News Corp. posted fourth-quarter results yesterday, and it turns out Fox didn't have such a hot quarter.
The operating income of News Corp.'s TV segment fell a whopping 28 percent amid a weak ad sales environment. Fox's woes aren't unique -- it's been a rotten year for network television as broadcasters struggle to hold on to dwindling viewers, who now find more compelling content online and on cable TV.
Traditional television viewers have migrated to the web and to premium cable channels. The numbers speak for themselves: Time Warner says HBO is poised to grow "by the double-digits" this year. News Corp. said one of the few bright spots of its TV business was its cable division, which grew operating income by $29 million to $313 million in the fourth quarter. And conventional wisdom has it that online video sites -- such as Hulu and YouTube -- are stealing market share from traditional television. Both subscription-based TV and online video sites are flourishing.
As any observer might note, a key difference between broadcast television and cable (or the internet), is that you may hear dirty words or see an exposed buttock online or on a cable program. Another key difference: Cable TV is actually growing. Network TV is not.
"Without a doubt, the business model of network television is suffering from competition with other channels who operate with fewer content restrictions," says Robert Thompson, a professor of popular culture and television at Syracuse University. "This country's obsession with not uttering naughty words and not talking about s-e-x is borderline psychotic. Strike that, it is psychotic."
While the major networks struggle to create compelling content that meets the FCC's rigid decency standards, HBO, Showtime and AMC have pumped out profitable hits such as The Sopranos, Sex & The City, Curb Your Enthusiasm, Weeds and Mad Men -- shows that could not exist on broadcast television. And not only is the public accepting of the adult content, many people pay to watch it.
"These are shows that could only be developed in a more relaxed regulatory environment," says Gerry Kaufhold, a principal analyst at InStat, a market research firm.
The migration hasn't only hurt the networks' ability to attract viewers, it's also made it increasingly challenging to attract talent.
"If you're a good writer, director or actor, your dream is to do an HBO series," says Thompson. "And it's only now that we're starting to see networks push back. After the wardrobe malfunction at the Super Bowl, the networks were stumbling over themselves to apologize. But finally, they are challenging the decency rules. To some extent, this culture has got to grow up . . . there are a lot of people who would like to watch something more sophisticated than 'Father Knows Best.'"
Photo: Flickr/Michael Licht/NotionsCapital.com
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