(CNN) Warner Bros. Discovery signals rapid deterioration of television business, sending stock plummeting. Quoting,
“It’s fair to say that even two years ago, market valuations and prevailing conditions for legacy media companies were quite different than they are today,” Zaslav said. “And this impairment acknowledges this.”
The classic example of economic obsolescence is the buggy whip, used with horse-and-carriage, which vanished, except for the novelty market, with the coming of the automobile. More recently, in 20 years of tepid effort, Eastman Kodak failed to adapt to the digital age; even though they were an early innovator in digital technology. See Att: David Zaslav; Future of CNN.
Kodak’s failure came not from inability to develop digital technology, but from a legacy of thought that was unable to grasp the future. The challenge to media is analogous. Quoting,
To be fair, WBD is not the only once-high flying legacy media behemoth struggling to find its footing in a shifting landscape upended by the Netflix revolution…
The above contains the seed of a great error. There was a revolution in delivery media, from cable/physical to web, which is just about complete. The revolution of the moment is social. The media companies are so behind the curve, they are fighting the last war. Quoting,
Zaslav did talk up other parts of the WBD business, describing the company’s Max streaming platform as “doing very, very well” with “tremendous upside.”
In microcosm, ignoring the social revolution, Max is doing well. In macrocosm, it’s an Outer Banks house on the beach that has just raised its stilts another six feet, or backed up another block from the ocean. It doesn’t look good long term.
The method of media delivery, and the social modality, are separate issues, connected only by the need for immediacy. Speed is a relative parameter, which in earlier times was supplied by the Pony Express. The social revolution flattens social hierarchies. Fast or slow, speed without adapting to the new hierarchies will result in dissipation of the great media companies. Quoting,
Paramount Global, a one-time titan, has stumbled and found enormous difficulty reorienting its business around streaming. The Shari Redstone-led company, which struck a merger deal last month with David Ellison’s Skydance, has lost 27% of its value this year.
The attempt of the media companies to reinvent themselves from the inside is hampered by the same legacy of thought that caused Kodak to become a shrunken raisin. This stems from the belief that no one from outside their business can understand their business. The self imposed isolation is no less striking than Japan before Commodore Perry sailed into Tokyo Bay in 1853. The companies rely on highly skilled financial optimization and resource allocation in place of real innovation.
These strategies, as skilled as they may be, cannot meet the current challenge, of preserving wealth or creating new. Japan was a highly optimized society, isolated from the fruits of the industrial revolution. It took Perry’s forcible entry to spur Japan’s ascent to modernity. The capitalism equivalents are the hostile takeover, or bankruptcy. Given the prominence of the media companies, Pareto’s theory of circulation of the elites is also relevant.
The rapid evolution of our society is the product of a mix of technology, structured social media, and the unpredictable spontaneity of the human mind. Time itself has compressed; twenty years become one, in which traditional media infrastructure are devalued to irrelevance.
To navigate this fractured landscape, you need a social theorist. I am one; see Social Virtual Reality, a Paradigm for Social Change, a look into the far future that no longer seems so distant. In June 2023, I wrote about the CNN dilemma in Att: David Zaslav; Future of CNN. Quoting,
If there is a long-term future for CNN, it is to be found in new approaches to:
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- Immediacy, allowing some bypass of format considerations that were relevant in the broadcast era.
- Enrichment of Information flow.
- New approaches to controversy.
- Connection with viewers, which can be mediated by AI.
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I would like to play a part in fashioning a viable future for an organization with a strong moral compass.
Since that time, additional actionable concepts have manifested.
Mr. Zaslav, I am at your service.