Next New Networks

Aug 31, 2022

Insights on media disruption, business models and growth strategies New!Follow this author to stay notified about their latest stories. Got it! Got it! Really? I leaped back into vinyl records, but what’s happening here? Most of my memories of TV antennas consist of surefire comedy shtick from Lucille Ball and Vivian Vance trying to install an antenna on their own – hijinks ensue - to Homer and Bart Simpson with their own rooftop antics . Others might lean on beefcake-tinged memories of a shirtless Brad Pitt fixing Leonard DiCaprio’s rooftop antenna in 1960s LA in Once Upon a Time in Hollywood. None of this sounds like a foundational element of the media business in the 2020s. But surprise, surprise – antennas have made a real comeback, and in a challenged economic environment, their importance may only be growing, and they may represent yet one more threat to the bundled TV ecosystem. E.W. Scripps Company, one of the old-line names in publishing and broadcasting, recently provided an overview of the latest developments in the digital TV antenna market, and Jon Marks, the company’s Chief Research Officer, helped further illuminate their analysis. First of all, for the many that still have visions of rooftops in their heads, two-thirds of digital TV antennas sold today are indoor units – small, flat, square discs that are easily attached to a wall near a TV. These antennas won’t bring you traditional cable networks the way outdoor dishes do, but instead are an inexpensive tool to receive over the air (OTA) broadcast signals, which today include not only the core broadcast network affiliates but a host of broadcast “diginets” (more on those later). The antenna business is real and growing. According to the Consumer Technology Association (CTA), U.S. consumers purchased 8.5 million antennas in 2021 alone. This seems merely a blip compared to over 200 million TVs sold globally last year, but it’s pretty impressive when you realize that DISH Networks, which has been in business for nearly 30 years, has a total of roughly 8 million satellite home subscribers. In fact, as Scripps and CTA point out, nearly one-third of all U.S. TV households now have a digital antenna, and half of those homes rely solely on antennas for their receipt of broadcast signals. Scripps projects (leveraging insights from Nielsen and CTA) that the total antenna marketplace in the U.S. will exceed 53 million homes in 2025. By that time, that is likely to be fairly equivalent to the total number of U.S. traditional cable and satellite subscribers (which has obviously been declining for years). MORE FOR YOU Having violated a first law of strategy consulting – start with why – you might now ask why so many households are flocking to the antenna market. The reasoning runs from old-fashioned geography to the riches of the newest tech advances. From the earliest days of broadcasting, if you lived in a rural area far from a broadcast station antenna or in an urban area surrounded by tall buildings, you probably got pretty lousy TV reception. Today’s digital antennas still address those O.G. problems, and for a one-time, low low price of about $25. And even with millions of video options and dozens of streaming services to choose from, broadcast stations still uniquely possess “must have” live sports, big events and (for some) live local news that you can’t find anywhere else but through an over the air broadcast station. The new tech element comes with the world of “ diginets .” Diginets are new(er) broadcast and cable networks made possible by the expanded digital broadcast spectrum available to every TV broadcaster. The broadcast owners often prefer the term “multicast networks” which should not be confused with “Multi-Channel Networks” or MCNs such as Machinima, Next New Networks and others which were all the rage on YouTube in the 2010s. Confused yet? Don’t be. Diginets were FAST channels (free, ad-supported TV) long before FAST channels were cool. There are more than three dozen of these networks, with Scripps as the most prominent creator/distributor, with a suite of 8 multicast networks including Bounce, Grit, Court TV, Newsy and more in part acquired through the company’s purchase of Katz Broadcasting in 2017. Other such networks include Weigel’s MeTV, Nexstar’s Antenna TV, NBCUniversal’s Cozi TV, Sinclair’s TBD, and CBS’s Dabl. Much of this content is what we used to call “reruns” and is now often labeled “classic” TV. It’s comfort food for the eyes. Viewing for these networks is collectively up 69% in the last 5 years versus declines in cable viewers of 31% in that period (obviously off of a much higher base). As a senior ad sales executive in this space told me: “I don’t know how people find this stuff, but they do.” Scripps identifies households that combine streaming apps with free content from antennas as “self-bundlers.” The company calculates that these households typically spend roughly $58 per month on their video versus an average of over $148 per month for those who combine cable or satellite packages with streaming services. In an inflationary environment, where the value equation is only getting more important, this is massive saving for many consumers. On a NATPE panel earlier this year, Sinclair’s SVP for Growth Networks and Content Scott Ehrlich described these self-bundler households as “among our fastest growing businesses.” He simply noted that “consumers will always like free.” That is a troubling proposition to the Comcast