Revolution in the infostructure

Television news, the dominant source of political information for Americans, was transformed Tuesday night. A death knell for broadcast network news has pealed its initial toll. For the first time in history, coverage of an important news event by a cable news network drew more viewers than any of the broadcast networks could boast.   Fox News Channel, with 5.2 million viewers between 10 and 11 PM Eastern, outdrew NBC (5.1 million), CBS (4.4 million), and ABC (4.3 million). FNC's cable news competitors could not even reach one third of its viewership.

The three broadcast networks are in the business of delivering mass audiences to advertisers. Their sole competitive advantage over cable broadcasters consists of their ability to reach larger numbers of eyeballs, with the nearly comprehensive availability of their signals to the viewing public. Even the most widely carried cable networks do not reach people who don't subscribe to cable. So advertisers who need to reach vast numbers of potential customers all at once find it worthwhile to use the broadcasters.

But unlike cable networks, which receive compensation from local system operators for delivering programming, broadcast networks must pay their affiliate stations for the privilege of having their content televised over the public airwaves of Atlanta or Mankato, Minnesota. The economic structure of the distribution systems of cable and broadcast television are opposite sides of a coin, in other words. CBS must pay to deliver its news to you, while Fox News and CNN get paid for the very same activity. There are profound implications, and their logic drives some inescapable conclusions.

Television network news is a high fixed cost operation. Correspondents and camera crews must be stationed in many cities, ready at a moment's notice to cover breaking stories. News anchors with broad public appeal must be retained (to encourage viewer loyalty) and compensated richly. Producers, news editors, video and sound experts, and an entire array of unseen minions labor behind the news readers, to provide fresh content for each news broadcast.

All of these expensive people are necessary to provide content for one half—hour evening news broadcast. Additionally, they feed stories (mostly headlines and short field segments) to the anchors of the nets' two—hour morning shows, when they aren't interviewing movie stars, authors, figure skaters, visiting cheerleaders, yodelers, and the like, who collectively comprise the majority of the morning's fare.

The huge corporations which own the three broadcast networks are businesses, run by executives accountable to shareholders. The top management of Disney, corporate parent of ABC, almost lost their jobs to a dissident shareholder movement seeking their replacement. The prospect of the managerial equivalent of a hanging focuses the mind wonderfully.

The bald fact is that all of the network news divisions are not paying their way. The three morning shows are wonderfully profitable, but they could readily obtain their news content from outside vendors, such as the three cable news outlets, AP, Reuters, and their local broadcast affiliates. The three evening newscasts, with their declining viewership, cannot justify the fixed overhead costs. Now that the national viewing public has shown that it will choose Fox News over each of them, albeit a national viewing public disproportionately consisting of Republican loyalists, the handwriting on the wall is in the hue of Day—Glo orange. The downward trend of broadcast network news is accelerating.

Up until the present moment, the notion that the three networks had an obligation to the public to provide national coverage of important breaking news events had some currency. Each of the broadcast networks owns local affiliates in the nation's major cities, which provide the bulk of their overall profits. These affiliates own licenses from the federal government, which stipulate that they serve the public necessity and convenience. Maintaining a national news organization has been seen as a cost of doing business, in order to keep those license renewals coming.

But now that even breaking national news coverage of a cable outlet exceeds the viewership of a broadcast network outlet, this rationale looks a lot weaker. Is the FCC, chaired by Michael Powell, likely to object loudly if one of the networks decides to eliminate its news division and simply buy coverage of important news from, say, CNN?

Such a decision is not likely to happen tomorrow. But the prospect of it happening in the foreseeable future is today much more likely than it was on Monday this week. Given the relentless squeeze of declining revenue from advertisers on the evening news, increasing costs of independent news gathering operations, and the unfavorable cost structure of distribution, the decision is now inevitable. Broadcast network news is going to follow theatrical newsreels into archival, as opposed to contemporary relevance.

As for the cable news outlets, the future direction is becoming clear. MSNBC, with the fiery Democratic partisan Chris Matthews, outdrew CNN, which still pretends to hew to the middle of the road, but succeeds mostly in hewing to boring in its less—obvious Democratic orientation. The pretence of news media objectivity is in terminal decline. Thanks to research organs of the right (Media Research Center) and the left (Fairness in Accuracy and Reporting), and to the many bloggers out there of all political stripes, the biases of the media are accepted as fact by a critical mass of the public.

Niche appeal —— explicit orientation of news delivery to appeal to specific fractions of the fractious public —— is the wave of the future in non—monopoly media. Fox News Channel, with its obvious appeal to those fed up with liberal media, has turned the mass media news world upside down. The British and European pattern of ideologically inclined news sources is likely to develop in America.

Television news, the dominant source of political information for Americans, was transformed Tuesday night. A death knell for broadcast network news has pealed its initial toll. For the first time in history, coverage of an important news event by a cable news network drew more viewers than any of the broadcast networks could boast.   Fox News Channel, with 5.2 million viewers between 10 and 11 PM Eastern, outdrew NBC (5.1 million), CBS (4.4 million), and ABC (4.3 million). FNC's cable news competitors could not even reach one third of its viewership.

The three broadcast networks are in the business of delivering mass audiences to advertisers. Their sole competitive advantage over cable broadcasters consists of their ability to reach larger numbers of eyeballs, with the nearly comprehensive availability of their signals to the viewing public. Even the most widely carried cable networks do not reach people who don't subscribe to cable. So advertisers who need to reach vast numbers of potential customers all at once find it worthwhile to use the broadcasters.

But unlike cable networks, which receive compensation from local system operators for delivering programming, broadcast networks must pay their affiliate stations for the privilege of having their content televised over the public airwaves of Atlanta or Mankato, Minnesota. The economic structure of the distribution systems of cable and broadcast television are opposite sides of a coin, in other words. CBS must pay to deliver its news to you, while Fox News and CNN get paid for the very same activity. There are profound implications, and their logic drives some inescapable conclusions.

Television network news is a high fixed cost operation. Correspondents and camera crews must be stationed in many cities, ready at a moment's notice to cover breaking stories. News anchors with broad public appeal must be retained (to encourage viewer loyalty) and compensated richly. Producers, news editors, video and sound experts, and an entire array of unseen minions labor behind the news readers, to provide fresh content for each news broadcast.

All of these expensive people are necessary to provide content for one half—hour evening news broadcast. Additionally, they feed stories (mostly headlines and short field segments) to the anchors of the nets' two—hour morning shows, when they aren't interviewing movie stars, authors, figure skaters, visiting cheerleaders, yodelers, and the like, who collectively comprise the majority of the morning's fare.

The huge corporations which own the three broadcast networks are businesses, run by executives accountable to shareholders. The top management of Disney, corporate parent of ABC, almost lost their jobs to a dissident shareholder movement seeking their replacement. The prospect of the managerial equivalent of a hanging focuses the mind wonderfully.

The bald fact is that all of the network news divisions are not paying their way. The three morning shows are wonderfully profitable, but they could readily obtain their news content from outside vendors, such as the three cable news outlets, AP, Reuters, and their local broadcast affiliates. The three evening newscasts, with their declining viewership, cannot justify the fixed overhead costs. Now that the national viewing public has shown that it will choose Fox News over each of them, albeit a national viewing public disproportionately consisting of Republican loyalists, the handwriting on the wall is in the hue of Day—Glo orange. The downward trend of broadcast network news is accelerating.

Up until the present moment, the notion that the three networks had an obligation to the public to provide national coverage of important breaking news events had some currency. Each of the broadcast networks owns local affiliates in the nation's major cities, which provide the bulk of their overall profits. These affiliates own licenses from the federal government, which stipulate that they serve the public necessity and convenience. Maintaining a national news organization has been seen as a cost of doing business, in order to keep those license renewals coming.

But now that even breaking national news coverage of a cable outlet exceeds the viewership of a broadcast network outlet, this rationale looks a lot weaker. Is the FCC, chaired by Michael Powell, likely to object loudly if one of the networks decides to eliminate its news division and simply buy coverage of important news from, say, CNN?

Such a decision is not likely to happen tomorrow. But the prospect of it happening in the foreseeable future is today much more likely than it was on Monday this week. Given the relentless squeeze of declining revenue from advertisers on the evening news, increasing costs of independent news gathering operations, and the unfavorable cost structure of distribution, the decision is now inevitable. Broadcast network news is going to follow theatrical newsreels into archival, as opposed to contemporary relevance.

As for the cable news outlets, the future direction is becoming clear. MSNBC, with the fiery Democratic partisan Chris Matthews, outdrew CNN, which still pretends to hew to the middle of the road, but succeeds mostly in hewing to boring in its less—obvious Democratic orientation. The pretence of news media objectivity is in terminal decline. Thanks to research organs of the right (Media Research Center) and the left (Fairness in Accuracy and Reporting), and to the many bloggers out there of all political stripes, the biases of the media are accepted as fact by a critical mass of the public.

Niche appeal —— explicit orientation of news delivery to appeal to specific fractions of the fractious public —— is the wave of the future in non—monopoly media. Fox News Channel, with its obvious appeal to those fed up with liberal media, has turned the mass media news world upside down. The British and European pattern of ideologically inclined news sources is likely to develop in America.