Curious Capitalist

Money Talking: What the Washington Post Sale Has to Do With the Future of Television

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What do the $250 million purchase of the Washington Post by Jeff Bezos and the continuing contract battle between CBS and Time Warner Cable have in common? This is a question I have been thinking about over the last week, as both events brought to the fore shifts in patterns of media consumption that have been underway for some time. The common thread is that what people once paid for in print – as well as in television – they can now get for free, or at least for a lot less, online. As broadcasters and pipe owners duke it out over who gets the largest share of an antiquated business model that involves charging people a lot of money to watch content via cable or satellite, consumers are slowly but surely switching to an entirely new model of consumption – they are watching streaming video over the internet.

The CBS/TWC battle is really just the next iteration of the disintermediation of old media by new media. That’s been happening for over a decade now in print – that’s why a storied news organization like the Post can be sold for a song. But what’s interesting is that it’s now really happening in television, too. Several years ago, I wrote (along with every other business reporter) stories about how the internet would do to TV what it was doing to print.

The thing was, it didn’t happen quite as fast as everyone thought it would. Television was starting from a richer base, and it still has much further to go before advertisers start moving elsewhere. But eventually, they will – because the consumers are. Craig Moffett, a leading telecoms analyst, recently put out research showing that even as the economy picks up, pay TV isn’t. Instead, over 1 million consumers have “cut the cord,” as they say in the business, moving from paid services to streaming the programs they like over the internet. That’s a very small amount of the market, of course, but it’s double the number that cut cord the year before. You can sense that shift building, as people’s consumption patterns shift, and watching multi-episodes of Orange Is The New Black back to back replaces flicking through 500 channels to find nothing on. Feels like that moment when everyone starting dropping their fixed line phone service because they realized they only really needed a cell. To hear more about all this, tune into the latest episode of my WNYC radio show with Joe Nocera and Charlie Herman, here:

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