Stephen Colbert's Late Show: Canary in the Linear Coal Mine

Nearly everyone in the media industry let out an audible gasp when they found out The Late Show got axed. This isn’t a Stephen Colbert thing, or even, a Late Show thing. It’s a linear broadcast thing, and it’s a harbinger of much bigger changes afoot. People have pointed to the cost of dealing with lawsuits, political polarization, and changing audience tastes, but the real reason is structural. All of the late night shows need to think about their future now. In fact, a lot of programming on broadcast is on shaky ground if it was originally created when there was content scarcity. Linear media companies need to rethink both their content lineup and their ad sales strategy, or audiences and advertisers will abandon them for streamers. Consider The Daily Show Colbert made huge money by moving to The Late Show, but The Daily Show has had the last laugh. With just over 2.4 million people watching the 11:35 slot, The Late Show is the highest rated late night talk show, more than twice the audience of the 11pm The Daily Show on Comedy Central. But The Daily Show is a multichannel powerhouse, with a format that is better designed for sharing and bingeing. In fact, The Daily Show just hit a 10-year ratings high—with young audiences pushing it forward and racking up billions of social views. Linear broadcast has been operating in the context of scarcity for decades. The Late Show was created at a time when other channels didn’t broadcast anything at all—it was literally the only thing on TV. With streaming and social media, today’s viewer has an infinite number of on-demand content choices, and The Late Show is not the most appealing option. Linear broadcast has a difficult problem ahead: Will the “agonizing” decision to cut The Late Show mean this is going to happen a lot more—including nightly news, morning shows, and soap operas? Giving viewers and advertisers what they want Linear is finally at the tipping point we’ve been talking about, where the ad revenue and audience numbers that propped them up for so long are migrating to other channels, especially streaming. Linear sales teams are finding that the products they’re bundling and selling are becoming more Frankenstein-like every day. Consumers not only have a lot more choice, they want different content than they did in the past. Younger viewers like YouTube and movies; they like to experience a show on many channels; they want to see what people are doing in their real lives on social media, interact, and share. Designing for this generation is completely possible—many broadcasters have a good formula with premium series that rule the streaming binge world like Friends, The Office, and Breaking Bad, as well as reality shows. The older formats built for captive audiences, like talk shows and news, are harder to translate at times when people want to pick and choose what they watch. Even if broadcasters make the content shift successfully, they still have to contend with completely new economics. Advertisers want to reach audiences, and they don’t really care if broadcasters have a lot of trouble reaching streamers. It’s up to media companies to figure it out on the back end or watch their advertisers abandon them for the streamers. Consider the shift in ratings for live sports as an example. People love sports; it’s got a captive audience, so the content isn’t the issue. Yet, both the NBA and MLB saw declines in their midseason games, as local fans tuned into streaming instead of their local broadcast. Ad sellers at the local level aren’t well set up to resell FAST inventory for those games, either because of contract issues, rights, or simple workflow problems. Declines were as big as 35%—and streamers gobbled up the audience and the ad revenue. Now linear sales teams are scrambling to establish sales channels to gain access and train their teams to make multichannel deals, but the issue is going to get worse, and the clock is ticking. While the political risks and costs of litigation are real, these elements are only real for a subset of the content in jeopardy. We can’t let those issues cloud the bigger picture: Streaming is coming for audiences, and advertisers and broadcasters need a content and ad sales strategy that works for this new world.

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The Death of The Late Show Is the Canary in the Linear Coal Mine

It's finally at the tipping point we’ve been talking about

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Dave Dembowski

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