It's put-up or shut-up time for Time Warner's (TWX) TBS and TNT.
In the midst of a rebranding effort that began about two years ago, Time Warner's Turner networks group on Wednesday teased a concert hall full of ad buyers with a slate of new shows aimed at reversing recent declines in advertising and subscribers. The new shows look good on paper, and the video clips of those serials that were played on massive screens inside New York's Theater at Madison Square Garden seemed to please the large audience.
Nothing, however, is ever assured in picking TV shows, especially these days. Not only are Netflix (NFLX) and Amazon (AMZN) producing first-rate serials, young people have long since made room for watching video at Alphabet's (GOOGL) YouTube, Facebook (FB) and Snap (SNAP) .
TBS and TNT need a breakout hit, and that responsibility falls to Kevin Reilly, chief creative officer for Turner Entertainment, who began remaking the networks two years ago when he handed comedian Samantha Bee her own program.
"We're in the process not of a refresh but a top-to-bottom rebuild," Reilly said. "In this environment, if you're not ahead of the wave, you're dead in the water."
In deciding to buy Time Warner, AT&T (T) CEO Randall Stephenson argued that the legacy telecommunications company needed content to attract wireless customers. For many shareholders, Stephenson's reasoning made sense given that cable TV as an industry is losing subscribers and wireless internet services is where the growth is.
But in electing to acquire Time Warner in a stock-and-cash deal valued at $85.4 billion, Stephenson also bought into the slippery slope of the cable TV business. And these are challenging days for companies heavy on cable networks. Most of the industry continues to be battered by subscriber losses and an ad environment made increasingly difficult by the overarching move to digital platforms.
Time Warner's Turner cable TV group, which also includes CNN, Cartoon Network and truTV, posted a 2% decline in advertising revenue last quarter even as its stations televised the hugely popular NCAA men's basketball tournament, historically a cash cow. It also marked the weakest first quarter for ad sale growth at Turner in at least seven years, according to Barclays.
If Turner couldn't show a profit with the NCAA tournament, the thinking went, what would have happened without it?
In hopes of turning things around, TBS announced new programing for the fall season: Miracle Workers, a workplace comedy set in heaven produced by Lorne Michaels, the longtime head of Saturday Night Live, and starring Daniel Radcliffe and Owen Wilson, along with Close Enough, an animated series from Regular Show creator J.G. Quintel.
Other new offerings include The Joker's Wild, a reboot of the classic game show hosted by rap-star turned all-around entertainer Snoop Dogg. Additionally, Turner showed bits of a still-untitled series from comedy trio The Dress Up Gang.
To be sure, AT&T is also purchasing Time Warner for HBO and the Warner Bros. film studio, two assets with a brighter immediate future than its cable TV properties. And while TBS and TNT remain works in progress, CNN has more than found its legs under Jeff Zucker. Though the network's ratings still trail 21st Century Fox's (FOXA) Fox News and Comcast's (CMCSA) MSNBC, profit is at an all-time high thanks to a younger viewer demographic that demands higher ad rates.
CNN announced it will air five new original series next year including Detroit 1963: Once in a Great City; Kennedys: An American Dynasty; American Heiress: The Patty Hearst Story; 1968: The Year That Changed America; and Pope.
For the moment, though, Stephenson must join the rest of the cable TV industry in hoping that somewhere among Turner's new offerings for the fall season there lies that illusive breakout hit.
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