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News Investment

News Investment

By the Project for Excellence in Journalism

With each year, the boundaries between one media platform and another become more blurred. Each of the three main cable channels or brands, accordingly, has also become a multimedia outlet interconnected with other partners, complicating the question of news investment.

Thus, we look at news investment in two parts: first, investments in the cable television channel and second, synergy that has developed between the cable operation and other platforms such as radio or the Internet.

Over all, in 2005, industry analysts expected Fox News to invest the most heavily of any cable channel, while MSNBC was to cut down expenses.

Fox News was projected to increase expenses by 16%, a follow-up to the 28% increase of 2004, and in stride with its growth in revenues.

MSNBC was estimated to reduce its expenses in 2005 by 5%, much as it had the previous year.

CNN was somewhere in between. Analysts projected it would increase expenses by 4% — something closer to the cost of living rather than a major new investment. But the projected increases for CNN and Headline News reversed the drop of 1% recorded for 2004.1

Investment in Cable TV Channels


CNN has the largest news operation among the three cable news channels.

Having shut down their business channel, CNNfn, in 2004 and with no new developments in the news distribution service, NewsSource,2 Turner executives spent 2005 focusing on two other areas: their efforts to beef up CNN’s sister channel CNN Headline News and trying to find the right strategy for CNN to take on Fox News.

In overall size and breadth of operations, CNN continued to have the largest infrastructure, with 36 bureaus worldwide, 10 of which were in the U.S. The latest bureau was added in September 2005 in New Orleans, in the aftermath of hurricane Katrina.3

Changes in programming were visible throughout the year after Jonathan Klein took over as CEO. Klein’s main agenda, he told Market Watch, was to rejuvenate CNN’s falling numbers and differentiate it from Fox News, which had built a big lead in the ratings race and made strong inroads with advertisers.4 As one television reporter put it, “the new CNN wants to be a lot more like the old CNN in hopes of enticing hard news loyalists.”5

As one part of its strategy to revive the brand, in early 2005 the network began counter-programming CNN’s prime time schedule with a more entertainment-oriented lineup on its sister channel, CNN Headline News. While revenue figures are not available for Headline News separate from CNN, audience ratings indicate that the focus on Headline News has paid off. It surpassed MSNBC in 2005 to become the third most watched cable news channel (see Cable TV Audience.)

At the main channel, many long-running programs were cancelled and there were changes in format and scheduling of some key shows.

In the afternoon and early evening, talk show staples like “Crossfire” and “Inside Politics,” once signatures of the channel, were killed. They were replaced with “The Situation Room,” a three-hour, back-to-basics news analysis program hosted by the former White House correspondent Wolf Blitzer.

During the weekend in prime time, “The Capital Gang” was also cancelled and replaced by “On the Story with Christiane Amanpour,” a program featuring its well-known but sporadically used globe-trotting correspondent, who would discuss world affairs on a weekly basis.

In the mornings, “American Morning” was retooled with Miles O’Brien joining the incumbent Soledad O’Brien, and expanded to four hours.

And in prime time, the closest CNN came to a signature evening newscast, “NewsNight with Aaron Brown,” was junked in favor of a new program with a younger host, Anderson Cooper, after he won praise for his on-scene reporting from New Orleans, during Katrina, and elsewhere.6 “We’re building our prime time strategy around two tent poles, Anderson and The Situation Room,” several publications quoted Klein as saying.7 The same media reports suggested that Klein hoped Cooper’s appeal to the advertiser-coveted demographics, people aged 25 to 54, would translate into higher ratings and more advertising dollars.

The cancellation of the older shows also led to the departure of many of CNN’s best-known faces. The host and commentator Robert Novak (“Crossfire,” “Capital Gang,” “The Novak Zone”) left CNN after a 25-year stint for Fox News, amid questions over his role in the outing of the CIA operative Valerie Plame. Along with Aaron Brown, Judy Woodruff (“Inside Politics,” “Crossfire”) stepped down from the channel in 2005.

Some new faces arrived, on air and off. In September 2005, Klein named Delia Gallagher CNN’s first full-time faith and values correspondent.8 Klein also hired the veteran broadcast news producers Victor Neufeld, formerly of ABC’s “20/20,” and David Doss from “NBC Nightly News” to work on prime-time programs anchored by Paula Zahn and Anderson Cooper.

In February 2006, the CBS correspondent John Roberts also joined CNN as a senior national correspondent, saying that his options at CBS had narrowed.9 He followed close on the heels of the onetime Fox commentator Bill Bennett, who became a contributing commentator on CNN in January 2006. Bennett was said to fill the seat vacated by Bob Novak.10

Fox News

Though the scale of its operations isn’t as large as CNN’s, Fox News’s rate of growth and spending was projected to be much higher than any other cable channel’s in 2005. Indicating a heavy investment in its star performer, Fox News’s total expenses have been rapidly increasing over the past few years. (Fox News has eleven bureaus in the U.S. and three abroad).11

The only significant programming change in 2005 was the addition of Geraldo Rivera’s syndicated daily show, “Geraldo at Large,” which began in November. But 2006 looks to be a more active year for new programming. In January, the company began broadcasting “The Journal Editorial Report,” a current-affairs program produced by the Wall Street Journal. The half-hour show, featuring the Journal’s editorial board, had appeared on PBS stations since 2004 but shifted to Fox after a series of controversies.12

Also in early 2006, there were reports that News Corp. planned to launch its own business news channel. It would be available on DirecTV, although Murdoch reportedly indicated a desire to complete an agreement with Time Warner Cable before the launch.13

Fox News seems unperturbed by the fate of other business channels or by the fact that people tend to watch business news programming during the day and in offices, where Nielsen Media does not have a ratings measurement system in place.14 This would mean that advertisers will not have a firm measuring stick for comparing the performance of business channels against other cable channels, and might balk at moving money into a new network. On the other hand, the demographic in those offices is hard-to-reach affluent, an attraction that may well outweigh measuring problems.

Indeed, analysts believe that given Fox News’s success against CNN, it can afford to risk the business news venture. As one observer put it, “When Fox unveils its own cable network at some point and begins to challenge CNBC… it [will be] sobering enough for CNBC to remember that Fox has already passed CNN in the widely followed cable news ratings.”15

News Corp.’s bigger potential move would be to launch its own broadcast national evening newscast. At the launch of his daily news show, Geraldo Rivera confirmed rumors when he told TV Week that the show was “the beginning of a process” leading to a national newscast produced by Fox News.16 The daily newscast had been, until now, the domain and signature of the other three main broadcast networks. Fox News’s interest in such a newscast — in essence competing beyond cable news — will be worth keeping an eye on.

The strategy of Fox News has been at odds with those of other cable news channels. By promoting itself as the extensive ”American” news channel Fox News capitalized on its smaller, less expensive cost structure and then made an affirmative case for this being not just a financial but a substantive advantage (see Cable TV Economics and Ownership).


The level of investment in MSNBC in 2005 was difficult to gauge. While market researchers were projecting that it would cut costs, it was not clear where those cuts would be. The new developments at the channel — NBC taking controlling interest over it — are bound to have even more of an impact in 2006.

According to Kagan estimates, the channel was projected to reduce its expenses in 2005 by 5%, while programming expenses, in particular, were expected to decline at an even higher rate of 10%.

MSNBC also made programming changes in 2005. It moved “The Situation with Tucker Carlson” from 9 p.m. to 11 p.m. , replacing it with Rita Cosby’s new program. Cosby, who moved from Fox News to MSNBC in May 2005, and is acknowledged for her interviewing skills, took over the 9 p.m. slot on weeknights with her single-subject interview show. MSNBC also began a new weekly news review with the “celebrity couple” Connie Chung and Maury Povich. Chung is a veteran news anchor with past stints at CNN, CBS, NBC and ABC, and Povich is a popular talk-show host syndicated by NBC. The real-life couple teamed up for a half-hour weekend news program that premiered in January 2006.17

NBC News’s Steve Capus seemed cautiously confident of the channel’s future. He was quoted in December 2005, just before the spilt with Microsoft, as saying that there had been some “quiet growth in prime time” and that MSNBC was making some “traction, targeting CNN and… doing very well” (though any growth may involve just the 25-54 demographic). Channel executives also said it was a mistake to look at MSNBC without seeing it as part of the NBC news organization, and in that respect, it had been operating well.18

Newsroom Expenses

As noted in the section on Economics, for 2005 Fox News was expected to markedly increase its investment in its news operations, by 16%, CNN to grow only moderately, 4%, and MSNBC to cut expenses 5%, even further than in 2004.

Expenses involve two components. Total expenses include salaries, capital expenditures on technology and machinery, and the specific costs attributed to different programs. The latter are termed programming expenses.19 Roughly the same pattern that was expected for overall expenses at the three networks was anticipated for programming costs as well.

In 2005, Fox News was expected to increase its programming expenses by 20%, a follow-up to the 24% increase of 2004. MSNBC was estimated to reduce its programming expenses in 2005 by 10%, much as it had the previous year, when they declined by 9%. A major question now is whether the shift of control of the network to NBC in December 2005 brings further changes, as some reports have suggested.20

CNN was expected to show a 4% growth in programming expenses in 2005, unlike the drop of 8% recorded for 2004. The figure could be a reflection of the investment being put into CNN Headline news (the number includes both CNN and CNN Headline News).

Cable News Programming Expenses
1997 – 2005, by Channel
Design Your Own Chart
Source: Kagan Research, “Economics of Basic Cable Networks 2006”, June 2005

CNN figures include CNN Headline News


While Kagan Research data do not distinguish between spending on personnel and spending on technology or infrastructure (studios, equipment, and so on), other reports suggest that the channels have been emphasizing synergy and cross-promotion with other platforms. has been one of the popular online news Web sites for some time (See Online Audience). In 2005, Time Warner took additional steps to link its cable and online entities. In August, in a trial run in San Diego , it broadcast 75 cable channels — including CNN, MTV and ESPN — over the Internet. Subscribers were able to download the CNN signal (along with other channels) through Real Media players. Results of the exercise have not been disclosed, but Time Warner, with help from RealNetworks, the creator of the online media players, was reported to be looking into offering digital video recording for the computer, as well as multicasting.21

CNN’s head of sales and marketing, Greg D’Alba, emphasized the channel’s adaptability to new platforms — essentially the Internet, but also video-on-demand and cell-phone TVs. He is quoted as saying “advertisers… believe in, and pay for, CNN’s ability to reach consumers in a number of ways with the same content.”22

Another milestone in the network’s move into new media was the launch of “CNN Pipeline” in December 2005. This online news channel provided both live streaming video content and access to recent video-on-demand clips and deeper video archives. It was launched as a commercial-free subscription service (costing up to $25 annually) and could be accessed through the main site.23

But Time Warner wasn’t the only media conglomerate expanding its news platforms. News Corp., hoping to extend its brand, launched a new unit in July 2005 that grouped together the Internet properties owned by its Fox Entertainment, News, and Sports businesses. The new division was named “Fox Interactive Media” and was headed by Ross Levinsohn, formerly chief of Fox’s online sports business. The division hoped to make it easier for browsers to move from one Fox-owned site to another, to personalize what they see and to get better access to video. In December 2005, Levinsohn forecast revenues for Fox Interactive for the fiscal year 2006, ending in June 2006, would be $300 million (but that was largely from non-news-related properties like and the gaming provider IGN).24

Meanwhile, Fox News has also developed a new model of synergy via radio.25 Fox News Radio offers a format combining hourly news updates with talk shows hosted by Fox personalities, including Alan Colmes and Tony Snow. In June 2005, it became the primary national news service for more than 100 of Clear Channel’s news/talk stations under a five-year deal. By mid-2005, it had reached 360 stations across the U.S. It planned to expand its newsgathering resources and have 500 affiliates by the end of 2005.26

In addition, content from the Fox News Channel and Fox News Radio, newly packaged under one brand name, was expected to become part of XM Satellite Radio’s programming in early 2006. The Fox Talk News Channel would feature most of the cable channel’s noted pundits, including Greta Van Susteren, Tony Snow, Sean Hannity, John Gibson, Alan Colmes, and Bill O’Reilly. According to one business analyst, “Fox News Channel will continue to make News Corp. shareholders smile with this XM marketing scheme. The channel’s radio exposure should lead to higher TV ratings and more lucrative advertising rates over time.”27

It’s interesting that while MSNBC lags far behind the other two as a cable channel, its presence online is just the opposite. Among all the three cable channels, MSNBC has had the most success in online synergy. The channel’s partner Web site,, has been the most popular news Web site since its inception in 1996, thanks in part to its ties to Microsoft.

In August 2005, drew the most visitors of any news Web site, receiving 26.6 million unique hits, according to Nielsen/NetRatings. “They have a much savvier Web news staff than their competitors have,” an online news consultant told the New York Times in September 2005.28 As recognition of the Web site’s success, that month the company created the post of president of to be employed directly by the joint venture company. Charles Tillinghast, who was previously general manager and publisher of the site, was named to the post.

MSNBC on the Web synthesizes elements from both NBC and MSNBC-TV. It continues to run feature stories from the NBC News staff and Newsweek magazine, and in 2004 began to showcase MSNBC cable’s talk shows and personalities as well. MSNBC has also been a way for Microsoft to publicize its own Internet services. In November 2005, it increased its efforts to woo news viewers by posting the entire “NBC Nightly News” broadcast on the site for on-demand viewing. While ads shown on the TV station weren’t transferred, MSNBC was reported to be looking into the possibility of selling ad space on both the TV broadcast and the webcast.29

In other words, beyond what it contributes to the bottom line on its own, MSNBC (the TV channel) has become useful as an effective platform for promoting its two parent companies and their products and helping amortize NBC’s news costs.


1. See also Cable Economics. Fox News was estimated to increase expenses from $316 million to $366 million; MSNBC was expected to drop them from $247 million to $235 million. CNN’s estimate for 2005 was $574 million, up from $552 million in 2004 (all figures approximate). Source: Kagan Research, “Economics of Basic Cable Networks 2006,” Kagan Research, LLC, June 2005,

2. NewsSource works on a subscription model: local TV stations around the country pay a fee to have access to the system, and they can both contribute their own video to the NewsSource system and download clips and packages from other stations for stories. NewsSource handles the technical aspects of gathering, labeling, and distributing the video over satellite feed systems; it has some 700 clients, the vast majority of them television stations (see 2004 Report for a fuller explanation).

3. Scott Leith, “CNN sets up permanent New Orleans bureau to cover Katrina recovery,” Atlanta Journal and Constitution, September 16, 2005. List of Bureaus from Turner Asia, “CNN Worldwide Corporate Profile – CNN bureaus,” May 2005.

4. Asked what it will take for ratings to climb again, Klein was quoted in a MarketWatch article as saying, “We have to first consistently deliver on one identity. Then we have to market it on the air.” Jon Freidman, “Happy Birthday CNN. Now form an identity,” Market Watch Web site, June 10, 2005 .

5. Ed Bark, “Alert the media: CNN back to hard news”, Dallas Morning News, June 25, 2005 .

6. Because of his Hurricane Katrina coverage in September 2005, Cooper became a media darling (even landing a profile in New York magazine and scoring $1 million book deal). He became a permanent part of “NewsNight” after Katrina hit, when CNN expanded the program from 10 p.m. to midnight , first co-anchoring it with the veteran CNN anchor Aaron Brown and then taking over when Brown was dropped altogether from CNN News. The show was renamed “Anderson Cooper 360.”

7. See Abbey Klaasen, “CNN‘s Aaron Brown out; Anderson Cooper moved to 10 p.m.,” Ad Age, November 3, 2005. See also Joanna Weiss, “Cooper’s celebrity is part of the story in new CNN role,” Boston Globe, November 8, 2005 , and Scott Leith, “CNN enshrines fire and ice team of Cooper, Brown,” Atlanta Journal-Constitution, September 30, 2005.

8. Anthony Crupi, “CNN Names Gallagher Faith and Values Corr,” Media Week, September 7, 2005.

9. See Anthony Crupi, “CBS White House Correspondent Roberts Joins CNN,” Media Week, February 1, 2006 , and Marisa Guthrie, “CBS’ Roberts jumps to CNN,” New York Daily news, February 2, 2006. The move also kindles speculation that CNN and CBS are inching toward a merger of their respective newsgathering resources.

10. John Eggerton, “Bill Bennett Joins CNN,” Broadcasting & Cable, January 25, 2006 .

11. E-mail response from Fox News Channel received December 22, 2005 . The international bureaus are in London, Paris and Jerusalem. The U.S bureaus are in New York, Washington, D.C., Los Angeles, Chicago, San Francisco, Seattle, Miami, Denver, Atlanta, Dallas, and Boston.

12. Joel Meyer, “Journal Editorial Report Jumps to Fox News,” Broadcasting & Cable, November 30, 2005.

13. Julia Angwin, “Fox quietly gears up its business channel to challenge CNBC,” Wall Street Journal, June 20, 2005.

14. CNBC was limping along in the ratings at 150,000 viewers, on average, in 2004, down from 317,000 in 1999. Bloomberg TV is struggling for distribution; the channel currently reaches roughly 25 million homes, or less than a third of all homes with cable; and CNNfn has been shut down.

15. “CNBC girds for Fox Business Threat,” Investors Web site, September 21, 2005 .

16. Michele Greppi, “Geraldo Prepping New Daily Show,” Television Week, October 3, 2005.

17. Povich, who runs the popular syndicated show “Maury” on NBC Universal, has signed a multiyear contract with NBC. The network is hoping, just like CNN, to use the celebrity appeal of anchors to attract viewers back to the channel.

18. Allison Romano, “Nightly News Boss Sounds Off,” Broadcasting & Cable, December 5, 2005 .

19. They include cost involved in either licensing programs or producing them in-house. According to Kagan Research, the average station or network will typically spend as much as 40% to 50% of its revenues on programming. In 2005, CNN was expected to spend 45.4% of total expenses on programming, and MSNBC 57.6%. Fox News was to invest the most among the three, at 60.4%. (Source: Kagan Research, “Economics of Basic Cable Networks 2006,” Kagan Research, LLC, June 2005)

20. Wayne Friedman, “NBC Buys Up More of MSNBC from Microsoft,” Media Post, December 27, 2005.

21. Ken Kerschbaumer, “TV on the PC gets real: Time Warner launches trial in San Diego ,” Broadcasting & Cable, August 8, 2005.

22. John M. Higgins, “D’Alba keeps fighting for CNN”, Broadcasting & Cable, October 17, 2005.

23. Scott Leith, “CNN starts live net video service,” Atlanta Journal-Constitution, December 3, 2005 . See also Ken Kerschbaumer, “CNN opens up pipeline,” Broadcasting & Cable, December 5, 2005 .

24. Georg Szalai, “Fox Interactive in Growth Spurt,” Hollywood Reporter, December 7, 2005 .

25. It has long had connections to radio, both in personality and in personnel. The TV hosts Sean Hannity, Bill O’Reilly, and Tony Snow all have their own talk-radio shows.

26. News Corp. Annual Report 2005, Released June 2005, p. 27

27. Steven Mallas, “XM’s Foxy Deal,” The Motley, October 21, 2005.

28. Alex Mindlin, “Browsing the Site, Not Watching the Show,” New York Times, September 19, 2005.

29. Gavin O’Malley, “ to post entire ‘NBC Nightly News’,” Media Post, November 1, 2005 .

30. Museum of Broadcast Communications , “U.S. POLICY: TELECOMMUNICATIONS ACT OF 1996,” Museum of Broadcast Communications Web site. Online at:

31. Definition of Multicasting compiled from KAET, Arizona State University ’s public television station Web site. See also Neil Hickey, “TV on Steroids,” Columbia Journalism Review, March/April, 2004 and Center for Digital Democracy, “Broadcast Lobby’s Indecent Posture: Asking for Big Public Hand-out,” Market Watch, April 26, 2004.