This Was the Week That Cable TV Died

As Bruce Springsteen might sing today about cable TV: 57 channels, and nothin’ is worth much .

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Cable television was born in the late 1940s but not heavily adopted in the U.S. until about 40 years later. It’s taken all of three days this week to pronounce it dead .

On Wednesday afternoon, Warner Bros. Discovery announced that it had reassessed the value of its cable networks. The outcome: the combination of the WarnerMedia channels and Discovery, Inc. networks are worth $9.1 billion less than David Zaslav & co. originally thought. That’s “billion” with the largest “B” you’ve ever seen in your life .

Not to be outdone, just 24 hours later, Paramount Global announced its Viacom cable channels had previously been overvalued (on the books) by $5.98 billion.

It was a whirlwind, and the devastation wasn’t even done yet. ( “Twisters” in theaters now! )

Exactly 15 hours after that , AMC Networks announced its own goodwill impairment charge. At just $97 million, it was much, much smaller (AMC Networks is a much, much smaller company than WBD and Paramount), but as they say, three is a trend.

What is going on here? Well, the WBD audit was triggered by its surprising ( and potentially devastating ) loss of NBA rights. Warner Bros. Sports is set to lose the NBA on TNT after next season now that the league has inked a new $76 billion deal across 11 years with Disney, NBCUniversal, and Amazon. WBD is suing the NBA in an attempt to keep its package of games, but the damage — to its books at the very least — has been done.

Paramount didn’t check its math just because Warner Bros. Discovery did. That reevaluation is a result of the pending Skydance deal . Basically, Paramount thought its cable channels were worth a lot; David Ellison offered a little. Shari Redstone took the deal, and Paramount has to revise its books.

A change in stock price was enough to trigger AMC’s adjustment. About one year after the COVID-19 pandemic first shut America down, AMC shares (AMCX on the NASDAQ) spiked above $70. In June 2024, they dropped to around the $10 mark. Time to break out the calculators.

You think that’s bad? Warner Bros. Discovery stock (WBD on the NASDAQ) fell below $7 per share. The damn company isn’t even two years old, and it’s already lost more than 70 percent of its value.

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Paramount’s struggling stock (PARA on the NASDAQ) has actually weathered this week’s bombshell. How? Layoffs, layoffs, layoffs . We wrote the word three times because the company is getting rid of a massive amount of people: roughly 2,000 in the U.S., a person with knowledge of the situation told IndieWire. This certainly is not the first round of staff reductions; in February, about 800 staffers were let go . And from December 31, 2022-December 31, 2023 , Paramount Global shed roughly 2,600 employees.

The only place Paramount seems to be expanding its workforce is at CEO : Brian Robbins, Chris McCarthy, and George Cheeks (“The Office of the CEO”) combined to replace one guy, Bob Bakish, in April. That joke won’t have a punchline soon, as the trio will likely be let go (or at least demoted) so that Ellison can (probably) install former NBCUniversal CEO Jeff Shell in the top spot of Paramount Skydance.

Together, by our math, WBD, Paramount, and AMC own like 30 cable networks. (OK, it’s rough math.) And today those are all worth much less than they were on Tuesday. That does not mean they are actually worthless.

Take Paramount. Its TV Media business, which also includes the broadcast channel CBS, has made about $14.5 billion in revenue for the first half of 2024. That’s $5 billion more than streaming, and nearly five times as much as its films’ business has generated over the same six months.

Warner Bros. Discovery’s TV networks bring in as much revenue as its streaming and studios segments combined. AMC is pretty much just cable channels plus a studio and some niche streamers. Cable makes the cash that powers the lagging streaming (and films, in a down year) businesses.

Even more impressive is cable’s profit margins. Cable provides the cash flow that directly offsets losses elsewhere. For Paramount, streaming turned a surprise $26-million profit, but film lost about twice that. The TV networks turned a profit of $1 billion.

Last quarter, WBD’s studios made about $210 million. Streaming lost $107 million. The TV networks made $2 billion — in profit — without a broadcast network. That’s great, until you remember it is the bucket that is going away at a pace that streaming simply cannot offset. Warner Bros. Discovery still carries like $40 billion in debt from its formation; today, its market cap (the total value of its shares) is just $17 billion.

Cable has already lost so much ground — and so many viewers — to streaming. Culturally, basic-cable shows have basically no relevance anymore, and now these self-devaluations are cratering the value of media companies in a tough economy. Balance sheets just became far less balanced (cash flow is unaffected by these impairment charges), and no one (but the tech companies: Netflix, Amazon, Apple) is safe.

Disney, NBCUniversal, and Fox executives got through their respective April-June 2024 quarters without a triggering event. Here’s hoping this story is not too triggering for them.