|By the Project for Excellence in Journalism
The three cable news channels are all owned by media conglomerates, and all have corporate siblings heavily involved in other media sectors, from broadcast networks and local TV stations (all three), to newspapers (News Corp.), to magazines (Time Warner) and movie studios (all three). Yet each plays a very different role inside its corporate structure.
Time Warner Company & CNN
The Time Warner Company is CNN’s umbrella corporation.1 It classifies its business operations into five reportable segments: AOL, Cable, Filmed Entertainment, Publishing, and Networks. Within the networks, there are three main groups — the Warner Bros. television network (WB), Home Box Office (HBO), and Turner Broadcasting System Inc. (Turner Networks). The CNN brand is in the last group, Turner Networks. CNN has a number of siblings or subsidiaries that profit from the CNN brand built by the news channel.2
Over the years, some critics have argued that the brand identity is losing value, and commented on what one described as “CNN’s endless struggle to come up with a single, durable style of presenting the news.”3 In 2005, recognizing that significant changes were necessary to retain viewers and win over new ones in the face of stiff competition, CNN seemed to be trying to re-establish the brand. The year saw changes in management, programming and on-air talent.
In management, Jim Walton, head of the CNN news group since 2003, brought in Jonathan Klein, a former CBS executive and then head of the Internet news venture FeedRoom Inc., to take over as CEO of CNN in December 2004. Among his changes, Klein introduced new shows, focused on on-air talent and made changes to programming (see Cable TV News Investment). It is too soon to evaluate how much headway has been made, but many critics saw Klein’s actions in 2005 as confusing and were not very optimistic about 2006. As one critic put it, “CNN keeps changing people, programs and news executives these days in moves that confuse its audience and aren’t making much headway in helping the network catch up with the Fox News Channel.”4
News Corp. & the Fox News Channel
News Corp. calls itself a diversified entertainment company, and reports its operations under eight major businesses — Filmed Entertainment, Television, Cable Network Programming, Direct Broadcast Satellite Television, Magazines & Inserts, Newspapers, Book Publishing, and Other Services. It has a strong presence in the U.S. local television market (Fox Broadcasting and 35 local stations), broadcast satellite television (DirecTV), and cable programming (Fox News channel, Fox Cable networks).
Within the cable network division of News Corp., Fox News plays a much larger role than either CNN or MSNBC are playing in their parent groups. Not only has it become the most watched cable news channel in the U.S., it is also the most successful of News Corp.’s American cable channels, which include FX, Fox regional sports networks, and the Fox Movie channel.
The year also saw News Corp. undergo its own internal political drama. Rupert Murdoch’s eldest son, Lachlan , quit his executive posts in late July 2005. Published reports indicated that clashes between father and son, over Rupert Murdoch’s hands-on involvement and Lachlan ’s role in the company, contributed to the resignation.5 But the business’s immediate finances were not depressed by the departure. In August 2005, the company reported that revenues had risen 12 percent and net income 67 percent for the quarter at the Fox movie and cable network divisions. Net income was reported to be 22 cents a share, compared to 15 cents a share in the previous year, and well ahead of analysts’ expectations.6
Roger E. Ailes, chairman of Fox News Channel since its inception, was given the additional title of chairman of Fox Television Stations. His deputy at Fox News, Jack Abernathy, had been made CEO a year earlier, in 2004. Those changes at the management level reflected the growing influence that Ailes, commonly acknowledged to be the reason for Fox News channel’s successes, has in News Corp. He now reports directly to Peter Chernin, CEO and president of Fox Television. Indeed, according to a New York Times article in August 2005, his influence in the organization almost parallels Chernin’s.7
In October 2005, Sharri Berg, considered a close Ailes loyalist, was promoted to a newly created job of senior vice president of news operations for Fox television stations. She also kept her job as vice president of news operations at Fox News. In her dual role, she is expected to ensure collaboration and operational synergy between the cable news channel, the local news stations, and the larger Twentieth Century Television.
The management changes also emphasize the focus News Corp. has on its U.S. news business, where it hopes to emulate the success of the cable channel in the local television market. As Media Week magazine put it, “ Just as Fox shook up cable news, Fox’s TV stations group is looking to reinvent local television” (see Local TV Ownership).8 Ailes’s appointment and those of his team indicate that News Corp. considers Fox News a centerpiece and hopes to leverage its resources and strengths for its local programming strategy.
Unlike its competitors, Fox News does not have an international service.9 It offers only its domestic channel, which is distributed in some form in 71 countries. Its news distribution service is called Fox NewsEdge.10 In 2005, the executives at Fox News got more aggressive about distribution in other countries, branding theirs as the only “American” news network with worldwide distribution. That was in contrast to CNN International, which bases a significant portion of its foreign news operations in the regions where they are aired.
According to News Corp.’s annual report, released in June 2005, it had had some success in its global effort. Fox News, the report indicated, had secured new international distribution deals with cable systems in Germany, Iceland, Colombia, El Salvador, Japan, Mongolia, and Singapore. The Canadian government had also approved the distribution of Fox News.
NBC and Microsoft caught the industry by surprise when, at the end of December 2005, they quietly announced that NBC was in fact taking over a controlling interest in MNSBC. Microsoft divested itself of its stake in the cable network, but continued to keep its interest in the news Web site.11
The Microsoft-NBC deal was a 99-year arrangement that began in 1996. Since the network’s launch, both companies had been equal financial partners in the venture. Now, NBC will have 82% stake, with the option to acquire the remaining stake after two years.
The spilt had been anticipated for some time and spotlights both the strained partnership between the two companies and the dismal performance of the cable channel against its competition. Media reports have contemplated that NBC might take the opportunity now to change the network, possibly giving it a new name (removing the ‘MS’ that stands for Microsoft). Steve Capus, President of NBC News, announced in a statement that he hoped to “fully integrate MSNBC into the NBC News family.”12
MSNBC is distinct from the other two cable news channels in that it develops programming simultaneously for both television (MSNBC-TV) and the Internet (MSNBC.com). Having premiered the same year as Fox News, 1996, MSNBC began with a bang — 22 million subscribers, the biggest subscriber base ever for a new cable service. In the years since, however, it has not made much headway.13
MSNBC uses the newsgathering resources of NBC News and its huge network of affiliate stations, which have the option of providing their own local news and information inserts. In terms of management, NBC News maintains editorial control over the content of both MSNBC-TV and MSNBC.com. It manages the TV channel on its own, while the Web site is jointly managed by both Microsoft and NBC.
NBC itself is a subsidiary of General Electric, which acquired it in 1985. The step was viewed as a way for GE to diversify, and a safety valve of sorts during times when the company’s typical industrially oriented operations struggled. In 2003, GE and Vivendi Universal signed a deal to create NBC Universal. That division owns the NBC Network, the Universal movie studios and the cable channels MSNBC, CNBC , USA , Sci-Fi, and Bravo. In 2005, NBC Universal accounted for about 9% of GE’s sales and 13 percent of its profits. But its performance has suffered in recent years, and profits for 2005 were expected to be flat — though unlikely to hamper GE’s overall results significantly.
CNBC, the niche business news channel run by NBC Universal, was launched in 1989. CNBC and its international versions cover business headlines and financial markets. In the U.S. CNBC provides business news programming from 4 a.m. to 8 p.m. (ET), with the evening and early morning hours (when the markets are closed) populated with talk shows (such as “ Squawk Box” and the Chris Matthews show), investigative reports, infomercials and other programs.
CNBC has operated international versions of its channel since 1995, when CNBC Asia launched. CNBC Europe followed in 1996. Altogether, CNBC reaches about 230 million households in more than 100 countries. (The Dow Jones Company sold its 50% stake in CNBC Europe and CNBC Asia to NBC in January 2006.)14
At the parent division, NBC and MSNBC have had internal turmoil as well. Neal Shapiro, president of NBC News, resigned in September 2005 and was replaced by Steve Capus that November. Rick Kaplan, a former ABC and CNN executive, had been in charge of MSNBC since early 2004. Kaplan named Bill Wolff, who was largely responsible for the Tucker Carlson Show, vice president for prime time programming in September 2005 as well.
MSNBC launched an intensive marketing campaign in December 2005. It was one of its most expensive (reported to cost just under $1 million) and concentrated campaigns based solely on the Internet. The channel bought up all the advertising slots on one day at three major Internet news sites — Newsweek, Washington Post and Slate — in addition to buying up keywords on Google and space on more than 800 blogs.15
From a financial standpoint, MSNBC is a useful outlet for NBC expenses, especially given the range of its news operations. For example, during the national political conventions and coverage of the Athens Olympics in 2004, MSNBC served as an extra channel for coverage. Thus, NBC News makes the most of its resources by producing material for not only NBC network news and MSNBC simultaneously, but also for its owned-and-operated NBC and Telemundo stations as well.
In an interview in November 2005, Steve Capus noted that while management was happy about the gains MSNBC made in 2005 it was “not satisfied,” and that there remained “some questions about the overall definition of the channel.”16
The BBC Factor
In 2004, there was much speculation that BBC, the other English-speaking news operation that already operates a cable network in the U.S., wanted to start an American cable news channel. BBC America, its foray into the overall American cable market, whose programming includes half-hour BBC World news programs, doubled its viewership in the first seven years it was on the air,1998 to 2004. It was that reception that led to the expectation of a wholehearted BBC move into the U.S. cable news market.17
In 2005, BBC World secured a three-hour block on BBC America, replacing the half-hour reports. As Jeff Hazell, BBC World’s director of distribution and business development put it, “The U.S. is a major focus for us, and this new agreement with BBC America demonstrates BBC World News’s commitment to… audiences in the U.S. We also hope this… will help us further increase the U.S. audience’s demand for the BBC World News channel 24/7.”18
BBC would have many advantages as a new American channel. First, none of the others could compete with it in sheer newsgathering muscle. It has 41 bureaus outside the British Isles (including six in the U.S. ), while CNN has 26 non-U.S. bureaus; Fox News and MSNBC have fewer than 10 apiece.19 In addition, its news style is not built on show hosts and anchors but rather on content — which would potentially distinguish it for American viewers. It uses a wheel of half-hour newscasts with traditional reported packages interwoven with half-hour feature programming rather than a continuously updated live news format. In other words, BBC could position itself as a high-end-demographic cable alternative (adding even more pressure on CNN, which has tried hard to convince advertisers that it is the elite cable news brand of choice).20
The main obstacle in BBC’s way remains getting clearances in the face of fierce competition for spots on cable system lineups, particularly from Time Warner Cable (CNN’s corporate sibling) and DirecTV (Fox News’ sibling). The process could prove daunting even despite its existing partnership with Discovery Networks. Discovery, which arranges distribution of BBC America in the U.S. , is in turn partially owned by Cox, the fourth-largest American cable provider.21
1. Time Warner was created in 1990 by the merger of Time Inc. and Warner Communications. That company acquired Ted Turner’s Turner Broadcasting System in 1996. It merged with AOL in 2000, making it one of the world’s biggest media conglomerates.
2. These include, apart from CNN US, CNN Headline News, CNN International, CNN en Espanol, CNN Radio, CNN en Espanol Radio, CNN NewsSource, CNN.com, CNN Money.com, CNN Studentnews.com, CNN Airport Network, CNN to go, and CNN Mobile. (Time Warner Annual Report, 2004)
5. See Jacques Steinberg, “News Corp. starts to fill shoes of departed Murdoch,” New York Times, August 16, 2005. See also Aline Van Duyn, “Ailes takes chair at Fox TV, News Corp.,” Financial Times, August 16, 2005
6. Agence France Presse, “Murdoch’s NewsCorp sees earnings jump,” August 10, 2005.
7. Jacques Steinberg, “News Corp. starts to fill shoes of departed Murdoch,” New York Times, August 16, 2005.
8. Katy Bachman, “Fox TV stations buff up local news,” Media Week Web site, October 10, 2005.
9. Although the parent company, News Corp., has a substantial international presence, including Sky News in Great Britain and STAR News in South Asia.
10. Paul Gough, TV News Section, Hollywood Reporter, June 22, 2005 .
11. Allison Romano, “NBC U Takes Control of MSNBC,” Broadcasting & Cable, December 23, 2005 . See also Wayne Friedman, “NBC Buys up More of MSNBC from Microsoft,” Media Post Magazine, December 27, 2005 .
12. “NBC Quietly Marks End of an Era,” Broadcasting & Cable, January 1, 2005 .
13. MSNBC Profile on the NBC Universal Web site (Company Overview, Television Networks).
14. Paul R. La Monica, “Should GE cancel NBC Universal?” Media Biz on CNN Money, January 19, 2006. See also GE Profile on the Columbia Journalism Review’s “Who Owns What” Web site , and NBC Universal and CNBC Company Profiles on the Yahoo Finance website.
15. Stuart Elliot, “To promote a cable network, a plan to inundate the Internet,” New York Times, December 12, 2005.
16. Stephen Battaglio, “New boss in town,” TV Guide, November 30, 2005.
17. Don Melvin, “More Americans turn to BBC for news,” Cox News Service, August 26, 2004.
18. Sam Matthews, “BBC hints at launch of 24-hour US news station,” Brand Republic , October 11, 2005 .
19. Adrian Van Klaveren, “Newsgathering,” BBC News, November 4, 2004.
20. Sam Matthews, “BBC hints at launch of 24-hour US news station,” Brand Republic, October 11, 2005.
21. BBC is in year three of its ten-year contract with Discovery Networks. With Cox’s backing, it might be easier for a BBC news channel to get distribution because Time Warner and News Corp. both have an interest in making sure their channels get distribution to Cox cable households.