The Fall of TV Accelerates With Twenty-First Century Fox Inc

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cable news - The Fall of TV Accelerates With Twenty-First Century Fox Inc

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Reports that Twenty-First Century Fox Inc (NASDAQ:FOX) might sell its entertainment assets to Walt Disney Co. (NYSE:DIS) at first excited the markets like a stiff martini, but now the hangover is settling in.

If Fox controlling shareholder Rupert Murdoch is willing to sell, what does that say about the medium’s future? With AT&T Inc. (NYSE:T) temporarily stymied in its efforts to buy Time Warner Inc. (NYSE:TWX), it means two of the three main cable news outlets are facing an uncertain future.

That last deserves investor attention.

While TV shows like The Simpsons adapt well to internet streaming, cable news networks don’t. The one “talk” show tried on the medium, helmed by Chelsea Handler, was canceled by Netflix Inc. (NASDAQ:NFLX) after just two seasons.

News, by its nature, is appointment TV. Younger viewers don’t do appointments. They may not even do TV.

The Demographic Cliff

Critics like to point out that the median age of a Fox News viewer is 68. But the median age of an MSNBC viewer is 63, the median CNN viewer is 59. For network TV news shows, the demographic news is just as grim.

Viewers are rapidly moving from TV to the internet as their primary news source. Most people under 50 already choose the internet for their news, according to Pew Research.

After denying the trend for years, media owners have decided now is the time to sell. Time Warner results are driven by the success of networks it bought from Ted Turner in the 1990s, including CNN. Those are the assets the government now demands it sell, that or DirecTv. The strong earnings reported by Fox on Nov. 8 were driven by cable.

The question is who will buy? The obvious answer has been infrastructure companies. When Time Warner bought CNN it owned Time Warner Cable, which is now part of Charter Communications Inc. (NASDAQ:CHTR). Comcast Corporation (NASDAQ:CMCSA), the largest cable operator, bought NBC Universal, which owns MSNBC, in 2011. The AT&T-Time Warner deal was thought to be a similar arrangement.

Who Owns the Infrastructure?

But it’s no longer clear that cable controls delivery infrastructure, even though they own the last mile of the wired internet. Because it’s internet services, in the form of Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Facebook Inc. (NASDAQ:FB), Alphabet Inc (NASDAQ:GOOGL) and Netflix, Inc. (NASDAQ:NFLX), that now hold the key to finding an audience.

On the internet, there are no channels. There are shows, which can be of any length, from a 20-second clip to a two-hour movie. News is consumed in short bursts, on apps like Google Now, or in a Facebook News Feed, which takes just minutes and, over time, leads users down rabbit holes of related interests.

The key commodity is time. Younger people are devoting less of it to news. They are unwilling to sit idly, hour after hour, staring at a box. The box has moved on anyway.

MSNBC, CNN and Fox are basically talk channels. Even CNN “Headline News” consists mainly of talk shows, the metadata of news, all about what to think rather than what is happening.

Oceans Rise, Empires Fal-

Small wonder, then, that as Rupert Murdoch approaches the final curtain (he is now 86), his sons might be interested in getting out at a market top. The sale of Fox stock by Alwaleed bin Talal, formerly Fox’ second-largest shareholder, but now under arrest in Saudi Arabia, gives the family some control over what happens next.

It seems now is the time to sell. But given the demographic cliff, and the move of consumers away from anything that resembles TV, with its monthly revenue stream from viewers and ad sales controlled by content owners, the question is whether you should be buying.

You don’t have to.

Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in MSFT and AMZN.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.


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