The Music May Be Stopping for Cable Networks

It feels empty, going back to talking about television and the future of video at a time when it feels like, for a young liberal like myself, we might not have a future of any kind at all, but there was some news this week that made me reflect on one of my older posts and how the television landscape is shifting.

In 2012, Comcast was looking for something to do with its ten-year-old video game channel, G4, which had been dropped by DirecTV two years earlier and seemed to be inexorably on the wane. It eventually decided to rebrand it to the Esquire Network, a joint venture with Esquire magazine. Two weeks before the rebrand was to finally take effect, Comcast, now in control of NBC Universal, decided to rebrand the Style network as Esquire instead, figuring that Style’s female-oriented programming was now redundant with Bravo and Oxygen, and giving Esquire a slot that actually had DirecTV carriage. G4 would remain on the air under that name, endlessly rerunning its back library, until its existing carriage agreements ran out, and it was finally taken out of its misery a little over two years ago.

That Comcast was willing to rebrand Style as Esquire Network without having anything else to do with G4’s space was surprising to me, because as I wrote shortly before G4 was put out of its misery, the trend in the cable business seemed to be to constantly rebrand channels until companies found a format that stuck, holding on to established channel space and using whatever channel hadn’t caught on to launch the next format idea that came to the suits. Which brings me to this week, and the news that came out Wednesday that Comcast will be shutting down Esquire Network’s linear feed later this year, converting it to a digital on-demand service. On one level, that Comcast replaced Style, not G4, with the Esquire Network means they have now effectively killed two channels instead of one. But on another level, there’s no guarantee Comcast wouldn’t be shutting down Style now anyway, if they hadn’t already done so. In that sense, Comcast may have simply been ahead of its time, knowing that it might not have any new channel ideas with which to replace either Style or G4 – for both channels, the alternative to giving Esquire Network a try would be a full shutdown.

The notion of “cable network musical chairs” was from the start rooted in one of the dynamics captured in my book, The Game to Show the Games. As described in Chapter 7, for many years the Big Nine companies that control most of the channels on your cable lineup were able to use their popular channels to bully cable operators into carrying less popular channels. By about ten years ago, it became nearly impossible to launch a new channel from scratch unless you could convince cable operators it would have a built-in audience from the start, and since then the only channels the Big Nine have attempted to launch from scratch have been regional and college-conference-affiliated sports networks. But outright closing a network and giving up its channel space was unheard of. Until G4, the only truly national cable networks to completely shut down since the 2004 closure of CNNfn and TechTV were ABC News Now, which had highly limited distribution to begin with, and SoapNet, which only survived the launch of Disney Junior because of Disney’s inability to get cable operators to swap one out with the other. It made sense to keep a channel around, just to squat on the space, until you came up with a new idea for what to do with it, knowing that unless things became truly dire cable operators would continue to carry it.

Of course, the same phenomenon that keeps companies from launching new channels from scratch also makes it difficult to relaunch existing channels and attract enough of an audience to make up from the audience lost from the old format, especially in the age of cord-cutting where starting up a new linear network seems like a decidedly outmoded, foolish proposition, if you don’t have any of the live events that are the main purpose of linear television going forward, or any established shows moved from other networks. It’s become decidedly obvious to all parties involved that the cable network landscape is badly oversaturated, but I felt that, without cord-cutting accelerating substantially, no one had any incentive to shrink it – so long as the Big Nine could still get cable companies to carry them, they had no reason to shutter any of them and deprive themselves of a revenue stream. Rerunning old content over and over would still bring in more money than losing the space without being able to get it back if you had a better programming idea.

There is some evidence, though, that cable companies are getting more and more empowered to at least try to dump networks they see as worthless, as they look for ways to shrink their packages to deliver more value and more reason for people to sign up for them. As much as online pay-TV services like Sling TV and PlayStation Vue have failed to live up to their promise of slimmed-down channel lineups, instead carrying most of the Big Nine’s entire portfolios, they’ve still placed some pressure on the Big Nine to shrink down what they have to carry, especially coupled with traditional cable companies’ efforts to create truly “skinny bundles”.

It’s hard to say what the tipping point was. By the time A&E Networks followed through with its announced replacement of H2 with the Viceland network in February, it was already widely ridiculed despite the head of Vice boasting that it would “return millennials to cable TV”. The general consensus was that Vice had no illusions of reaching “millennials” by any means other than online, and a linear network would simply broaden who it could reach at very little cost to Vice itself with the potential to bring in additional ad revenue. Al Jazeera America shut down two months later without replacement, despite the efforts of OneAmerica News Network to take over the space, in part because it wasn’t backed by any of the Big Nine. The same goes for the October shutdown of the Pivot network, itself already a merger of the Documentary Channel and Halogen network. The shutdown of Esquire, triggered by both AT&T and Charter looking to dump it, suggests the Big Nine’s bundling practices won’t insulate them from having to cut down on their networks.

To be sure, the Big Nine will continue to play musical chairs for as long as they can – Comcast is reportedly also looking into converting Oxygen into an outlet for crime dramas – but if the shutdown of Esquire is any indication, we may finally be about to see a market correction as the cable network landscape contracts to just those networks that are absolutely necessary, or at least sustainable. Losing Esquire on its own won’t cause anyone to dump cable, but if the trend accelerates fast enough, as more networks shut down there will be less of a reason for those subscribers that remain to keep their cable subscription, and eventually we should reach an equilibrium where cable is priced low enough to actually be worth the cost for those subscribed to it, while the migration of the “lost” content to the Internet, heralded by Esquire’s conversion to a digital platform tied to the Esquire magazine web site, will minimize the damage from the contraction and increase the value of cord-cutting. We could be seeing the start of the formation of the video landscape of the future. Again, assuming there is a future.

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  1. […] but that wouldn’t be enough to prevent catastrophic changes.) Against this backdrop, as I said earlier, writing about anything else, certainly anything that attempts to shape what the future might be […]

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