Weekly: Whatever to do with linear TV?

Warner Bros Discovery cited ‘clarity and focus’ as the reasoning behind its move yesterday to split streaming and linear networks into two very distinct divisions.

Wall Street certainly approved: the company’s shares soared 15% in afterhours trading.

But the move poses bigger questions, both for producers who have for decades stocked these content-hungry networks, and for operators in countries where cord-cutting has not been as ubiquitous as the US.

Direction of travel

The Stateside narrative, of course, is fairly straightforward. US studios have felt encumbered by channel businesses that continue to drag on resources when they would rather be focusing on the shiny world of streaming.

That world is not making them huge amounts of money just yet, of course, but WBD is not alone in wanting to differentiate between the old and the new.

Six months before the Financial Times first mooted WBD’s possible linear/streaming reorganisation in June, Disney chief Bob Iger had suggested the company might sell some of its linear assets.

It has since rowed back on the idea – Disney’s finance chief Hugh Johnston told CNBC earlier this week that “the cost is probably more than the benefit” – but the evolutionary path in the US is clear.

Comcast is another that has already put wheels in motion, spinning off its portfolio of NBCUniversal cable channels into a new venture headed by long-time exec Mark Lazarus.

Networks that once dominated US viewing – from USA, Syfy and Oxygen to MSNBC and E! – will be split from the mothership, which will house streamer Peacock, along with broadcast channel NBC and cablenet Bravo.

Cable calamity

In some ways this is totally expected but in others, it is still fairly momentous stuff – a moment of realisation that all the conjecture around the death of cable, and to a lesser degree linear networks, over the past decade or so is now coming to fruition in a very tangible way.

For WBD, it is not a case of a wholesale divorce – some of these networks still derive handsome profits, after all – but more an amicable split: the company will remain the parent of both a streaming & studios division, and a global linear networks unit.

But it is worth taking a look at the wording used to describe the jobs of these two very different entities.

Streaming & studios will house Max – a “globally scaled streaming platform” – as well as its “storied film and entertainment studios”, which includes Warner Bros TV Group and Warner Bros Motion Picture Group. Its focus is “on driving growth by telling the world’s most compelling stories,” as chief exec David Zaslav put it.

The job of Global Linear Networks, meanwhile, is “maximising profitability and free cash flow to continue deleveraging” its rather large debts.

The restructure is expected to be completed by mid-2025, but it remains to be seen how this reorganisation will affect producers, particularly those of the unscripted variety.

Broadcast International enquired with Max content chief Casey Bloy when he was in London last week about the role of unscripted and was pointed to shows on Investigation Discovery that were “really popping”.

Docs are also a focus, he added, but besides that, there was little more forthcoming – perhaps partly because, as Bloys said, the focus at that particular event was on tentpole scripted fare.

But also perhaps because streaming and networks are still tightly intertwined.

“One of the things that’s a little bit tricky to get past,” he continued, “is that there is a lot of linear spending with Warner Brothers Discovery, so it doesn’t necessarily count as Max spending – I’m not sure where you would count it.”

Disney’s Johnston put it another way when discussing his reluctance to split streaming and linear just yet: “operational complexity”.

As Bloys alluded, a fair chunk of programming that appears on Max also has a home on its networks, with unscripted still being produced in relative quantity despite the tight squeeze felt across the genre over the past 18 months.

“We’re making a lot and we’re spending a lot on unscripted, and it’s obviously done very well for us,” he said.

The question now is, will it stay that way when the two divisions are separated? And can the types of shows that worked so well on US cablenets for years perform in a similar way for a streamer such as Max?

If the current squeeze on US unscripted is anything to go by, it suggests not.

The RoW conundrum

The battle to adapt to changing viewing habits is one facing companies around the globe, even where cord-cutting has been felt to a lesser degree.

Across Europe, broadcasters have seen average viewer ages climb consistently, seemingly unable to stop the ascent nor the outflux of advertising money to mediums attracting a younger and more easily defined audience.

And the US studio shifts on linear will also have repercussions internationally, given the company’s far-reaching tentacles.

Yet there are markets where linear continues to perform, such as Central and Eastern Europe. At NEM Zagreb this week, Marina Williams – co-founder of Asacha Media Group and former chief operating officer of international operations at Endemol Shine Group – reminded producers of the money and reach still available to many linear channel operators across the region.

For others, such as the UK’s ITV, it seems to be a matter of hedging bets on multiple platforms.

Regardless of whether it sells its profitable ITV Studios unit or not, the broadcaster needs to attract viewers to streamer ITVX but also the output created by its linear networks.

Yet like its US counterparts, the argument to convince ad money to continue flowing onto those linear networks in the way it once did is a tough one to pull off.

That perhaps explains why ITV said this week that hundreds of hours of its shows would soon be available to YouTube viewers, following a distribution and commercial partnership with the Google-owned service.

The broadcaster’s commercial team will sell ad opportunities around ITV and ITV Studios channels on the platform, with the ambition being to boost reach and revenues.

Genre-based channels will be launched, carrying daytime, chat show fare such as Loose Women, but also tentpole entertainment shows including The Masked Singer and Love Island.

And this doesn’t appear at first glance to be simply a case of flinging shows onto the platform to see what sticks. A dedicated YouTube sales team is being created within the ITV commercial arm, with Abul Noor joining from Channel 4 to oversee the move.

ITV’s managing director for media and entertainment Kevin Lygo said the move is part of a strategy “to maximise reach and viewing opportunities for audiences, wherever they choose to watch”.

And that is the problem.

Viewers across all countries are choosing to watch their shows in an ever-increasing number of ways, at all times and from myriad producers and creators. Monetising content sufficiently in this landscape is proving understandably tough.

While it might seem unlikely that YouTube will ever deliver viewers – never mind revenues – to ITV in the way that its linear networks once did, that’s not really the point. The US industry differs in many ways to the UK and most other countries, but it is not alone in its experience of linear channel decline.

And wherever you are, to deliver ‘clarity and focus’ - as WBD puts it - in this fast-changing landscape, you have to start somewhere.