The TV landscape is starting to change, and yes I’m referring to Cable TV and not YouTube and Netflix (those two companies love to change, it’s almost like they’re dancing). That being the case, the conventional network TV providers are now transitioning to an environment of reduced ad loads. This makes a lot of sense given the competitive dynamics of SVOD providers who display zero ads, and price more aggressively. At this point, we can all acknowledge that the excessive advertising of cable providers was getting ridiculous as they milked the dying cow a little too long. Instead of competing with Internet TV, they doubled down on their existing strategy (advertise more and sell subscriptions at higher prices). However, things have changed. Nowadays ESPN has to pay excessive amounts of money just to retain the last remaining trophy property – sports broadcasting. Eyeballs are fewer to come around, and if engagement metrics worsen they might as well stop advertising and transition to product placements and sponsorships within the content, so people don’t have to sit past 10 minutes worth of 30-second ad reels. In the end, preserving the subscription business model is far more important than the incremental monetization potential of ads. Wedbush uncovered some additional findings at CES 2016 when pertaining to media:Reducing ad loads at TV networks – enough to make a difference in audience and subscriber metrics - will create near-term ad growth headwinds. Ad load reductions may create greater headwind for pay TV than broadcast TV networks. For example, TNT announced Thursday that it would air three new drama series in 2016 with ad loads reduced by ~50%. This isn’t all that surprising as I believe Turner Network Television is signaling to the rest of us the likely direction of linear programming. While network programming won’t completely disappear, industry consolidation and heightened efforts to curate and produce content will sustain the business moats of some TV networks. Nonetheless price competition and heightened competition for the most valuable live broadcasts (NFL, NBA, NHL and MLB) will put pressure on these names. I feel like the weakness in Disney’s stock price will continue to carry over into other properties like CBS and 21st Century Fox. Furthermore, the entire group is trading in sympathy because they're exposed to industry-specific headwinds and tailwinds. Also, CBS had made some important comments, according to Wedbush analyst James Dix:CBS expects that by 2020, 50% of its prime time audience will be non-linear. While 11 years ago, the CBS prime time audience was virtually all live, last season 39% of its prime time audience was non-linear. CBS assumes that the pace of the shift to non-linear viewing will slow because CBS does not see any new disruptive technology on the horizon as a further catalyst. While I’m not going to agree with CBS on their forecast for market shift to non-linear, I do think linear broadcasts have the advantage of content curation. Furthermore, I do believe that the model can still sustain itself somewhat, but scale is still a differentiating factor for internet only television like YouTube and Netflix. I believe the network providers are heavily dependent on a specific brand of content, which are sporting events and the high budget dramas. However, Internet media is both broadly diversified and heavily specialized. User perceptions of online content is shifting to the specialized niches that are continuing to emerge. Furthermore, the quality has caught up quite drastically over the years. However, this doesn't mean CBS isn't responding as they're also moving to SVOD, which implies that the market will revolve around packaged content applications, so perhaps it's the MVPDs who are in a little more trouble, because they're reliant on their current distribution model. So, I'm a little more upbeat on the networks, but very cautious towards the programming distributors (Time Warner Cable, Comcast, Century Link, DirecTV\/AT&T). Overall, I think investors can look for opportunities within conventional media. But, to say these companies will become robust growth stories is a bit of a stretch. Nevertheless, I’ll be posting up additional analysis on these companies in the near future.