Signs that Broadcast Network Television is disintegrating are abundantly evident.  Prime time ad revenues for the broadcast networks dropped 15% in the last quarter or 2008, according to TargetCast, with CBS experiencing the deepest decline.  In 2009, ad revenues continue to decline. In August, one headline revealed:  TV networks cut ‘upfront’ prices for ad time but still sell less.

In an article entitled “Ten Big Companies That Are Veering Toward Bankruptcy” (The Business Insider, Sept. 18, 2009), CBS was listed as number 7, right behind Goodyear.

Although the authors of the article weren’t sure whether CBS’s “weak advertising and falling license fees [which] have sent CBS’s earnings off a cliff in 2009,” were due to a)  a cyclical trend;  or b) the fact that “traditional TV is dying” — two possibilities which are worlds apart —  the answer is obvious.

If you were an advertiser, would you rather spend a) $300,000 to air one 30-second prime-time spot that will never reach its intended  20 million viewers, because they will be fast-forwarding past them on their DVRs, or b) $30,000  to reach 20 million Internet users, who can click on your ad to get more information, can bookmark your ad if they want to come back to it, and can actually order your product online? (While Internet users are able to turn your ad off if they find it intrusive at the moment, they continue to see your product off to the side and can turn the ad back on at their will.)

Choosing “b” for both of the preceding paragraphs will put you on the correct side of history. 

That the television industry, itself, is in a state of sheer panic was evidenced on the 61^st Primetime Emmy Awards telecast on Sunday, September 20, 2009, where presenters playfully mocked the presumption that broadcast network TV will meet its demise. 

During her presentation of Outstanding Supporting Actor in a Comedy series, Julia Louis-Dreyfus quipped,  “Amy [Poehler] and I are proud to be presenting on the last official year of network television.” The audience responded with laughter, as the truth behind their mass denial was revealed.

Host Neil Patrick Harris performed in a sketch where he played an evil scientist declaring that audiences preferred watching shows presented in a tiny aspect ratio on on a tiny computer monitor than on their huge flat screen televisions, and that they enjoyed waiting for a computer to “buffer” while viewing an Internet video stream.

The sarcasm is lost, of course, because the writers of the sketch – and presumably the top network executives – don’t get it.  The technology is here.  The same satellites or cables that bring you Two and a Half Men will bring you the Yahoo! search page you’ve grown accustomed to on your PC. The progamming that audiences will be watching in a year (or two) from now will look just as beauitful in high definition and play just as smoothly as an episode of House.

Soon, when you press the “on” button of your Samsung, hi-def 60” TV, you will be able to select from anything you can get on the Internet today, including high-end series, dramas, comedies, musicals, classic films, performaces by emerging artists.  These prgorams will not be presented or produced by ABC, CBS and NBC, but from companies like Google, Netflix, JibJab, Noisivision and iTunes, to name a few.

Like a star getting sucked into a black hole, Broadcast Network Television – long conisdered the center of the entertainment galaxy — is collapsing under its own gravity, taking with it advertisers and everything within its vicinty, while the Internet — formed from the vast nebula of technology — has emerged as the new star, with millions of opportunites for information and entertainment orbiting it.

Note the use of the term “Broadcast” Network Television to distinguish it from “Cable” Network Television, whose models of doing business may very well allow HBO and SHOWTIME to survive in the era of convergence, and perhaps even thrive. It all boils down to two areas where they beat their Broadcast cousins handily: a) their current usage of the Interent as an interactive tool to complement and enhance their programming; and b) their ablity to produce high-quality shows on smaller, tighter budgets.

TO BE CONTINUED

Next year will be end of the major broadcast television networks.  They will meet their demise with no fanfare, no melancholy send-offs, no bittersweet memorial at the Staples Center.  Their influence over contemporary culture will cease to exist, save as foggy memories in textbooks recounting the history of electronic media.

While that’s bad news for network executives, who for seventy years have arrogantly dictated which shows their ever-dwindling audiences can watch and at what time of day they can watch them, it’s great news for everyone else.

The death of the networks and their antiquated programming matrices will be a renaissance for electronically delivered entertainment and a golden opportunity for advertisers, as the difference between traditional television and your Internet-connected computer become virtually indistinguishable.

Viewers will keep their TVs, but instead of being spoon-fed from a limited variety of shows at predetermined times from the Big Three Networks, they will dine on an endless spectrum of news and entertainment from thousands of producers around the world, via the Internet, conveniently viewing them at a time of their choosing.

This shift from Network Television to Internet Television is referred to as “convergence,” and there’s not much disagreement that it’s coming.

What executives don’t seem to grasp is how quickly it’s all going to converge.  It won’t happen in ten years; it won’t happen in five years. It will be happening by the end of next year.

As I write this, it’s August 2009.  My prediction is that by next summer it will be all over for the big guys.  The 2009-2010 television season will be the last one that we recognize as such.  (Okay, maybe they’ll manage to stay on life support for an additional year, but it’ll be in a vegetative state, in which case they will be declared dead in 2011.)

So, if a year from now network television ceases to exist, what does that mean for ABC, NBC and CBS (yes, and Fox – although after 20 years or so, it’s still hard for me to think of them as a major network).  In short, they will be out of business, and their parent companies will suffer immeasurable losses.

The Big Three Networks are all owned by major studios.  Disney owns ABC, Universal owns NBC and VIACOM owns CBS.  Corporate directors should start thinking about liquidating these assets now, or risk losing everything for their stockholders.  And don’t expect Congress or President Obama to bail them out. Unlike the auto industry, there will likely be more jobs created without them.

Some contend that the Big Three will still exist, but in a different form.  Perhaps, but that difference will have to be radical and immediate, two adjectives I don’t suspect have ever been attributed to network television without being followed by a rim shot. In their current configuration, it seems impractical for networks to compete viably with independent Internet producers, who are leveling out the entertainment playing field every day.

TO BE CONTINUED