Jeff Bewkes on TV & Advertising

Television that is entirely dependent on advertising revenue may no longer be viable and, in regard to quality programming, may not be desirable, or that is what recent remarks by Time Warner CEO Jeff Bewkes at the Paley Center seem to imply.

Bewkes notes that an advertising-only business model doesn’t work for all types of content. As an example, he points to the era, roughly the 1960s-70s, in which the Big Three broadcast networks (NBC, CBS, ABC) controlled the programming now dismissed as the “vast wasteland.” The broadcast networks depended solely on advertising for revenue, unlike cable networks, which since the early 1980s have enjoyed the dual revenue streams of advertising and subscription fees.

Bewkes’ point, I believe, is that the broadcast networks’ reliance on advertising led them to program blandness. But was it reliance on advertising that shaped their programming strategy? Or was it their oligopolistic power that allowed the Big Three to get away with bland programming and retain audience attention for advertisers?

The 1960s-70s tripartite network oligopoly, enforced by favorable FCC policies that warded off competition from technologies such as cable, allowed the Big Three to program according to the Least Objectionable Programming theory. Rather than design programs to attract audience interest, the Big Three only needed to retain enough audience interest to stay competitive with each other while forcing up advertising prices by controlling advertisers’ access to mass audiences.

The network programmers thus designed programming to be as inoffensive as possible. Controversial programming didn’t become a central network programming strategy until after the Fin-Syn Rules of 1971 forced the networks out of the programming business and the rise of All in the Family proved that controversy could be an effective way to harness audience attention.

 Bewkes makes another important point: that advertisers need to make interesting advertising to keep audience attention. Audiences have more mobility now, yet the television advertising model is still based on forcing audiences to sit through advertising during a program. Is this model solely the outcome of broadcast television’s reliance on advertising as its sole revenue? Or could it also be a legacy of the network oligopoly of the 1960s-70s?

Before we had the 30-second spot commercial, which became the dominant advertising format in the 1960s, commercial broadcasting was just as dependent on advertisers. However, most of the advertising on national network radio in the 1930s-40s was by sponsorship. Advertisers controlled entire time blocks and chose the programming. Tight integration between the product and the program characterized radio programming, as in Maxwell House Coffee’s sponsorship of Showboat, featuring a coffee-sipping captain. Broadcasters, then, evolved different programming and advertising strategies in different historical periods for a variety of reasons that extend beyond the revenue model.

Despite my historical quibbles with Bewkes, he is probably correct that total dependence on advertising revenue may not be a winning strategy for “content companies” like his own in this era of audience mobility. Bewkes is definitely correct that advertisers can no longer depend on forcing audiences to view uninteresting commercials and that they must find new ways of attracting audience attention.

However, I think it merits more reflection before we assume that the weakness of the legacy television business is based entirely on its dependence on advertising revenue. Industry structure, particularly the rise and fall of oligopolies, whether networks or media conglomerates, may have a greater impact on how television programming strategies evolve and whether or not broadcast networks survive.

(BTW, Bewkes’ embrace of Netflix as a kind of syndication partner for Time Warner’s television content, as well as his acknowledgement that the “cord nevers” pose a greater threat to the cable “ecosystem” than the “cord cutters,” indicate a greater level of insight from the CEO than we have seen of late.)

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