Wear Something Black: It's A Legacy Media Funeral

Tucker Carlson, Don Lemon, and the death of the cable news network outrage machine.

Tucker Carlson is out at Fox News. Don Lemon is out at CNN. Different networks, different reasons. Same day, same result. I could attempt to get into the weeds on motives behind these decisions, but I think that’s better left to you guys in the comments. What is the official kneejerk reaction from the Heretic Speculator?

Good! We’re one step closer to destroying the idiot box dwelling braincell poisoners. And before you blow a fuse, no, I’m not talking about Carlson or Lemon. I’m talking about these dead men walking cable news networks.

This is Bad News For Fox

If you’ve been a Fox-viewing Bud Light fan for years, it’s been a fun month, huh? Just scanning some of the comments on the various platforms one thing is for sure, Tucker’s viewers are not happy about this. That’s probably bad news for Fox FOX 0.00%↑ because Tucker Carlson wasn’t just a guy who had a cable news show on Fox. Tucker Carlson was the guy on Fox. He was a viewership juggernaut and you can check out some of the more recent figures through this Mediaite link.

But the long term implications from this are way bigger than just one or two cable news hosts. Numbers aside, this is my favorite part of the article:

Despite CNN’s ongoing ratings struggles, the network does currently boast the youngest audience in cable news with an average at 67, Fox’s viewers average 69, and MSNBC’s average 70.

The youngest cable news audience is 67? That is, frankly, hilarious for a medium that primarily tries to sell advertisers an adult between the ages of 25 and 54 years of age. But it’s unfortunately not surprising whatsoever. I’m 36. I’m not aware of a single family member, friend or acquaintance within 10 years of my age who would go out of their way to watch any of these networks on purpose. We all cut the cord 5-10 years ago. I’ve seen clips of Tucker Carlson and Don Lemon on Twitter. That’s how I know who they are.

And this is the fundamental problem for Fox and just about every traditional cable or broadcast network company; it’s not necessarily the business model that no longer works as much as it is the distribution model that no longer works. Fox News generates money from a mix of advertising and subscribers. That happens to be exactly what many popular streaming services are now doing.

The difference is the cable networks rely on a distribution method that pools subscriptions together with a scheduled consumption approach. That just doesn’t work when subscribers decide they would rather stream on-demand and a la carte. The broadcast networks know this too. It’s why just about every legacy media company has launched and/or purchased a streaming platform in the last 3 to 5 years:

• Disney DIS 0.00%↑ owns ABC. And ABC has a streaming app on Roku ROKU 0.00%↑ where one can watch network programming outside of Disney's Hulu ecosystem.

• Comcast CMCSA 0.00%↑ owns NBC. They’re streaming original NBC content through Peacock.

• In addition to Paramount+, Paramount Global PARA 0.00%↑ has numerous CBS-branded streaming apps and also owns PlutoTV.

• Fox has several Fox-branded direct to consumer streaming apps through connected TVs and also owns Tubi.

The problem for each of these parent companies is they’ve become so large doing things the old way that the new way probably cannibalizes too much of the existing revenue without generating an incremental return. We’re not talking about streaming for growth at this point. It’s streaming just to survive. And every single one of these networks, cable or broadcast, is reliant on carriage fees either directly or indirectly through local station group affiliation agreements.

Consider the conundrum ESPN is now in. There are 72 million people in America paying for that channel but there is nowhere close to 72 million people watching it. There is a reason Disney is trying to sell it. This ends very badly for ESPN. And this is the exact same problem facing cable news. There are just as many people paying for Fox News, but there are far less actually watching it. Tucker Carlson had anywhere between 3 and 4 million viewers - and he was the leader.

Tucker Wins

With Tucker Carlson leaving Fox, who is the real winner here? For the reasons stated above, it’s not Fox. And it’s difficult to imagine any of the other cable networks benefitting either. Tucker leaving cable doesn’t generate more cable subscriptions. People watched Tucker because they like Tucker. Given the loyal following Tucker Carlson has amassed, the biggest winner is Tucker Carlson. He has 6 million followers on Twitter. He had anywhere between 3 and 4 million viewers on Fox. Salary? Yahoo reports that to be $8 million annually up until today.

He will get that back going independent easily. Where will he go? Wherever he wants.

• He could go to Rumble RUM 0.00%↑

• He could build his own empire through Substack

• Even Spotify SPOT 0.00%↑ could be in play

He just has to get the distribution method right and he will likely come out ahead. If even 5% of Carlson’s Fox viewers follow him to a platform like Rumble and pay him $5 a month, he’s at $9-12 million annually. And on top of an earnings boost, he’d have complete editorial control. It’s a no-brainer and I suspect Carlson knows it.

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Dress For a Funeral

This post isn’t even really about Tucker Carlson. It’s about the old guard and the predicament many of these legacy media companies are in. It’s not just because of revenue streams, distribution models, or “human capital” flight to other businesses. It’s also because so many of these businesses are carrying such an immense amount of debt. Debt that is going to be far more difficult to manage in an environment where refinancing borrow costs stay high and revenue declines.

And revenue will decline because the strategy these companies have largely gone with over the last decade is one that punishes loyalty. Subscriber decline? No problem. Just charge the remaining subscribers more to make up the difference. It works until it doesn’t. I have no idea why Tucker Carlson left Fox. Maybe it’s because he wanted more money. Maybe it’s because he was a dick to former coworkers. Maybe it’s because he invited guests on his show who said some real sh!t from time to time. I don’t really know and I don’t really care.

Tucker will be fine. I’m less convinced about Don Lemon. The networks though? They’re toast and deservedly so. And it’s not just Fox News. It’s all of them. Fox News, MSNBC, CNN, even the major broadcast networks - all just different flavors from the same soda fountain. They might taste good in the moment but they’re terrible for your long term health if you can’t moderate your consumption.

The networks gave up on doing actual news years ago and instead chose to be political caricatures catered to one philosophical viewpoint. Modern society is dumber because of these outrage machine echo chambers. The networks have to reap what they’ve sown; now it’s time for them to die.

Disclaimer: I’m not an investment advisor. I’m long ROKU and RUM.