The Daily Bell
Wednesday, April 11, 2012
Citibank Says It’s ‘Flummoxed’ By Ratings Collapse In Cable TV … Citibank entertainment media analyst Jason B. Bazinet and his team wrote in a note to investors today that they are baffled by the audience ratings decline they’re seeing in cable TV. Citi downgraded CBS, Disney, Discovery, News Corp and Scripps from “Buy” to “Neutral” in the note after concluding that the ratings falloff was accompanied by a similar decline in the growth of ad dollars being spent on cable. Citi left Time Warner and Viacom as “Buys.” Cable continues to grow revenues, up 8 percent (compound annual growth rate) since 2008, on Citi’s numbers. That’s more than the media sector as a whole, which only grew 2 percent. Audience ratings, however, are in a tailspin. – Business Insider
Dominant Social Theme: Newspapers and magazines are having trouble because of the Internet. But it is just a passing phase.
Free-Market Analysis: Citibank entertainment media analyst Jason B. Bazinet is in the news today. He wrote to investors that he simply cannot account for the slump in cable TV viewers.
As a result, he downgraded CBS, Disney, Discovery, News Corp and Scripps from “Buy” to “Neutral.” This is no small thing. Ads follow viewers. Fewer viewers, fewer ads – and less ad dollars.
He notes that in aggregate, cable TV is up some eight percent since 2008, when the ongoing “depression” began to gather steam. But revenues are not ratings. Audiences continue to slump, and over time this bodes ill for the industry.
What could be causing the malaise? He cited a combination of “Netflix, warmer weather, job gains, lack of hit shows, and faulty Nielsen measurement.” But here’s the bottom line: “While we’ve tried to quantify these sources … we can’t explain the entire ratings shortfall.”
Gee, a leading media analyst can’t figure out why cable TV – and the visual media generally – is in a slump? How about the Internet?
The Internet is perhaps the “fifth communication technology wave,” as we see it. There are plenty of nuances involoved in such a statemet, but in our view it constitutes at least a rough description.
What were they? Well, perhaps the first was rock painting, the second was carved tablets, the third paper and ink (papyrus), the fourth book printing and the fifth … electronic communication technology. But this fully came into its own with the Internet, which is a fundamental adaption, whereas TV, phones, etc. were not.
We’ve discussed what’s going on via a paradigm that we call the Internet Reformation. We’ve long argued that the Internet Reformation is as fundamental as the Gutenberg Press that brought tremendous changes to the world.
These include the Renaissance, the Reformation and the populating of the New World as well as the advent of the scientific method and the gradually diminishment of the Roman Catholic Church as the world’s ultimate arbitrator.
Some will say that the Internet is merely a tool, but human beings are tool-using creatures and tend to define their societies by the tools they use. Tools, in other words, can be transformative. Here’s some more from the article:
Citi cited a combination of Netflix, warmer weather, job gains, lack of hit shows, and faulty Nielsen measurement as possible culprits. Bazinet et al then concluded: “…while we’ve tried to quantify these sources, the bottom line is that we can’t explain the entire ratings shortfall. We are flummoxed.”
Here’s one possible solution: People aren’t watching cable anymore because they’re using their cable service to play on the internet instead. I’ve argued for month now that the TV business as a whole is now sliding down the same slope that ruined the newspaper business: People abandoning old, expensive media for cheap, new web media.
But much as the Gutenberg Press undermined the system set up by the powers-that-be 500 years ago, so the Internet is doing the same sort of thing now. This bodes poorly for the kind of mind control that the elites exercised in the 20th century. It is another reason to be hopeful about the future.
Conclusion: The Internet is NOTHING like TV. It is an active interrelationship more akin to reading than a passive one, like TV. The transformation of society’s messaging continues apace, and this is surely not to the liking of thepower elite. But the Internet is a process not an episode.