11/05

Lessons for Radio from Time Warner Cable

timewarner

Earlier this year, CBS was blacked out on Time Warner Cable in several major markets due to a dispute over content rights fees. CBS wanted more and Time Warner didn’t want to pay it. More than 3 million Time Warner Cable customers lost access to CBS-owned stations, Showtime, and three other cable nets for a month until the standoff was resolved.

So what happened?

The monthlong CBS blackout for Time Warner Cable customers in major markets was a key factor leading to the cable operator’s biggest quarterly loss of video subscribers in its history. The cable company lost 306,000 residential TV subscribers in the third quarter, much higher than analyst expectations of a decline of 183,000, according to StreetAccount. TW Cable also dropped 24,000 high-speed data and 128,000 voice subscribers on the consumer side, as the cable operator incurred higher-than-expected losses across all three services. ‘The CBS dispute apparently took a much larger toll than anyone would have imagined, and this colored all of the results,’ MoffettNathanson analyst Craig Moffett wrote in a research note.

So where’s the lesson for radio?

Radio is both a distribution channel (e.g., Time Warner Cable) and a content-maker (e.g., CBS). While radio used to own a big chunk of distribution that is less true today than ever before. Distribution is everywhere.

Just as consumers can route around TW Cable to get the content they want (by accessing CBS content via the Internet or switching to another cable provider) they can also route around your radio brand. Unless, of course, the content on your radio brand is so unique and compelling that there is no substitute elsewhere, no way to “route around” you.

The lesson here is that in a world where lots of platforms possess lots of reach – lots of distribution – the value flows to the content and the license each distributor has to carry that content.

The power is in the hands of those who make great stuff, exceptional stuff, stuff you can’t find everywhere or even anywhere else.

While great content needs distribution to succeed, it’s the content that’s scarce, not the distribution.

Are you investing in unique and compelling content?

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