Cable TV Newsroom Investment

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

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).

MSNBC

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