What CNN’s Town Hall with Donald Trump may tell us about media’s view of future growth priorities

CNN interviewed ex-US President Donald Trump on Wednesday night created a lot of heat and debate but I think the more interesting questions lie around what it may say about many media companies’ changing views of how they perceive future growth. As usual, comments and thoughts welcome.?

1. Much of the talk around the Town Hall has centred around the apparent mistake CNN made in hosting the Town Hall with ex-President Trump. The ratings were not great - according to Nielsen, 3.1m watched the debate live, below the 3.7m who watched President Biden’s Town Hall last summer and the six previous Trump Town Halls held on Fox News - but more to the point, both the invitation and CNN’s handling of the event were widely criticised.?
2. However, that criticism misses the bigger picture of what CNN’s owner Warner Bros Discovery (WBD) in particular, but also other Media, are doing and it links to three overlapping themes, which are all based around the concept of future growth. The first is the growing realisation content has to appeal to most audiences, not just particular segments; the second is that the available growth opportunity for many companies may lie more outside big urban areas; and the third is that companies may need to listen less to those who work in media.?
3. On the first point, one of the most consistent themes WBD’s CEO David Zaslav has talked about in the past 12 months with regard to WBD and its strategy is that its content needs to appeal more to middle America. For example, part of the reason WBD gave for dropping the HBO brand from its streaming platform Max was that HBO was seen to be associated with a certain set of values associated with wealthier, more liberal / urban audiences. Some of this will Zaslav’s own experience with Discovery, which is more focused on mainstream audiences. However, it also likely reflects a realisation that focusing a message on one part of the audience limits growth.?
4. That theme was expressed in Zaslav’s defence of the decision to invite Trump to the Town Hall, where he stated “We have a divided government. Right? We need to hear both voices. All voices should be heard.” It is fair to say that there is a widespread polarisation amongst Americans when it comes to their views on the media industry. According to Gallup, Americans’ trust in media is near record lows (https://news.gallup.com/poll/403166/americans-trust-media-remains-near-record-low.aspx) with a sharp polarisation by political affiliation: 70% of Democrats trust the media according to Gallup but only 14% of Republicans and 27% of independents.?
5. There seems to be a growing realisation that such polarisation can limit the upside potential for businesses. Interestingly, both sides of the ideological divide are coming to this conclusion. Fox’s firing of Tucker Carlson, which happened almost simultaneously with CNN’s firing of Don Lemon (who is a beta noire of many on the American Right), should probably be seen in this light (https://www.dhirubhai.net/posts/ianwhittakermedia_fox-tuckercarlson-fox-activity-7056585774888013826-SYut?utm_source=share&utm_medium=member_desktop). The centre holds more ground.?
6. A second related point is that future growth opportunities for many media companies may lie outside the major urban areas. Part of Zaslav’s comments around HBO were based on a view that it did appeal to the non-coastal urban areas. Put simply, focusing on urban (and big city in particular) audiences may bring diminishing returns for many companies. The real future growth opportunity may lay in more suburban and rural areas.?
7. Media owners do not tend to break down their audiences and subscriber numbers by where they live but it is fair to say that both there is more competition within urban areas for customers and that future growth opportunities may be more limited in terms of penetration. Urban areas have almost uniformly better broadband services, connectivity etc simply because the economics work better for investment where there is a greater density of population. However, that also means that competition is more intense as urban areas are where companies focus their attention, especially as it can mean rapid growth in a relatively short amount of time.?
8. However, given that penetration of streaming in US households is now at 89% according to Kantar (https://www.kantar.com/inspiration/technology/us-streaming-market-growth-continues-despite-changes-in-the-industry), there is the need to reach into new audiences. Many of the un-penetrated households will live in areas where broadband connections are poor, which tend to be rural and semi-rural in nature and therefore content programming will have to have at least some appeal to these customers.?
9. The same trend is also seen in other markets. For example, in the UK, Sky has just signed a major new deal with the English Football League, which represents the English football clubs that sit below the top-tier Premier League. Sky is paying 50% more under the new package which starts from the 2024/5 season at a time when the football rights for the top-tier leagues in other markets are seeing declines (https://www.dhirubhai.net/posts/ianwhittakermedia_sky-efl-football-activity-7061648763513131008-Y09H?utm_source=share&utm_medium=member_desktop).?
10. One of the most likely attractions for Sky is that the EFL clubs tend to be based outside the major urban areas where Sky faces less competition and where both it is probable the majority of its subscriber base is based and where penetration of Pay-TV services (including streaming) may be lower. Put simply, Sky is taking a bet that, by paying more for the rights, it will both decrease churn amongst a large chunk of its subscriber base but also potentially make inroads into a segment of the population that gets overlooked in the media industry.?
11. That leads onto the final point, namely the growing realisation that those who work in the media industry are not necessarily representative of the general population. CNN’s CEO Chris Licht made that point very clear when he defended the Town Hall: “While we all may have been uncomfortable hearing people clapping, that was also an important part of the story. Because the people in that audience represent a large swath of America, and the mistake the media made in the past is ignoring that those people exist.”
12. This is likely to be a growing issue for the media industry, especially as political views become another point around which people make decisions when it comes to choosing products. Part probably reflects the political affiliations of many of who work in the industry which may not reflect the wider population, as I have written about it before (https://www.dhirubhai.net/posts/ianwhittakermedia_budlight-advertising-activity-7059473511211302912-sXLB?utm_source=share&utm_medium=member_desktop).?
13. However, it also reflects the fact that media people tend to have very separate media and tech habits from the rest of the population. The Thinkbox survey In the UK in 2022 showed a very large disconnect in the media consumption habits of people who worked in the media industry and the general population (https://www.thinkbox.tv/research/thinkbox-research/adnormal-behaviour/). Put simply, media people are not normal people.?
14. That has a number of implications, not least around the relevance of media and also around advertising. One of the findings from the Thinkbox study was that both media and normal people underestimated significantly the amount of time people spent watching live TV. That may mean that advertisers, and those who advise them, may be acting on assumptions that are wrong. However, it is also likely that the messaging from some advertisers at least is likely to be out of tune with consumer sentiment, as the recent Bud Light controversy has shown.?
15. In conclusion, media companies may be starting to realise that there needs to be a pivot in their strategies for keeping, and growing, audiences and customers. That is likely to be key in particularly for areas such as streaming where growth is slowing but also more generally. We may be seeing a return to the centre and a view that media needs to represent all of the population and not just segments.?

As usual, this is not investment advice.?