Happy Monday War & Peaceniks. Let’s make some change.
Above is the latest update of my Media Universe map, reflecting our ever-and-fast-changing ecosystem. Each month, I remake the map, in powerpoint, updating each planet and valuation, by hand. It's painful.
But as many times as people suggest ways to automate the updates, I demur. Digging into the numbers for these 124 companies each month, with my own fingers and brain, teaches me a LOT. It illuminates patterns and trends I otherwise wouldn't see, and which many others don't. With Paramount in play, Disco Brothers likely on deck next, and massive disruption coursing through the veins of this ecosystem, a year from now, this map may look quite different.
So much of our conversation around Media these days focuses on the economic unraveling of traditional Media (see Paramount and WBD) and their inability to find “a new normal.” The players themselves speak about the issues the industry faces as if the problems landed suddenly, from outer-space, afflicting us all without warning.
“The model that underpins our business is definitely broken.”
“This is a generational disruption. Going through it with a service that’s losing billions of dollars, it’s really difficult to go on offense.”
- David Zaslav, Disco Bros CEO
These leaders, and others dressed just like them in Media C-Suites around New York and LA, talk about these disruptions, these existential crises of industry, as if the companies and execs are hapless victims - as if the challenges they face happened to them, rather than being created by them. On earnings calls and at business conferences, they blame the failures of their businesses on external forces, on changing habits, on the consumers - on anyone or anything but themselves.
Never mind that in these two examples - and so many like them - the decisions made by the executives at the helm of these Media starships led directly to the catastrophes in which they now sit.
Iger’s decisions to bid up and acquire Fox for far more than it was worth (primarily as a way to crown his career); his choices in bungling Disney’s succession planning worse than Logan Roy; and his mandate to march the company into the Direct To Consumer Streaming business - without any meaningful diligence for how it would affect Disney’s “underpinning,” and absent a real plan to manage the cultural and economic transformation it would entail - are precisely why his return as CEO has been such rough sledding.
Zaslav’s rationale for combining Warner Media and Discovery was “a simple and powerful strategic principle: these assets are more valuable together. When we combine these historic brands under one roof, we will unlock so much value and opportunity.” Since he said that - without actually understanding what TF it meant - since the merger that he engineered, despite massive cuts to overhead and staff designed to find efficiencies and “unlock value,” Warner Brothers Discovery has lost 78% of its value. Why? Because the WBD merger plan was designed with one priority: Make money for those who engineered it.
But, despite this demonstrable history, nowadays when these two icons of industry (two of the most highly paid executives on earth) talk about the challenges of the Media Apocalypse, they conveniently avoid any accountability for creating it.
They are not alone. Leaders at all levels of entertainment and tech now speak about the disruption our industry faces as if they could not have possibly seen it coming, or potentially prepared better for it, or might have done anything at all differently to mitigate it.
But WE - they, all of you, and me - could have seen it coming. We should have prepared better. We could have avoided fully empowering the disruptive powers that tore gaping holes in our business models. We should have reinvested our massive (and unsustainable) profits to plan for and carefully build a new entertainment ecosystem that catered to the changing habits of our audiences, while more smoothly evolving the economic underpinning of our models to ensure the best possible transformation of our industry and for the hundreds of thousands of people who work in it.
A dozen years ago this summer, I wrote an essay in Huffington Post, specifically warning the industry of the powerful disruption we were enabling and of the nearing disaster we were creating by not managing it better.
“The TV industry faces a looming crisis. This may seem odd; after all, advertising and subscription revenues are at all time highs. Netflix, Hulu, and Amazon are all paying top dollar for the digital rights to the best shows. All the major TV programming conglomerates just issued great earnings.
But there is something destructive eating away at the healthy tissue of the Media Industry: Stasis. To harness the disruption headed our way, rather than succumb to it, we all will need to truly embrace disruptive thinking and bold actions to ensure that our industry makes the transition it must to survive and thrive.”
We, as an community, ignored the warning signs. We all went blind in the same way. Companies like Comcast, Paramount, Disney, Warner Media, Fox, AMC Networks, Discovery, and Scripps; executives, leaders, and board members across Media took far too long to realize that easy cash from streamers was not nearly as important as making uncomfortable near-term decisions to build long-term sustainability into our models.
Then, as we tend to do, we overcorrected - violently veering our ships into new, direct-to-consumer waters, without taking the time to rebuild our vessels for the changing seas ahead. Ad models were tossed. Churn was never calculated. Worst of all, the consumers - for whom we were supposedly changing everything - were not factored into our new models or platforms.
Sticking the word “strategic” into a talking point does not automatically transform a cash grab into an actual strategy, any more than simply “turning on” a streaming service immediately converts an old school Media company into a tech platform for the modern age. Perhaps most importantly, replacing an existing TV user experience - even one that people hate - with a chaotic, asymmetrical labyrinth of content walled-gardens, cannot fix what was actually wrong with television at the end of the last era.
In fact, much of what we’ve all done to transform TV into a modern medium has made the TV user experience much worse - for consumers and for our businesses.
We replaced the over-priced, over-stuffed cable bundle, with a Wild Wild West of TV fiefdoms. We created the impetus to binge and churn that now eats away at the foundational revenues of the television business. We moved our content into an unnavigable Tower of Babel, where discovery gets more difficult daily, and measurement has become a running joke.
The average consumer now has 100 unique logins across their suite of lifestyle services. Media users now average 14 unique Media outlets - and they’re ready to cancel half of them at any moment.
The Media chaos our community created - waiting too long to change, then rushing too without direction towards change at any cost - has resulted in a Media Universe that’s increasingly unusable for users themselves, defeating the very purpose of our change. Plagued by platform, content, and subscription fatigue, consumers are now doing something unthinkable in modern times: They are actually cutting back on their Media usage.
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