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Commentary: Let the bidding begin for CNN! Who can turn around the Can Not Network?
CBS Marketwatch ^ | February 21, 2003 | Jon Friedman

Posted on 03/07/2003 5:06:18 PM PST by Dont Mention the War

Let the bidding begin for CNN!
Commentary: Who can turn around the Can Not Network?

By Jon Friedman, CBS.MarketWatch.com
Last Update: 12:03 AM ET Feb. 21, 2003

NEW YORK (CBS.MW) - CNN has got to be the only television network that creates more news than it breaks.

On Feb. 18, Jamie Kellner, the top executive of Turner Broadcasting, of which CNN is a part, resigned, paving the way for former CNN leader Phil Kent to return to power.

On Feb. 13, CNN and ABC News broke off their much-discussed merger negotiations.

On Feb. 1, news anchor Aaron Brown sparked a firestorm when he didn't rush to go on the air to lead CNN's coverage of the NASA disaster even though his counterparts at CBS, NBC and ABC raced to represent their networks.

On Jan. 29, CNN founder Ted Turner resigned as vice chairman of network parent AOL Time Warner, promptly fueling speculation that he might try to buy back CNN.

On Jan. 13, CNN head Walter Isaacson stepped down, in the wake of Fox News (FOX: news, chart, profile) passing CNN in the television ratings.

CNN's splashiest headline may yet occur: the sale of the cable news network.

During a conference call marking Kellner's departure, Jeffrey Bewkes, the chairman of AOL's entertainment group, said CNN wasn't for sale. At the same time, Bewkes opened the door a crack by adding that any property might be for sale at the right price.

In the foreign language known as media-speak, Bewkes's statement is akin to an auctioneer slamming down a gavel and shouting, "Let the bidding begin!"

Viacom's acquisition strategy

CNN certainly seems ripe for a change in ownership. It doesn't fit into AOL's strategy, which is built around subscription revenues. The roster of prospective suitors for CNN keeps growing and could eventually range from Turner himself to such large rivals as Viacom (VIAB: news, chart, profile).

The plot thickened this week.

On Feb. 19, Viacom president Mel Karmazin told Electronic Media, a trade publication, that CNN represented "an asset we would be interested in if it were available."

Translation: "Hey, Jeff Bewkes! How much do you want for CNN?"

Viacom spokesman Carl Folta said Viacom isn't currently negotiating to buy CNN.

CNN, which also operates the Headline News program, would fit in with Viacom's collection of TV brand assets. A cornerstone of Viacom's acquisition strategy has been to buy prominent cable TV operations.

Cable brands are coveted because their customers are, by definition, upscale (since they can afford to pay premium prices for cable TV hook-ups).

Further, the cable properties' niche programming attracts choice viewer demographics. Remember, Viacom happily scooped up BET, which is highly popular primarily among affluent African-American consumers.

Likewise, Viacom has quietly tried for years to add a Hispanic network to its stable. Viacom's assets also include Nickelodeon (which appeals to children and their parents), MTV (young adults), VH-1 (the Baby Boom generation) and so on.

Finally, CNN would represent a way for a media company to circumvent the Federal Communication Commission's nettlesome media ownership regulations, which the industry regards as being antiquated.

[Editor's note: Viacom is a significant investor in MarketWatch.com, the publisher of this report].

But Viacom may be a long shot to buy CNN. After all, if CNN and ABC News couldn't agree on terms to combine their news operations, pairing it with Viacom's CBS News isn't likely to be any easier.

CNN's changes

AOL (AOL: news, chart, profile) insists that the personnel changes at CNN are part of an orderly process to repair the network, which has stumbled since America Online acquired CNN's former parent, Time Warner in January 2001. [By the way, AOL Chairman Steve Case resigned his position last month, too].

The America Online faction introduced ill-conceived entertainment flourishes in CNN's heretofore hard-news coverage. The plan didn't work because the sudden shifts from hard news to personality-oriented stories confused and, ultimately, turned off its audience.

While parent AOL desperately seeks order and calm after a year of turmoil of its own, CNN is constantly embroiled in some sort of a re-organization or a calamity, if not a juicy rumor.

AOL Time Warner (AOL: news, chart, profile) wants to project a can-do posture to the investing world. But, like an unruly child, CNN keeps acting as if its initials stood for the Can Not Network.

CNN could go a long way toward repairing its image if it could finagle the hiring of, say, Jane Pauley, who Thursday announced she was leaving NBC after 27 years at the Peacock Network.

Turner's turn?

The stars may still be aligning for Turner to re-claim CNN. AOL Chairman and CEO Richard Parsons has eased out Kellner and Isaacson and replaced them with Turner loyalists, Kent and Jim Walton, respectively. Walton is taking over as the president of the CNN News Group.

The people in the CNN newsroom in the Atlanta headquarters were all smiles when the news came that Kellner was exiting. He was always regarded as an outsider from the WB Network, which he will continue to run, and not a Ted Turner kind of guy. The staff would probably start opening champagne bottles if it became clear that Turner wanted to regain the reins.

The flurry of activity serves parent AOL's needs, too. The company is working hard to build goodwill in advance of its annual stockholder meeting in May.

Once, it might have been enough to throw the shareholders a bone by declaring that the company was dropping the anachronistic "AOL" part of its corporate name and restoring the preferred handle of Time Warner.

But the AOL stock has fallen 55 percent in the past year, clearly showing management that it needs more than symbolic gestures to make its long-suffering stockholders happy again. A sale of assets might do the trick.

For his part, Turner has tried to shrug off speculation by saying, he couldn't afford to buy CNN because AOL's stock plunge has caused his wealth to drop to a mere $2 billion.

Translation: "Hey, Jeff Bewkes! How much do you want for CNN?"

Let the bidding begin.

MEDIA WEB QUESTION OF THE DAY: WHO WOULD BE THE BEST OWNER FOR CNN - AOL OR SOMEONE ELSE?

Please send your reply to me at mailto:Jfriedman@MarketWatch.comJon Friedman is media editor for CBS.MarketWatch.com in New York.


TOPICS: Business/Economy; Editorial; News/Current Events
KEYWORDS: aaronbrown; abcnews; cablenews; cablenewsnetwork; cbsmarketwatch; jamiekellner; jonfriedman; melkarmazin; philkent; tedturner; viacom; walterisaacson

1 posted on 03/07/2003 5:06:18 PM PST by Dont Mention the War
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To: Dont Mention the War
Maybe Roger Ailes could buy them. :)
2 posted on 03/07/2003 5:08:06 PM PST by Brett66
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To: Dont Mention the War
You could slap a lamborghini body on a pinto engine...itll still run like a piece of crap.
3 posted on 03/07/2003 5:10:37 PM PST by smith288 (http://smith288.redirectme.net:2000/xplanet/world.png <- Time of day in Iraq)
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To: Brett66
Howsabout JimRob buys it and renames it FRNN
4 posted on 03/07/2003 5:13:13 PM PST by try phecta tom
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To: Dont Mention the War
I say put Slick Willie in charge!
5 posted on 03/07/2003 5:14:52 PM PST by AndyTheBear
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To: try phecta tom
Howsabout JimRob buys it and renames it FRNN

LOL, love that idea! Think we could have a large enough fund raiser for that to become a reality? ;-)

6 posted on 03/07/2003 5:15:11 PM PST by ladyinred
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To: AndyTheBear
No. They want CNN to actually make money. All Slick Willie would do is drive is further into the ground! Hey maybe its not such a bad idea! LOL!
7 posted on 03/07/2003 5:19:48 PM PST by ConservativeMan55 (Liberate Iraq! Lets Roll!)
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To: ladyinred
That would be awesome! Imagine the advertisers! We could make it fair and balanced! LOL!

Invite Tom Daschle on for a debate, and when he comes on I would balance my knuckles upon his face!!! That would be fair!!!
8 posted on 03/07/2003 5:21:03 PM PST by ConservativeMan55 (Liberate Iraq! Lets Roll!)
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To: Dont Mention the War
2 cents... who'll bid 2 cents?
9 posted on 03/07/2003 5:21:16 PM PST by Lexington Green
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To: Dont Mention the War
CNN=Communists News Network.
10 posted on 03/07/2003 5:24:08 PM PST by Defender2 (Defending Our Bill of Rights, Our Constitution, Our Country and Our Freedom!!!!)
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To: Dont Mention the War
The America Online faction introduced ill-conceived entertainment flourishes in CNN's heretofore hard-news coverage. The plan didn't work because the sudden shifts from hard news to personality-oriented stories confused and, ultimately, turned off its audience.

Wrong, Wrong, Wrong!!!!!!!!!

3 words. Fair and Balanced.

But hey let them keep thinking that way for it will surely be the doom of the Clinton News Network.

11 posted on 03/07/2003 5:27:35 PM PST by qam1 (Upstate New York secede from Downstate Now!!)
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To: Dont Mention the War
"Hey, Jeff Bewkes! How much do you want for CNN?"

"I must consult with the DNC first..."

12 posted on 03/07/2003 5:28:07 PM PST by NewLand
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To: ladyinred
We could all be reporters. Wouldn't be a bad job M-F 9-5 no weekends or holidays. All the guys that like to hit the abuse buttons could be in charge of alerts and breaking news. We would need some that like dogs and a few that don't mind flying, for the car chases though.
13 posted on 03/07/2003 5:30:04 PM PST by CindyDawg (.)
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To: qam1
The current head of AOL Time Warner, and correct me if I'm wrong, is Dick Parsons, an african american republican (he is also a proponent for privatizing social security), now, there is a logical question, why, as a republican, doesn't he work at revamping CNN? Mostly, because, no one there,even cares for it anymore, its been left to the left to putter and die.
14 posted on 03/07/2003 7:59:55 PM PST by Sonny M (If you want to get rid of more wellstones, just loosen the bolts, not that I did that or anything.)
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To: Dont Mention the War
Maybe Rush and some of his cronies ...??
15 posted on 03/07/2003 9:01:24 PM PST by The Final Harvest ( -> -> -> Oswego!!)
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To: Brett66
I've had my Dish Network for 2 years, and have watched CNN about 4 times. That's all I need to know about the viability of that network. I remember when we used to talk about Fox news not having access to as many cable systems, and overall starting with a huge disadvantage. The fact that they overcame that and zoomed past CNN with flying colors is an amazing story, and also I think vindicates so many of us who new it would work. I'm very curious what the next step will be in the media.

Is Michael Savage the next step?

16 posted on 03/07/2003 10:16:06 PM PST by lawnguy
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