(TV) Pay TV: The Pay TV apocalypse continues

It's no secret that we're the golden age of television but its also no state secret that cable and satellite Pay TV providers have been taking a pounding for years which has culminated this week with the worst quarter in the history of the industry with Pay TV providers losing a whopping 762,00 subscribers. 

Why Pay TV providers are losing subscribers at a record rate isn't rocket science with the combination of skyrocketing price hikes, an increasingly unpopular business model, and better digital alternatives offering by SVOD services such as Netflix, Amazon and Hulu, it was only a matter of time before quarters like this become the new normal.

What's worse is that Pay TV providers are in no position to do much about it as they contend with soaring programming costs largely fuelled by the increasing value of sports content. Pay TV providers have for years passed  this cost onto customers without much to sweeten the deal which has seen an customer cut their cords at record rates for the best part of  a decade.  

It's always concerning when an industry can't keep its customers and even more so when can't attract new ones but the pay TV industry recent bloodletting has shown that can't do either which is why an already mature market is now showing signs of atrophy.

The decision to pay lengthy and expensive premiums for sports TV rights has cost Pay TV providers dearly but rationale behind pay TV's bet on live sport made sense as live sport events such as the Super Bowl or march madness have proved to be the most reliable content for getting bums on sofas across the land at the same time but as the last NFL regular season proved, sports content is showing signs of losing its lustre. The 7% dip in regular season viewing and a drop in Super Bowl viewership for the second year running saw many executives clamouring for answers to why NFL ratings dropped from a highly divisive presidential edition to Colin Kaepernick's stance (or lack thereof) during the national anthem. 

However, despite the complicated and varying factors that negatively affected NFL viewership during both regular and postseason games, the fact remains that pay TV's costly bet on sports programming is starting to unravel and it's unclear whether last year was a blip or a start of a very grave trend.  

Despite their recent struggles, Pay TV providers aren't sitting on their hands and idly watching their industry crumble before their eyes with  pay TV operators increasing their digital footprint with skinny bundles and even SVOD offerings that appeal to cord cutters and cord nevers who enjoy the power of watching TV where, how, and when they want to. 

However, Pay TV providers fight in keeping and attracting new customers is taking a turn for the worse with Amazon and Facebook picking up live sports content deals. This development should scare the life out of pay TV executives everywhere as While Amazon's deal in particular involves the ecommerce giant airing much maligned Thursday night games, should Amazon attract large audiences for Thursday night NFL matchups or at least larger viewership number than their cable counterparts. It could see live sport content providers hosting more of their content with online partners. 

This would be a disaster for Pay TV providers and networks as they'll have to outspend deep pocketed behemoths for live sports content when the cost for live sports TV rights are already high. Pay TV providers will be forced to pass even more costs onto a customer base already looking for a reason to jump ship.  

However, what should keep pay TV executives up at night is that whether Amazon or Facebook attract large audiences for NFL or MLS games or not is what they'll learn about sports viewers. The reason why both Facebook and Amazon have largely pulled away from their direct competitors and send shivers down the spine of executives everywhere when they so much as hint about entering their market is because both companies are become very good at using data from their users to provide a more personalized service to the point they know their customers better inside out, literally. 

It's why both companies have abnormally high customer retention rates and never have trouble attracting new users as their ability to implicitly meet the needs of their users through data keeps current users hooked with new features and services which in turn provides Amazon and Facebook new opportunities to learn even more about their users habits. 

What all this means is should Amazon and Facebook deliver impressive viewership numbers, Pay TV will have a hard time getting those customers back. This alone will put a steak through the hearts of Pay TV providers everywhere who will continue to lose customers, spend and lose millions trying to get them back and surrender their future customer base to SVOD services. 

In sum, there has been much talk about the future of Television but now the chatter should cease as the future is here and it's going to be brutal.

(TV) Viacom: Why a merger with CBS is the only play Viacom have left

With the end of the disastrous decade long reign of Phillippe Dauman over, there has been a lot of talk of Viacom's next move which seems quite strange since the company only has one option worth contemplating, merging with CBS as quickly as possible. 

With surely no one crazy enough to risk their reputation turning around a company that owns increasingly irrelevant and underperfoming media networks, low on cash and is $12 billion in debt, Viacom not merging with CBS is suicide. Understandably, highly respected CBS CEO Les Moonves is less than thrilled with the prospect of  his company merging with Viacom which currently, for the lack of better words, looks like a shit sandwich. Unfortunately, for Moonves at least, the decision to merge with Viacom isn't entirely up to him.   

The decision to merge the two would largely depend on redstone family (principally Sumner and daughter Shari Redstone) who own 80% of both companies through the company National Amusements. Both Redstones are in favour of merging both companies which split over a decade ago and have already made moves to see it through. 

With both companies boards stacked with members loyal to the redstones, the merger looks like a matter of time. In truth, Viacom would not be in this position if the company would have got rid of now former CEO Philippe Dauman five years ago instead of last August as the Frenchman is largely responsible for the glaring weaknesses that beset the company. Much of Viacom can be laid at Dauman's feet as he oversaw arguably the dumbest capital allocation strategy ever pursued by a media company and failed to respond to glaring market trends particularly the rise of SVOD companies such as Netflix and Hulu and the increasing maturity of Pay TV market. 

Because of Dauman criminally negligible mistakes, Viacom  are alarmingly vulnerable as they own media networks in an age where the market for them is shrinking rapidly. The upshot of this trend is that it affects their two biggest markets, TV and advertising. Viacom for years made their crust bullying cable and satellite pay TV operators into paying  large carriage fees by leveraging  their popular networks such MTV and Comedy Central forcing pay TV operators to cough up for less popular networks in their portfolio and then sell airtime to marketers and agencies during commercial breaks which has made Viacom one of the most powerful media conglomerates in the world.  

However, this business model had dangerous weaknesses as it made Viacom unhealthy dependent on the pay TV market for their daily bread. Thanks to rise of Netflix and SVOD in general and pay TV operators losing subscribers every quarter for the last five years, Viacom's pay TV dependent business model has blown up in their faces and nobody knows just how to pick up the pieces. 

The only way out of the mess Viacom finds themselves in is merging with CBS who have negotiated the maturity of pay TV and the rapid rise of SVOD better than most media companies. CBS, unlike Viacom, has some footing in the SVOD market with Showtime anytime and thanks to its content deal with the NFL, it has its hands on the most important content in the TV business, sports. However, CBS, like Viacom, is low on cash and is $8 billion in debt. Nonetheless, CBS are still in a better position than Viacom which despite some downsides, makes a merger viable. 

In sum, Viacom can thank their lucky stars  they're part of the Redstone universe as if they weren't, one could only imagine where Viacom would be.