Networks Fray Rope Between Their Affiliates And Streamers
A prominent group head once said: “Networks and their affiliates are dancing; locked in a deadly embrace. If either lets go, both die.” That is the challenge facing the networks today as they walk a tightrope between their affiliates and their new streaming platforms. Unfortunately, they are fraying the rope.
So infatuated with streaming are the traditional networks that they seem to have forgotten what their affiliate partners bring to the table: A massive distribution system, powerful brand value and reportedly $2 billion dollars per year to each network in the form of program payments. Though it seems to have slipped their minds, the networks also know their success is directly tied to the brand strength of their affiliate bodies.
When Rupert Murdoch launched Fox back in 1986, the network struggled for survival. It wasn’t until Murdoch bought a prominent group of highly rated CBS affiliates that the network took off. These many years later, CBS in most of those markets continues to underperform because the network is now on lesser stations. More recently, powerhouse WRAL in Raleigh, N.C., switched from CBS to NBC, causing NBC for the first time in market history to contend for first place.
Why then are the networks risking their relationships with affiliates by pouring most of their attention and cash into streaming platforms while ignoring the needs of their long-time local partners? The answer is that Wall Street is obsessed with streaming. It is the latest bright, shiny object.
The problem for the traditional networks — and it is a big one — is that streamers such as Paramount+ and Peacock offer no unique brand value outside their programming. They are simply delivery systems dependent on turning out hit shows. By definition, if you are not in the brand business, you are in the commodity one.
Netflix, which had been Wall Street’s darling for years, recently made the mistake of believing it had brand value beyond its programming, thinking it could continue to raise prices even without a list of current hits. That’s one reason Netflix lost 200,000 subscribers last quarter and its stock dropped like a rock.
Disney+ is another example. Disney has a clear brand: Kids. So long as Disney+ catered to kids, it saw huge growth and was loved by Wall Street, but once that market was saturated, it stalled. “Make original programming,” chorused the stock analysts, which is another way of saying “Jump into the commodity wars.”
Then there is Prime Video. Amazon has stand-alone music and reading services, but video is bundled with free shipping. Amazon obviously believes its video streamer cannot stand on its own. Otherwise, Prime Video would have a separate monthly fee.
Clearly, streamers are only as successful as their latest releases. This need for a constant flow of actual hits, something no network or streamer can achieve, has created a desperate race to pour money into program development, because no matter how good the script, how prominent the actors, no one really knows what will grab the public’s attention. Seeing where this is leading, Discovery chief David Zaslav recently vowed to not overspend, saying his organization would be “careful and judicious,” but those words seem lost on the traditional networks. Driven by the fear of being left behind, they are in with both feet.
When you consider that the real goal is stock price, these moves are understandable. What does not make sense is why the networks seem to be going out of their way to alienate their affiliate partners. For instance, at least one network has chosen to not invite affiliates to this year’s up-front presentations, one of many signals that the networks have devalued their station relationships. It’s as if the networks are now playing a short-term stock price game rather than looking to the future.
The irony is that the networks did not have to choose between affiliates and streaming. The partnership that has worked so well for decades makes just as much sense in the streaming world because affiliates bring the one thing every streamer desperately needs: brand value, a reason to subscribe that goes beyond just the latest hit program.
The case for a partnership can be made on many levels. Station relationships run deep into their communities; their marketing engines are second to none and of course they also bring the power of local news. None of those things can be duplicated by a national service. Strong station brands also create sampling and, as we know from history, can accelerate the launch of hits.
It’s time for the networks to take the smarter course. Their affiliates are powerful potential allies. They would distinguish the network streaming services from all the other commodity offerings while adding the leverage of massive local marketing platforms. If the goal is to please Wall Street, then partnering with affiliates and their powerful local brands seems like an obvious move.
Hank Price is a media consultant. His second book, Leading Local Television, has become a standard text for television general managers. In a 30-year general management career, Price led TV stations for Hearst, CBS and Gannett, including WBBM Chicago, KARE Minneapolis, WVTM Birmingham, Ala., and both WXII and WFMY in Greensboro/Winston Salem, N.C. Earlier, he was a consultant with Frank N. Magid Associates. Price also spent 15 years as senior director of Northwestern University’s Media Management Center. He is currently director of leadership development for the School of Journalism and New Media at Ole Miss.