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Behind the Numbers: an EMARKETER Podcast
Late Show Canceled & an NFL–ESPN Mega Deal: Has Streaming Finally Beaten Linear TV? | Behind the Numbers
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A
Unlock more growth with awin. Tackle acquisition, conversions and retention by tapping into a network of over a million affiliate partners with everything from partner management to reporting and payments in one easy dashboard, AWIN helps brands drive real scalable results. Visit awin.comemarketer to learn more. Hey, gang. It's Monday, August 18th. Paul, Danny and listeners, welcome to behind the Numbers, an E marketer video podcast made possible by awin. I'm Marcus and I'm joining you from our New York studio. And for today's episode, we have two people joining us. We have VP of Content Living the good life up In Maine is Mr. Paul Werner.
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B
I think you're living the good life in New York and everywhere else you go, but thank you.
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A
Not while I'm in New York, because as Danny can attest, senior editor living the fight to the death to get off the subway before people force their way on life in New York. Stanley Konstantinovich.
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C
Hello. Very happy to be here and not in the sweltering heat. It's the dog days over here.
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A
Oh, yes, I'll be here briefly and then leave again. But I'm glad to be here in the studio hanging out with Lars and Danny, who are behind the scenes making this all possible on the production team. Thank you to those two gents. Today's fact. So my dad's working in New Zealand at the moment on a project, so I dug up this fact about New Zealand because of that. Although he doesn't listen to the show, it's not really for him. I'll tell him.
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B
So we can talk about him freely.
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A
You can?
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C
Yeah, yeah. Any, you know, grievances you want to air out.
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A
Do you ever. What. How long do you just be the whole show? He doesn't even. He doesn't even know what company I work for. For years, he would just tell people I worked for the Economist, which is cool. I wish. Yeah. Wish I did at one point. Anyway, New Zealand is the first country to see the day's first sunrise, which is quite. You know how you see, like, Australia celebrating New Year's first and then on TV and then obviously other people, because they're ahead of us in time. Were they New Zealand, specifically a town called Gisbourne or Gisborne? I don't know. They're the first place to see first country, so to see the sunrise. Technically, Caroline island in the Pacific is the first place to get the sunrise, but it's not a country. I think it's quite magical, isn't it, knowing that you're seeing the first sunrise?
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B
Well, here in Maine we see the first sunrise in the us.
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A
Oh, that's true.
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C
That's true.
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A
Yeah. How is it?
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B
I could not tell you because I've never been a sunrise person. The closest I get to seeing the sunrise is if I'm still up, not because I've gotten up early.
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A
I'm still up late. Hello Paul, what line of life are you living? Me and Danny Caridi, who's running production for us, we talk about not being morning people unless you're jet lagged for the one or two days when you're jet lagged, you can pretend to be a morning person and then it's all gone. The last inhabited place on earth to see the sun set, if that's more your speed, is American Samoa. Anyway, today's real topic have the scales finally tipped in? Streaming's favorite news and sports were childhood friends of linear tv. But then news and sports went off to college and started hanging out with their new friends streaming. And ever since, linear TV has been feeling its old friends have been slipping away that may have recently gone up a gear. On the one hand, late night tv, which is where a lot of people get their news through a comedic lens, took another hit. The death of the Late show is the canary in a linear coal mine, writes Dave Dembowski in a guest piece for Adweek. He suggests that it's finally at the tipping point. We've been talking about saying today's viewer has an infinite number of on demand content choices and the Late show is not the most appealing option. He argues that this isn't a Stephen Colbert thing or even a Late show thing. It's a linear broadcast. Paul, do you agree that the death of the Late show is the canary in the linear coal mine?
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B
I don't think it is a tipping point for linear tv. I think there are other many other tipping points that have been we've seen coming for a long time. So I don't agree with that premise. I think what happened with the Late show is more endemic of the media landscape itself or actually political alignments and the business priorities of Paramount then actually an illustration of linear tv. But if we want to look for tipping points as far as there's so much, one thing I would point to is so YouTube for the past several months has been at the top of Nielsen Gage's index of the most watched sources of entertainment on streaming or linear. And it's the first time this has happened consistently for a period of several months. Disney has generally been at the top of that list since Nielsen Gage started, I think it was mid 2023. So that I would definitely call out as a tipping point. We've talked before about paid TV versus non paid TV view viewers, so that has also that threshold has been crossed.
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A
Cable households. Yep. Below 50% for a while now. That Nielsen number, actually, I looked at that as well, but I didn't look at specific players. I was looking total streaming, according to their gauge scales, tipped in streaming's favor in May. Their data shows that streaming was half a percentage point ahead of linear that month at a count of 44.8% to streaming versus 44.2%. So a fraction above to linear. The gap was already by June. So that was May. By June, it's widened to 4 percentage points from 46 for streaming, 42 for linear already.
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B
And the YouTube data that I cited, which of course is related to the top line, streaming versus linear. That gap between YouTube and Disney has been widening also since I think February. From February to I think June is the last month we have data for. So. So I think by now it's a pretty unmistakable trend. So I would characterize that as a tipping point. I mean, I'm not discounting the significance of the Colbert show being suddenly canceled. And I think there's a lot to talk about when it comes to late night. And I like the way you framed it, Markus, where you talked about linear tv. Had some friends that have deserted it. So, yeah, I think sports and news. And now late night is going to be the next friend to kind of ditch linear and leave them in a ditch.
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A
It's strange, Danny, because normally shows see their racings fall and then they get canceled. But Late show was top of the charts, audience of over 2.4 million people. The highest rated late night talk show doubled the audience of the Daily show on Comedy Central. But it had been struggling. It was unprofitable still, despite those numbers.
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C
Yeah. I think I also want to push back against the canary in the coal mine. Read on. The Colbert cancellation. I think, like Paul said, this is a symptom of something that's been building for a long time. I think the political questions around the Paramount Skydance merger are definitely interesting. I mean, the timing of the Colbert announcement came days after he called a settlement of a lawsuit related to 60 minutes a bribe to the Trump administration. So there is a lot of speculation that this was sort of a way to secure the merger agreement or win political favor. Yes, I suppose it's certainly possible. Yeah. I do think, though, that even though the Colbert, you know, Late Show I almost had the Colbert Report was, you know, leading the pack in terms of late night viewership. I think the niche that late night fills for a lot of viewers has been eaten into by so much free content. If you want, especially post Covid, if you want to see, you know, interviews with celebrities, there are so many places now where you can do that on YouTube, on Instagram, you know, with influencers perhaps moderating these debates, who consumers might feel a closer kinship to.
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A
That was part of the point from. That was one of the points from the piece which was saying late night isn't as social media friendly. It's not as shareable as something like the Daily Show. The Daily show is still a late night type of show, but it is more snackable.
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C
Yeah. And I think you've seen a lot of these late night esque shows experiment with what does like a digital content distribution strategy look like. The Daily show example that's raised in the Adweek article, I think is a great one. Like they have done a very good job at, you know, clipping certain parts of the show and making it very shareable. And the writer noted that that contributed to a big jump in viewership, especially among young viewers. Yes, I thought that was very interesting. And I think you've also seen similar things happen with a show like last week tonight on HBO with John Oliver, which had a pretty public. I'm not sure what the word I'm looking for here is, but I guess dispute between Oliver and Warner Brothers discovery about how to distribute the show on YouTube to try and get it to reach more people. I think when you see stuff like that, that's indicative of, you know, companies really looking to try and throw something at the wall, see what sticks. Like, figure out a strategy for this legacy entertainment format in real time.
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A
Yeah, yeah. I mean, does, does this, I wonder if this just all goes away or do these shows pop up on streaming services to be watched differently? Because the late night model we mentioned, it's been struggling. The ratings were good, but in terms of money, if you Widen the lens, CBS's late night shows in 2018 made about 440 million in ad revenues. Last year that number had been cut in half. So from 2018 to 2024, according to Guideline, ad revenues to CBS's late night show has been cut in half. And we've seen. I think I agree with you guys, we've seen other canaries in the coal mine. Conan left his 11pm show in 2021. CBS ended the Late Late show after James Corden stepped away. NBC Universal cut the tonight's show down to four days a week last year. Does, does this format just move over? Do they. You know, these hosts just pop up in streaming land down the road as it is.
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B
I think the whole late night viewing experience is shifting. You know, Danny, you mentioned John Oliver. I think SNL is a case in point where the idea of like staying up to 11:30 and I know I just said I'm a night owl, but I don't like to stay up and watch these shows in real time anymore. I used to do that. I used to do it with Letterman. I used to do it with Jimmy Kimmel and snl. I think now I tend to just watch some of the highlights, the bits that I want to see the next day or whenever. And media outlets like the New York Times are always condensing what happened on late night last night. So I think there's so much of that content that it really dilutes that core experience. Plus, I think Gen Z and Millennials, they're really not into appointment viewing anyway. So I think the bottom line is the content is valuable, but not in the current late night type of appointment viewing format. And that's why obviously these networks are not making a lot of money from these shows. So it's one more model that needs to be reinvented.
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C
Yeah. With regards to the question of whether late night will survive the transition to digital a uncertain. I mean, there's not a great example right now of show. Well, I suppose the Daily show is an example, but of the classic late night format, I don't think there's a great example of a show that's made that transition. Conan o' Brien was brought up earlier, someone who left the late night talk scene and that has been replaced with podcasts. So I think that John Mulaney, maybe.
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A
This is show, a talk show, but very few episodes, though, you know, I don't think it's gonna, it's, it's, it's very few episodes compared to something like late night, which is done all the time.
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C
Yeah, but maybe that's a benefit. I mean, to Paul's point about young people not being into appointment viewing, maybe with the regular episodes, there's more of an opportunity to make an event out of it that people will be interested in. I think appointment viewing on a nightly basis is especially tough for younger consumers. I think that's something they are, you know, really not clocked into. But yeah, I think that if late night does make this transition, I think the, you know, visual staples like how we view late night right now I think is going to change super dramatically. There are just so many other successful formats that are in that space that are way cheaper to produce. So I think the big variety show extravaganza is probably on the way out, in my opinion.
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A
So that's the new side of the coin. Let's talk about linear TVs other friend, sports. In a blockbuster deal, ESPN is set to acquire the NFL network, watched by 50 million households and other National Football League media assets, including the linear rights to the league's popular Red Zone channel, in a deal that will see the NFL get a 10% equity stake in the All Sports network. An ESPN statement noted the NFL Network will be integrated into ESPN's upcoming DTC streaming product, set to launch this week for $30 a month, and it will continue to be available on traditional pay TV providers. ESPN also gets the NFL's fantasy app to merge with its existing one. Danny, in an article you described the ESPN NFL agreement as a landmark deal. So what's your biggest takeaway from this agreement?
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C
Yeah, I think this is a super interesting agreement. The first thing that really jumps to mind for me out of this is years down the line, the current distribution of NFL streaming rights is going to be re examined. You know, the contracts with YouTube and Amazon and whoever else are going to expire and the NFL is going to have to drop a new, you know, high for how they want to split up the NFL. And if they have an equity stake in espn, that's a huge incentive to give ESPN a favorable package and it deepens the relationship between Disney and ESPN or Disney and the NFL. Excuse me. So years down the line, I think Disney is poised to win big time in NFL rights, you know, bidding wars or negotiations or what have you.
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A
I love this take from you. Yeah, power, you say power swinging back into Disney's hands and you point out that we're not too, too far away. Next year is 2026 and so by that time you're looking at a couple of four years until the Sunday ticket, then a couple years after that until Thursday Night Football comes up. So soon. Ish. Quite soon in TV rights land. Yeah, Paul, biggest takeaway, the way I.
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B
Described it in a couple of media interviews I did after the news broke, is that Disney is managing this transition from linear to digital a lot more effectively than its direct competitors. And it's actually putting the likes of YouTube and Amazon on notice that it's in it for the long haul. So I think, you know, to Danny's point, When those contracts come up for renewal with this, with this, you know, digital first companies, it might be a different conversation with Disney more embedded into the mix. I think that it's interesting because, you know, here we're talking about, like, the death of linear. So, yes, this is another one of those tipping points where linear is kind of like fading into the background. Because really, what we're talking about is a deal that is all about the ESPN D2C service, and yet we're also talking about a traditional media company. So I think that the way Disney is trying to carefully manage itself out of linear into digital should be a playbook for other companies. Not that a Paramount or Warner Discovery or even an NBCU is necessarily in a similarly strong position to do that. But it's interesting that Disney has gone in this direction. All those other companies have been either spinning off their linear assets or merging or doing other big breaks with what's been going on up until now or how they've run their businesses up until now, where I think Disney seems like it's making a smoother transition. And this NFL deal is a big part of that.
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A
Yeah, the brand helps massively. ESPN being a place where people know that's where I go for sports, just for sports. And folks seem ready to stream sports on ESPN properties. Danny, in your piece, you add this chart that folks who are watching can see on the screen right now used in your article. Danny, the streaming service US sports fans prefer most for streaming live sports is Amazon Prime Video 29%, then ESPN 26%, right behind it, according to 2024 Civic Science data, and quite far ahead of some of those other folks. Peacock with 20, max with 14, et cetera. Paul, how likely is this to get approved, though? Because it does need approval from NFL owners and government regulators. There's a Wall Street Journal piece citing Guggenheim securities analyst Michael Morris saying, quote, the league being a part owner in one of its distribution partners should raise the question of whether that entity is getting favorable treatment relative to other networks and streamers that air games close quote. Is this a done deal in your opinion?
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B
It's not a done deal, but I think we are in an era where regulatory approval is that the bar is lower. And it really comes down to how Disney is positioning itself politically. And I think, again, I think it's another thing that Disney has done well is, is try to, you know, thread that needle in terms of the NFL owners. I don't think that there are going to be any major issues because for them, it really just solidifies a Relationship that's been ongoing for decades. Yeah, I think if we were talking about a 30 or 40% stake, it would be a different conversation. But a 10%, it does raise some of those flags. But I don't think the NFL owners are going to object.
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A
Yeah. Danny, where do you land?
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C
I agree. I think that if the stake was higher, maybe people would, or regulators would turn a more wary eye. But like Paul said, I think that the regulatory environment right now is ripe for this kind of thing. So even if there are legitimate questions about fairness of competition, when, like these rights deals do come back on the table, or even just about this deal itself.
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A
Yeah.
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C
If you want, if you're Disney, if you're the NFL and you want to, you know, ink a relationship like this, now is the time to have as few roadblocks as possible.
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A
Yeah. I wonder if this is. Paul, I think in one of the pieces you were cited in, they were talking about this being a playbook for other leagues and networks to say, we'll take a slice of your league for the rights to stream on said platform. So maybe this year, baseball, basketball, in.
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C
The more short term, I guess. Something that also struck me as interesting about this deal was it came amid a bunch of upfront ad commitment results from TV networks and streaming companies, including Disney. A lot of these companies, again including Disney, did not see a lot of ad spend growth during this upfront period. I think, you know, lack of a major tent pole sports property is probably a big part of that. But I think a lot of existing budgets also went to NBC Universal this year because next year they have the Olympics. They have the super bowl as well. Those are two enormous tent pole events to attract a lot of advertising spending. But Disney's results kind of raised some concerns about their position in the sports streaming market. And then this news comes out two days later. I think it really cements them as, like Paul said, company that's in this for the long haul, they're not going to easily cede territory here.
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A
Final thing for me with regards to whether this is a done deal, there was another conflict of interest pointing out from Joe Flint of the Journal saying that there's one potential wrinkle here, which is that ESPN's NFL journalists and commentators will now be covering a league that owns a stake in its employer, espn. John Casillo of Forbes saying ESPN stomps out dissent among its own talent, pointing to a 2014 incident where the network suspended sports commentator Bill Simmons for his critical comments about the NFL commissioner Roger Goodell. We shall see. But that's all we've got time for for today's episode. Thank you so much to my guests. Thank you. First to Danny.
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C
Thank you. Always a pleasure.
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A
And of course, to Paul.
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B
Always a pleasure.
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A
Yes indeed, gents. And thanks to the whole editing crew to everyone for listening in to behind the Numbers in the Market video podcast made possible by awin. Subscribe and follow. And please do leave a rating and review. If you have a moment, you can join me Wednesday as I guest host the Reimagining Retail show again, speaking all about retail partnerships.