Scott Galloway Sounds the Death Knell for Cable News: ‘This Business Is Not Coming Back’
Scott Galloway rejoined Kara Swisher on the latest episode of their podcast Pivot, after taking the month of August off, and returned with an in-depth analysis about the cable news business – concluding that “this business is not coming back.”
Galloway focused on CNN and noted how Pivot gets significantly more downloads from listeners who fall in the advertiser-coveted 25-54 age demographic than CNN gets viewers. Galloway flubbed his numbers a bit, claiming that CNN averages only 27,000 demo viewers, while it actually brought in 53,000 demo viewers in August.
“When you have still very profitable but declining businesses, which pretty accurately describes cable news or the cable TV world, there’s a way to make money and add shareholder value, but it’s to stop injecting Botox in a grandma such that she looks freakish. It’s to make her comfortable and consolidate. There isn’t a reason for CBS, ABC, and NBC to have three different newsrooms,” Galloway began, adding:
They’re just not that different. They’re reporting the same f*cking thing, starching it, trying to make it interesting, and then showing some guy who’s raising dogs in Alaska alone and some inspiring stories so we’re not just totally depressed about it. It’s the same fucking thing over and over.
Whoever’s more attractive, you tune into that person. The back end can be consolidated. It’s very easy.
I told you one of my best investments ever was a Yellow Pages company, and we knew the business was going away, but we just went around and bought every Yellow Pages company, held on to the best salespeople, and as long as you cut costs faster than the revenue declines, you can have a good business.
“This business is not coming back, and the reason why is the following,” Galloway concluded before breaking down his argument further.
“You’re right, a great product always works, but what you’re, the three key words here are means of production. The means of production for the Colbert show costs $100 million. They make 60 million, which means they lose 40 million. Stephen Colbert is an amazing talent,” he continued, adding:
It’ll be an amazing product on podcasts. And of the 200 people that work on that organization, eight will make it onto the podcast arc. They will do 20 million in top line revenue instead of 60, but he will continue to make 10 million.
But unfortunately, the 194 people that don’t make it onto the arc are going to be getting the real estate licenses. The means of production at CNN and traditional media are just unsustainable. So this is what’s going to happen.
All that amazing talent, and they do have amazing talent, amazing brands, is going to be arbed down. What are podcasts? Podcasts are now TV shows with a strong audio overlay.
This is what you’re going to have. You’re going to have On with Kara Swisher. My prediction is like Mark Thompson is going to call Kara Swisher and say, “We’re going to run On with Kara Swisher.”
I want you to do the following things. We’re very talented. We’re going to make this a little bit more TV friendly. We’re going to reduce it to 21 minutes so we can pelt nine minutes of ads. We’re going to run it. And here’s the thing.
They don’t need to get as many viewers because you can… We’re going to do 10 million bucks in revenue this year. What do we have? Eight people? That’s one and a quarter million dollars per professional.
Cable News is averaging two to $400,000 per professional.
The means of production, it’s a cost issue. And a lot of these companies may not be able to transition their means of production without some sort of radical restructuring.
“You could. You could. There is glimmers of interest, including Fox News,” Swisher pushed back, citing Fox — which just topped all of broadcast television in prime time for the summer — as remaining successful in the cable news space.
“Just let me give you an example. Megan Kelly is getting bigger audiences than she did on Fox with six people,” Galloway pushed back.
“Quite frankly, this is very self-absorbed. I’ve decided, unless it’s someone I’m friends with, like Stephanie or Anderson, or Michael Smerconish, I’m name-dropping right now. The juice isn’t worth the squeeze,” Galloway continued, explaining why he no longer goes on cable news as often.
“Look at the viewership. Look at the viewership. And not only that, in order to get ratings, they have fucking food fights like whatever that show is with Abby Phillip,” he added, “It’s like no longer news. Everyone’s becoming foxy. Unless you’re on The View or Morning Joe, if you have your own platforms, the juice isn’t worth the squeeze. There’s some prestige to being seen on MSNBC. You do it every once in a while. I used to go on once or twice a week. I don’t go on anymore.”
Listen to the full conversation above.
