On Wednesday, Newsmax announced that it would be shutting down its free stream and replacing it with a paid service called Newsmax+. In its post announcing the move, Newsmax said its contract with cable TV companies forced them to make this change. The cable providers are unhappy that it’s offering a free stream when they have to pay to carry the channel. As a result, it had to end its free stream.
This comes as Newsmax went dark on DIRECTV in January, with its free stream being one of the reasons that the satellite TV provider said drove it to drop the network.
The forced move to a paid streaming service is a warning message for many network executives thinking of taking the cable TV network free streaming online. Newsmax attracted a decent following for a small cable network with 242,000 prime-time viewers in the fourth quarter of 2020. Yet even with many of them watching for free online, the amount of money earned by free streaming vs cable TV payments meant it was more profitable to get fewer viewers and keep their cable TV contract.
For all the potential for small cable networks to reach a much larger audience, the profit of a small cable network supported by many viewers who don’t watch it is still higher than a free ad-supported service. A cable network getting just 10 cents a month from the roughly 50 million cable TV customers who still pay for a traditional cable TV service can pay a cable network $5 million every month. That is something many small networks would struggle to replace with streaming.
With roughly 50 million American households still paying for cable TV out of the more than 131.2 million American households in the United States as of 2022, you can see why networks are slow to ditch cable altogether.
Major players like Fox, likewise still value the revenue it gets from the traditional linear TV model.
“From a Fox perspective, the pay-TV distribution remains the largest and most important revenue stream,” Fox CEO Lachlan Murdoch said on the company’s third-quarter conference call on Thursday. “It will remain the largest for years to come.”
This has not stopped cable networks from offering free stream. Services like Pluto TV, Tubi, The Roku Channel, and more are full of network content but not the same feed as you will find on cable TV. Newsmax also announced that it will still have a free stream with Newsmax2, but it will be a different feed of delayed programing.
For now, the money from cable TV is just too lucrative for even small cable networks to give up in exchange for a 100% ad-supported model.