I have a lifelong fascination with "the media" -- when I entered the University of Florida, I thought I knew that I would major in some form of Journalism and get into television news. Like many a college student, I changed my mind while on campus but media remains a deep interest. At this moment, I don't know how I stumbled upon The Collapse of CNN (probably some tweet in my Twitter timeline -- yep, Jim Treacher, retweeted to my timeline by Stephen Kruiser) but it was an interesting piece with some fairly typical and predictable comments to the opinion of John Ellis, the writer.
One, however, was certainly not typical or predictable. Identified as "WigWag" (I originally typed WigWam for some reason). Clearly a leftist (anyone asserting that CNN's left-wing bias is open for debate is a clear leftist), WigWag nevertheless delivered some worthy opinion. Here it is in full:
The only thing more shallow then CNN’s news coverage may be the assertion that CNN’s problems stem fro liberal bias. Even if CNN has a left slant (a debatable proposition), the idea that this accounts for it’s problems is simply ignorant.
Fans of Fox News or MSNBC may take some delight in CNN’s failures but they shouldn’t celebrate too long; their favorite purveyors of bloviation are headed for the dust heap of history too.
The major challenge facing old media in general and television (especially cable television) in particular is the looming massive wave of disintermediation that is about to strike it with the destructive force of a massive cyclone. CNN as the weakest link may fail first but Fox News and MSNBC won’t be far behind.
News Corp, the parent of Fox News seems particularly vulnerable because it is an old media company that seemingly has no clue about how to operate in a new media age. Remember, Fox and News Corp recently performed the remarkable feat of turning a billion dollar investment in My Space into a loss of $900 million when they sold the company for pennies on the dollar. But for News Corp/Fox that’s not the worst of it.
To get a sense of foreshadowing for what is soon to hit one needs only to examine what happened with Fox News and Glen Beck. After Beck and Roger Ailes (the man that John Ellis naively thinks could rescue CNN) had a falling out over Beck’s extraordinarily popular Fox show, Beck realized he doesn’t need Fox. After all, he had an incredibly loyal audience willing to pay to hear him rant; why cut an intermediary like Fox into his action.
Beck set up his own subscription based show on the Internet and it is incredibly successful, profitable and growing by leaps and bounds. Producing a high quality show that looks as good as a television show takes capital that Beck doesn’t have so he partnered with Premiere, Inc, a subsidiary of Clear Channel radio. Premiere and Beck each own 50 percent of Beck’s show. Premiere also owns 50 percent of Limbaugh’s and Hannity’s radio shows.
The irony is that the CEO of Premiere’s parent company, Clear Channel, is Bob Pittman. Bob Pittman was the founder of MTV and a former chief operating officer of AOL and later AOL-Time Warner. After Steve Jobs, he may be the greatest marketing genius of his generation. Stupidly, CNN’s parent, Time Warner passed him over to hire the bland and diffident Dick Parsons to run the Company.
The irony is that the CEO of the parent company which partners with Beck and owns 50 percent of Limbaugh and Hannity’s shows is himself a rabid liberal who has raised millions for Obama and before that both Clintons. Whatever their political differences, Pittman shares a common passion with his right-wing partners; they all love making money. Beck is delighted to work with Pittman; Pittman is delighted to work with Beck. All that matters is that everyone is drowning in dollars.
Clear Channel and News Corp/Fox are heading in opposite directions. It won’t be long before the likes of Hannity, O’Reilly and Van Sustern figure out that they can make far more money by emulating Beck. When they do they will tell Murdoch and Ailes to take a hike and they will sell their wares directly to the public with the Internet as the vehicle. MSNBC will collapse when Madow and colleagues follow suit.
Clear Channel and News Corp/Fox are heading in opposite directions. Murdoch’s company makes mistake after mistake after mistake; Pittman’s company is on a roll.
For a long time Clear Channel represented the oldest of old media. After print, what could be older or duller than radio. Clear Channel had taken on truly massive debt to build an 850 radio station Empire. Several years back, Bain Capital (after Romney had left) took Clear Channel private in a leveraged buy-out. Clear Channel was owned approximately 50/50 by it’s founding family and Bain.
The founding family in question was quite right-wing. Some may remember the controversy Clear Channel stirred up when their stations boycotted the Dixie Chicks after members of the band criticized George Bush. The other owners, the partners of Bain Capital are also a relatively conservative bunch. But after the highly leveraged company continued to flounder, that didn’t prevent the owners from hiring the uber-liberal Pittman to save their company.
Pittman is turning Clear Channel from a stodgy old media company to a highly successful new media company so fast that it makes your head spin. Clear Channel’s iHeartRadio site which let’s you listen to all 850 of their radio stations on line (or importantly on a smart phone) gets more than 10 million hits a month. They have a listening platform identical to Pandora that is used by more than twice as many listeners who use Pandora. Ominously for the Time Warners and News Corps of the world, Clear Channel is contracting directly with recording artists like Lady Gaga and Taylor Swift: record labels are almost a thing of the past; television networks will be following them into oblivion. Clear Channel owns 50 percent of Ryan Seacrest; if Seacrest gets an anchor job on the Today Show or if he hosts American Idol, NBC and Fox have to pay not only Seacrest, but also Clear Channel. The Company is even getting into the business of promoting concerts such as the iHeart Festival in Las Vegas or the Jingle Ball concerts in cities throughout the United States.
While Clear Channel is prospering by using it’s old media platforms as a bridge to a new media world, less nimble companies like Fox, Disney (owners of ABC and ESPN), Time Warner (HBO, Time Magazine Group, CNN) and Comcast (NBC) are being left in the dust.
Just as CNN is dying; Fox News and MSNBC are also about to experience a near death experience. Technology induced disintermediation means producers of entertainment or news can sell their product to consumers without cutting Fox News, MSNBC or CNN in on the deal. It also means that subscribers/consumers will be able to purchase only product that they want rather tan paying for a lot of product that they don’t want just to get a small amount of product that they do.
Disintermediation is going to kill television as we know it. Smart companies like Clear Channel are likely to thrive. Dinosaurs like News Corp/Fox and Time Warner are likely to go the way of Kodak.
Anyone who thinks that political bias is what will kill content providers like news outlets doesn’t know what they are taking about.
It’s capitalism and it’s hand maiden; creative destruction.
Adios CNN. Sayonara MSNBC. Bye bye Fox News.
Now -- say what you will, that's a very interesting comment that is going to give me quite a bit to think about over the next month or so. Kudos to you, WigWag.
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