Thursday, December 4, 2014

Cable News in Decline: Here's Why Time is Running Out for Fox News

by Nomad

If the capitalist model is based on supply and demand, what will happen when there is nobody left to buy your product? That the situation facing Fox News.

Fox News, as one writer noted,  has built its success by "selling a conservative political product to an older audience."
The average age of the audience is over 68 years old. That's average, mind you. Not only are the Fox News viewers the oldest, they are also  the most misinformed. They are also likely to remain that way the longer they continue to watch. 
In many ways, tuning into Fox News is a lifestyle choice. The average viewer of the channel tends not to have an active agenda and can devote much more time watching television news. On the other hand, a younger audience would more likely spend more time on the Internet or engaging with people socially.

Frank Rich, writing for New York Magazine, called Fox News a politically conservative 'retirement community.' When looking at the long-term viability of the network, that's something to consider.

The Slow Sinking of the Viewership

Last spring it was reported that the ratings for the cable news channel for the ideal consumer (25-54 age group) is at its lowest point in 12 years. As one blogger pointed out:
The average age of Bill O'Reilly's audience is a shocking 72.1 years old. Well, Megyn Kelly (perhaps because of that hip "y" in her first name) has brought that figure all the way down to 71.7 years old. That's a decrease of 0.4 years—almost 5 months younger! At this rate, they should make it to that prime 25-54 demographic some time in the year 2525. (If man is still alive!)
Programming executives at the network must be scrambling for solutions. There was a recent shake-up in which Megyn Kelly replaced Sean Hannity in the prime time slot. 

But if they thought the Megyn Kelly would be the way to attract a younger audience, then the problem of who needs to be replaced goes much deeper than just anchors. 
All that programming sleight of hand did was make the old men salivate from the heady combination of sensational looks, perkiness, and mean-girl aggression.
As the blogger noted: young people are not going to tune in given that they are just going to be fed the same stream of lies, distortions, and evasions no matter who the talking head might be. 
So, the real question is: 
What happens when there aren’t enough young people tuning in to replace the elderly audience?

Earlier this year, the news for Fox News ratings was bleak to say the least. One source reported:While still occupying the top slot among the cable news networks, Fox saw about a quarter of its audience dissolve across every demographic group and time period.

Strangely that information contrasted sharply with the upbeat Forbes report at the same time which stated that Fox News was the only cable news network to grow compared to the prior year quarter.
(Obviously one cannot rely on Fox News to report the truth about the company. Or anything else.)
One source gives us this grim picture of the cable news industry:
In terms of TV viewership, cable news peaked as a medium around the 2008 presidential election and, while showing impressive potential in digital, the business model is uncertain.
The question may be which of the big three, CNN, MSNBC or Fox News will fall first. (By the looks of it, that's probably going to be MSNBC.)

Problems with the Product

The other problem revolves around the quality of that product. As entertainment, Fox News, especially for young people, is a bore. Anyway it has always been a stretch to call the acidic views of Bill O’Reilly, Sean Hannity or Megyn Kelly "entertainment." Most people understand what the Fox News product is: right wing propaganda. 
In that, Fox News excels. 

As far as news with accurate unbiased information, however, the Fox News Channel produces a substandard product. Of course, even a defective product (especially in an unregulated industry) is better than no product at all. 

Fox News has crafted a message solely based on supporting the fears and ignorance of the under-informed. Indeed,  Fox News simply cannot broadcast the truth without losing its audience.That's like trying to sell Coke without the "fizz."

Tell the angry white conservatives that the economy is indeed recovering under Obama, that unemployment is down,  that Obamacare could possibly be working out or that, for the first time, the dream of American energy independence is within sight, and they will be cancelling their cable subscription. 
Fox News has got what conservative folks crave. In fact, broadcasting factual news would probably crash their shaky business model. 

So to sum up, Fox News has got a product that cannot be improved which is being sold to a demographic that can't be enlarged. Realistically, the end for Fox News may be postponed somewhat but that decline is also unavoidable.

Key Problems with the Business Model

Coming at a time when News Corp, the parent company of Fox News, was jolted by a shareholder revolt, those poor showings suggest that the news division is simply no longer the asset in the company portfolio as it once was. 

There are also questions about how money is being spent at Fox News.  It's somewhat of a shocker to read that Fox News spends roughly 45% of its programming on factual reporting and 55% on commentary and opinion. Think about that. What on earth could Fox News consider factual reporting? 
(More surprising perhaps is that they bother to make any distinction between opinions and fact at all.) 

A more important question is: Why should so much money be spent on something like opinion that is essentially free? Why pay for commentary or opinion at all when it isn't based on facts? As any young person- above the age of 40, that is- knows, the Net can provide more than enough free opinion.

That might be shocking but in fact, Fox News spends more of its budget on factual reporting than MSNBC. MSNBC, on the other hand, reportedly dedicates an average of 15 percent of its programming to factual reporting, the other 85 percent dominated by commentary and opinion. 

To compare one to the other is missing the point. As we have seen, MSNBC, CNN and Fox News are all in decline and each of them, in varying degrees, demonstrate the same problem with the business model. 

It's a fundamental flaw that any first-year business school student could see: No company can survive by paying so much to manufacture something - opinion and commentary- that is freely given away everywhere. 
Tucking your precious opinions behind subscription firewalls (as Rupert Murdoch has unwisely tried to do with his failing newspapers) will only hasten the decline and add to the irrelevance of the product.

The Rupert Era will sooner or later come to an end. After a showy welcoming back, it appears his wayward son will attempt to take over the running of the company. How long News Corp will hold on to Fox News without a drastic business model restructure is anybody's guess. 

Considering the significant decline in viewership for all cable news channels and its impact on revenue. shareholders could soon feel the pressure to rethink the New Corp structure. It may be too late for even the most drastic solution at this point. 

For angry aging viewers (and possibly for investors), Fox News, has become the dunce's corner for the nation.