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By the Project for Excellence in Journalism

The Big Three of television news broadcasting looked overseas, to cyberspace and to new partners for growth in 2008 in the face of continuing declines in their traditional advertising-based businesses.


CBS Corp. took a significant step in its online media business with its purchase in June of CNet, the most-visited website for coverage of consumer electronics. It placed the acquisition at the center of a reorganized CBS Interactive division. CBS combined all of its existing interactive businesses, which had been part of its television unit, with all of the newly acquired CNet websites. It also created a new management structure for an expanded CBS Interactive business unit that is separate from CBS’ television properties.

The unit, CBS said, would focus on five areas: technology, entertainment, sports, news and business.1 Its holdings included 25 websites, including the comparison-shopping site, the TV fan site and CNet’s search engine, search.com2 (See the market share of the three top search engines in the Online Ownership Section).

The combined assets of CBS Interactive made CBS the eighth-largest Web property worldwide in terms of monthly unique users, according to comScore.3 The deal gives the New York-based CBS more online properties to deliver its content to a wider audience, something the company hopes will be more attractive to advertisers.4 CBS Interactive’s executive vice president and chief marketing officer, David Keane, said,  “Advertisers are looking for greater scale, and, with our native properties, we weren’t always able to deliver that.”5

The purchase and realignment also represents something of a new turn in the history of CBS’ efforts online. In March 2005, CBS had made a splash by hiring Larry Kramer, creator of CBS Marketwatch, to take over digital operations. In November 2006, CBS refocused its efforts on digital acquisitions rather than on building its own assets. Kramer stepped down to make room for investment banker Quincy Smith, who filled a newly-created role with both operating responsibility and the authority to broker mergers and acquisitions.6

Kramer, who went on to serve as a senior adviser at Polaris Venture Partners, a national venture capital firm, praised the move and Smith’s new role: “He’s the right guy to do it,” Kramer said. “The company…[CBS] really had to start visiting the M&A strategy and partnership strategy because it was clear to get the kind of growth for a company of our size, you have to go further than organic growth.”7

With its newest focus on online properties, CBS also moved away from some of its traditional media activities. It sold its share of the Sundance Channel, which it had operated with NBC Universal and Robert Redford, the actor, director and producer. Rainbow Media, the cable programming subsidiary of Cablevision, bought the company for $496 million.8

The current incarnation of CBS Corp. was formed in 2005, when then-corporate parent Viacom split into two separate companies. One is now known as Viacom and the other as CBS Corp. Control of both firms is held by billionaire Sumner Redstone. After the split, Viacom was left with a number of cable properties, most notably MTV and Comedy Central. CBS Corp. consisted of a number of radio and television holdings, including the namesake broadcast network (see the 2005 Network Ownership Section).

CBS Corp. Revenues, 2007 vs. 2008
In Millions

2007 2008 Increase/Decrease
Television 9,108.0 8,991.1 -1%

Source: SEC filings, CBS Corp., November 4, 2008

CBS Corp. Profits, 2007 vs. 2008
In Millions

2007 2008 Increase/Decrease
Television 1,760.7
Radio 657.8
Outdoor 404.9
Interactive (21.7)
Residual Costs
Operating Income Before Impairment Charges
2,022.7 23%
Impairment Charges
Adjusted Operating Income
2,277.0 -17%

Source: SEC filings, CBS Corp., November 4, 2008

CBS, with 23,970 employees worldwide, consists of four segments: television, radio, outdoor and publishing.9 The television segment includes network television (CBS and The CW, a joint venture between CBS Corporation and Time Warner’s Warner Bros. Entertainment), cable television (Showtime Networks and CBS College Sports Network), local television stations, television production and syndication (CBS Paramount Network Television and CBS Television Distribution).

Through the first nine months of 2008, the company reported $10.4 billion in revenue, up 1% from $10.3 billion in the same period a year before. The company credited higher syndication revenues, chiefly from CSI: New York, higher affiliate revenues, growth in its billboard business, and the acquisition of CNet. Offsetting the gains were lower ad sales.

Profits, however, plunged by 750% due to a $14 billion write-down of the value of its media assets. That charge, made in the third quarter, resulted in a loss for the first nine months of the year of $11.8 billion compared with a profit of $957.7 million in the same period a year earlier.

“While the advertising market is difficult, we’re capitalizing on our other growth opportunities,” Chief Executive Leslie Moonves said on a conference call with analysts.10

The company still derives the largest share of its revenue from television. In the first nine months of 2008, it reported $6.8 billion in revenue from television, or 65% of its total revenues. The company’s second-biggest source of revenue was from its outdoor advertising division (16%). Radio was No. 3 (11%).

Beginning in the third quarter of 2008, the company started reporting financial results for the separate interactive segment. Despite its potential, the division was responsible for only 2.2% or revenues, or $230 million.11

The company also announced job cuts at the end of the year, though they appeared more modest than its rival networks and concentrated mostly in entertainment programming.

General Electric (NBC Universal)

General Electric stock lost more than half its value during 2008, performing worse than the market as a whole.

This fueled speculation that GE would spin off its NBC Universal subsidiary. Analysts speculated that NBC’s assets – including cable networks, broadcast network and television stations, movie production and theme parks – might be sold to specialized buyers.

The company’s chairman, Jeffrey Immelt, explicitly rejected that idea in July and by the end of the year there were no signs he was planning such a move.

On Sept. 25, GE cut its earnings forecast for the year, blaming volatile financial markets for damaging the profitability of its loan and lease business that accounts for almost half its income. It also suspended a stock buyback but said it would continue its dividend rate.

“Given the recent dramatic developments in the financial markets, we have made some tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend,” Immelt said in a statement.12

When its third-quarter earnings were released, they showed a drop of 22% compared with the same quarter a year earlier. Much of the troubles were blamed in the credit market squeeze and its impact on GE’s credit division, GE Capital.

In October, the company announced a deal with Warren Buffett’s Berkshire Hathaway. The Omaha investment guru bought $3 billion of preferred stock in the company.

There were still no hints of a sale of NBC Universal, whose profits rose 10 percent to $645 million on revenue of nearly $5.1 billion in the third quarter. Among the strong performers was the CNBC business cable news network and MSNBC, which set audience records.13

The unit did, however, announce steep job cuts, including some at the networks, designed to reduce expenses in the face of a faltering economy.

In December, NBC Universal said it was shedding 500 employees, or 3%, of its workforce of more than 16,000 as part of a previously announced plan to cut $500 million in expenses.

“This kind of message is never easy, but it is the right step to make, and the right time to make it,” NBC Universal President-CEO Jeff Zucker said in an internal e-mail at that time. “We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.”14

NBC also made a series of smaller moves during the year. Among these were several that signaled interest in expanding its overseas presence. NBC’s strategy is to look overseas to develop television and film concepts, produce programming and enlarge license rights.15 It moved to sell of some of its local television stations.

NBC Universal purchased production companies in Britain, India and Mexico.16In Britain, NBC Universal signed an agreement to acquire Carnival Film & Television, an independent production agency. Carnival will be merged with a new NBC division dedicated to international television production.

NBC also reached an agreement with the Mexican television company Grupo Televisa to distribute programming from NBC’s Spanish-language broadcast network, Telemundo.17 Starting in April, Grupo Televisa’s channel began carrying more than 1,000 hours of Telemundo programming per year18 (see the Hispanic Media Chapter).

In addition, NBC bought a 26% share of NDTV Networks in India.19

Back in the United States, NBC joined with two private equity partners to acquire The Weather Channel. The acquisition also included, which attracts nearly 40 million unique users per month, and Weather Services International, a forecasting service with more than 5,500 clients.

NBC’s partners in the $3.5 billion deal were Bain Capital and the Blackstone Group.  Each partner owns roughly a third of the venture. 20

NBC also sought to limit the number of local television stations it owns to only those in the top 10 markets. Accordingly, it put up for sale in May stations in Miami and Hartford, Conn. 21

As of the end of the year, it had announced the sale of the Miami station, WTVJ, to a Washington Post Company unit, Post-Newsweek Stations, for $350 million, but that deal collapsed in December. No sale of the other station, WVIT in Hartford, had been reported. 22

GE Holdings

Over all, General Electric Company, with a total of 319,000 employees worldwide, is the one of the world’s largest corporations. Its products include some of the world’s best- known household appliances, aircraft engines and a wide range of other products.  It ranked  sixth among the Fortune 500 in 2008.

GE Revenues, 2007 vs. 2008

In Millions

2007 2008 Increase/Decrease
Energy infrastructure 30,698 38,571 26%
Technology infrastructure 42,801 46,316 8%
Capital finance 66,301 67,008 1%
NBC Universal 15,416 16,969 10%
Consumer & Industrial 12,663 11,737 -7%
Consolidated revenues 172,488 182,515 6%

Source: SEC Filings, February 18, 2009

GE Segment Profits, 2007 vs. 2008

In Millions

2007 2008 Increase/Decrease
Energy infrastructure 4,817 6,080 26%
Technology infrastructure 7,883 8,152 3%
Capital finance 12,243 8,632 -29%
NBC Universal 3,107 3,131 1%
Consumer & Industrial 1,034 365 -65%
Consolidated net earnings 22,208 17,410 -22%

Source: SEC Filings, February 18, 2009

GE can be broken down into five segments: energy infrastructure, technology infrastructure, capital finance, consumer and industrial products, and NBC Universal.

NBC Universal reported revenues of $17 billion in 2008, a 10% increase from $15 billion in 2007, reflecting higher revenues in cable and film, partly offset by lower revenues in broadcast television. The segment’s profit of $3.1 billion was 1% higher than a year before, as higher earnings from cable were partially offset by lower earnings from local stations. 23

In addition to the NBC network, NBC Universal includes Telemundo and the MSNBC, CNBC, Bravo, USA and the Sci-Fi cable television channels. The segment also includes a movie and television studio, relations with 230 local affiliates, theme parks and a number of online digital properties.  GE owns 80% of NBC Universal, and the 20% balance is held by Vivendi, the French media conglomerate. NBC, unlike its broadcast rivals, operates two cable news channels (MSNBC and CNBC) and shares people and costs across the platforms. NBC also shares ownership with Microsoft for one of the most-visited news websites,, which is largely produced at the Microsoft corporate campus in Washington State.

Olympics Coverage

The 2008 Summer Olympics were not the profit bonanza NBC had hoped for, but the network hopes it has laid the groundwork for future ratings boosts.

“The Olympics were profitable, not wildly profitable, but we made money on the Olympics,” Jeff Zucker told the British Royal Television Society in London on September 27.  NBC plans to build on the results, and in that vein, Zucker asserted, “Eventually it will be very significant to our bottom line.”

The company paid $1.5 billion for the U.S. broadcasting rights to the 2006 and 2008 games. In 2003 it outbid rivals ABC and Fox for the rights to the 2010 and 2012 games. The $2 billion bid included $200 million from GE to be a worldwide sponsor of the games.

When it bid on the 2006 winter and 2008 summer games, the Olympics were the core of an unusual strategy by NBC to bypass the NFL and Major League baseball broadcasts that other networks were bidding higher and higher to win. 24 However, in 2005, NBC abandoned that strategy with a $600 million-a-year deal to broadcast the NFL’s Sunday Night Football though 2012. The deal includes the rights to the 2009 and 2012 Super Bowls. 25

The network remains committed to the Olympics with a strategy that calls for packaging ad buys on its television and Internet platforms. The network created a proprietary audience-measuring system called Total Audience Measurement Index, or TAMI, that combines both online, mobile and on-air viewership.

The system was launched during the games and the network asserted that it was a success with advertisers. It said its research showed that 90% of Olympic consumption was still on television but that the Internet and other platforms grew strongly and drove people to television.

“The results have been phenomenal,” said Gary Zenkel, president of NBC Olympics. “We’re fairly certain that multiplatform distribution is fueling that interest [in network prime time] and driving everyone to share the Olympics together as they have since the beginning. They’re gathering in greater numbers than ever.” 26

NBC planned to calculate and distribute TAMI numbers for its entertainment, news and sports programming as a way of calculating – and gaining value from – changes in how people consume television (see discussion in Network Digital Trends ).

For example, NBC said the 2008 season premiere of The Office had 15.5 million impressions on television, 6.9 million streams online, 37,515 downloads of the podcast, 33,389 video-on-demand plays and 37,775 views on mobile, for total impressions of 22.5 million. 27

NBC says its research shows that viewers recall advertisements more clearly when they are run on both television and the Internet. If validated and replicated, the findings could change the way commercial time is bought. 28

Disney (ABC)

Profits at the Walt Disney Company increased by about 8% in fiscal 2008, to $8.5 billion. Gains were shown in all its divisions except studio entertainment.

The company, with more than 137,000 employees according to its most recent report, is divided into four segments: media networks, parks and resorts, studio entertainment and consumer products.

Media Networks

At roughly $16 billion (or 43% of total revenue), this segment was Disney’s most lucrative in 2008. It includes the ABC Television Network, 10 local television stations, and 46 radio stations.

Disney also owns a number of cable and satellite properties, including the various ESPN channels (in which the Hearst Corporation holds a 20 percent interest), the Disney Channel, the ABC Family Channel, Toon Disney, and SOAPnet. It is also in a joint operation to produce programming for the Lifetime and A&E channels.

Disney Revenues, FY 2007 vs. FY 2008
In Millions

2007 2008 Increase/Decrease
Media Networks 15,104 16,116 7%
Parks and Resorts 10,626 11,504 8%
Studio Entertainment 7,491 7,348 -2%
Consumer Products 2,289 2,875 26%
Total revenue 35,510 37,843 6%

Source: SEC Filings, November 4, 2008

Disney Profits, FY 2008 vs. FY 2007
In Millions

2007 2008 Increase/Decrease
Media Networks 4,275 4,755 11%
Parks and Resorts 1,710 1,897 11%
Studio Entertainment 1,195 1,086 -9%
Consumer Products 631 718 12%
Total Operating Income 7,811 8,456 8%

Source: SEC Filings, November 4, 2008

As with NBC, Disney in 2008 looked to expand overseas. The company sought a joint venture with Russian broadcaster Media-One Holdings to launch a broadcast channel in Russia in 2009, but a Russian regulatory agency blocked the deal. 29 The programming would have been broadcast on the 30 stations throughout Russia owned by Media-One, and would have featured family-oriented programming – both Disney-branded and original Russian programming. Disney would have had a 49 percent stake in the venture in exchange for a cash investment and content acquisition. 30

As for its core domestic television business, looking ahead, analysts predicted that profits would fall at ABC because of lower ad revenue and higher programming costs. About 60% of Disney’s revenues are vulnerable to economic swings because they are tied to advertising and consumer products. 31

The company, in its end-of-year filing with federal regulators, said it was already feeling the effects of the recession and warned that the impact was likely to grow: “A sustained decline in economic conditions could reduce attendance and spending at one or more of our parks and resorts, purchase of or prices for advertising on our broadcast or cable networks or owned stations, prices that cable service providers will pay for our cable programming, performance of our theatrical and home entertainment releases, and purchases of company-branded consumer products. These conditions could also impair the ability of those with whom we do business to satisfy their obligations to us.”


1. “CBS Corporation Completes Acquisition Of CNet Networks; Merges Operations Into New, Expanded CBS Interactive Business Unit,” CBS News, Press Release, June 30, 2008

2. “CBS Corporation Completes Acquisition Of CNet Networks; Merges Operations Into New, Expanded CBS Interactive Business Unit,” CBS News, Press Release, June 30, 2008

3. “CBS Corporation Completes Acquisition Of CNet Networks; Merges Operations Into New, Expanded CBS Interactive Business Unit,” CBS News, Press Release, June 30, 2008

4. “CBS Corporation Completes Acquisition Of CNet Networks; Merges Operations Into New, Expanded CBS Interactive Business Unit,” CBS News, Press Release, June 30, 2008

5. Gavin O’Malley, “CBS Pays $10 Million For Celebrity Blog,” Online Media Daily, October 12, 2007

6. Staci D. Kramer, “Quincy Smith President Of New Company-wide CBS Interactive; Larry Kramer Out As Head Of CBS Digital,”, November 5, 2006

7. Andrew Wallenstein and Paul J. Gough, “CBS gets Interactive with Smith,” Hollywood Reporter, November 6, 2006

8. Brian Stelter, “Cablevision Unit Buys Sundance Channel,” New York Times, May 8, 2008

9. CBS Corp. SEC Filing, November 4, 2008

10. Deborah Yao,  “CBS swings to $12.46B 3Q loss after hefty charge,” Associated Press online, Oct. 30, 2008

11. CBS Corp. SEC Filing, November 4, 2008

12. “GE Revises 2008 Guidance,” GE Press Release, Sept. 25, 2008, available at

13. Steve Lohr, “G.E. Projects a Calm Air To Reassure Investors,”  New York Times, Oct. 11, 2008

14.Jon Lafayette, “TV Industry Job Cuts: What’s Next?” TV Week, Dec. 7, 2008

15. Brian Stelter, “NBC to Acquire British Production Agency for International Unit,” August 20, 2008

16. Bill Carter, “Telemundo is Said to Have Struck Deal in Mexico,” New York Times, March 17, 2008; Tara Conlon, “NBC Universal Buy Carnival,” Guardian Unlimited, August 20, 2008; “NDTV networks and NBC Universal conclude strategic partnership transaction,” The Financial Express, May 26, 2008

17. Bill Carter, “Telemundo is Said to Have Struck Deal in Mexico,” New York Times, March 17, 2008

18. David Goetzl, “Cross-Platform, Cross Border: Telemundo Distributes Shows In Mexico,” Media Daily News, March 18, 2008

19. “NDTV networks and NBC Universal conclude strategic partnership transaction,” The Financial Express, May 26, 2008

20. Andrew Dolbeck, Weekly Corporate Growth Report, July 14, 2008

21. Jonathan Marino, “NBC’s Station Auction Underway,” Mergers & Acquisitions Report May 12, 2008

22. Jonathan Marino , “NBC’s Station Auction Underway,” Mergers & Acquisitions Report May 12, 2008

23. “GE Earned $18.1B in ’08,” General Electric press release, January 23, 2009

24. Richard Sandomir, “NBC’s Olympic Run Is Extended to 2012 With $2 Billion Bid,” June 7, 2003

25. John Consoli, “NBC, ESPN Snap Up NFL Packages,” AdWeek, April 19 2005

26. Jon Lafayette, “NBC Measures Cross-Platform Viewership, Cites Olympic Gains,” TV Week, August 13, 2008

27. Jon Lafayette, “NBC Unveils TAMi Audience Figures Across All Platforms,” TV Week, October 15, 2008

28. Jon Lafayette, “NBC Measures Cross-Platform Viewership, Cites Olympic Gains,” TV Week, August 13, 2008

29. Parmy Olson, “Russian Pops Disney’s Dreams,”, February 20, 2008

30. “Disney to launch TV channel in Russia,” Orlando Business Journal, Dec. 17, 2008

31. Diane Mermigas, “Media and Advertisers in Damage Control,” Seeking Alpha, October 12, 2008