This story first appeared in the May 6 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
Will the television industry be a potential beneficiary of a coming upheaval in the digital media world? On April 12, observers were stunned by a Financial Times report that digital darling BuzzFeed missed its 2015 revenue targets of $250 million by at least $80 million. The privately held company vigorously denied the story, but it came just days after another hot digital outlet, Mashable, slashed jobs, which followed similar cuts at The Huffington Post and International Business Times.
The issue: Audience growth rates are slowing and advertising rates are dropping despite the fact people are spending more time consuming online content. “It may be hard for a lot of these brands to collect enough eyeballs to be the big, profitable businesses that they hope to be,” explains UC Berkeley journalism professor Alan Mutter. As a result, many editorially driven companies are shifting their attention to video. Media analyst Ken Doctor calls the trend a “significant recalibration” as high-flying digital startups chase the higher ad rates that go hand in hand with viral video clips and premium series.
Web boosters predict online ads eventually will cannibalize TV budgets, but that industry-altering moment has yet to occur. And TV upfront ad spending, which kicks off May 16 with NBCUniversal’s annual sales pitch, actually is expected to see an uptick this year after three straight years of declines. No wonder, then, that Vice has launched cable channel Viceland, Mashable is using a Turner investment to reorient toward TV content, Vox Media has launched a Hollywood-based division to bring its brands to linear platforms, and even BuzzFeed is leveraging its new ties with NBCUniversal. Notes BTIG media analyst Rich Greenfield, “There is still a lot of money in TV.