This is the top story from our daily newsletter published on October 2, 2020. To have this and more delivered directly to your inbox scroll down and enter your email or click here to sign up. Photo Credit: Tucker Carlson, Credit: Gage Skidmore. Rachel Maddow, CC 3.0
Chaos Equals Cash: If you’ve been a subscriber to this newsletter for a while you know that we take issue with the media industry’s overall business model. If it bleeds it leads. If it leads it gets looks. Looks generate likes and reactions. Reactions generate revenue and sales. Sales keep shareholders smiling. That’s why it’s in the media’s best interest to use hyperbolic language, pictures, and videos to scare the living daylights out of the American public. Knowing that, we wanted to highlight how major networks stand to make a killing this election season by stoking division, fear, and chaos. Because at the end of the day, chaos equals cash. Here’s how.
Election Stress Disorder: “The intense election season and today’s divided political climate may have many Americans feeling particularly anxious,” Elizabeth Elkind writes for CBS. One therapist has a name for what they’re feeling — “election stress disorder.” Dr. Steven Stosny, a therapist who authored several books on improving relationships, coined the term “election stress disorder” in 2016. He wrote in the Washington Post that he had been “overwhelmed with distress calls during the recent election cycle,” which, amplified by the 24-hour news cycle, he said was creating stress that intruded on patients’ personal relationships. Even if Americans know the nightly news is stressing them out, there’s one problem: we’re addicted.
Addiction: TV networks like NBC (owned by Comcast, stock ticker:CMCSA), ViacomCBS (stock ticker: VIAC), and ABC (owned by Disney, stock ticker: DIS), have reported that news viewership is surging. This is likely due to a number of factors. There is less live sports coverage on TV, people have more time at home to fill, and many are hungry for information about news related to the pandemic, the economy, social unrest, and the upcoming presidential election. Because viewer interest in politics has spiked, ad revenue for news networks has also climbed. CNN’s (owned by AT&T, stock ticker: T) ad revenue between June and August this year spiked by 68% compared to the same period last summer. Similarly, Fox News’ (stock ticker: FOX) ad revenue jumped by 46% this summer compared to last summer. Earlier this week, an estimated 73.1 million viewers watched the first debate between President Trump and Former Vice President Joe Biden on network TV. NBC, ABC, Fox News, and many other networks sold out their ad offerings for the event. (PS: CNN originally said that figure was 65 million, which is what we quoted in the newsletter yesterday. Thanks, CNN.)
Putting a Price on Fear: Some networks have already sold out or are close to selling out their advertising space for the October 7 vice-presidential debate, the next two presidential debates on October 15 and October 22, and election night on November 3. Networks and advertisers know that audiences will be glued to coverage of these upcoming events, and ad prices reflect this. ABC reportedly charged $375,000 for a 30-second ad spot during the debates.
News Won’t Loose: Though many are working to ensure that the presidential election runs smoothly, television networks are making plans for how they will deal with an election that is not decided on the night of November 3. Some networks are offering sponsors the option to continue their ad campaigns during the week following November 3, if election results take time to be reported. Nearly every industry will be affected by how the upcoming election unfolds, but news networks and their advertising business will be very directly and immediately impacted.
Flag This: What that said, we’re going to run an experiment. Over the final quarter of the year, we’re going to track the stock tickers listed above to see how these companies perform. This is not intended to serve as a recommendation to buy, sell, or hold any security (read the full disclaimer below). It’s simply to have a little bit of fun. Obviously, these companies are conglomerates that oversee many divisions from entertainment parks to cruise ships, but let’s give it a shot. Zooming out, we hope this deep dive offers some perspective around what these outlets are trying to do, which is keep us glued to the TV. Whether you’re a Trump-loving, Fox News fanatic or Biden-supporting, CNN superfan just be cognizant of what’s going on behind the scenes. By the way, if you want more business and finance news, be sure to sign up for our weekend newsletter, The Street Sheet.