2004 Annual Report - Cable TV Economics

MSNBC, meanwhile, was created as part of a strategy devised under Andrew Lack, the former NBC News president, to amortize the costs and brand of NBC News across multiple platforms. The content and even much of the staff feeds directly off of NBC News, keeping costs at a minimum, and providing revenue for NBC News that might not otherwise exist. So with minimal added cost, NBC brings in additional revenue from MSNBC, CNBC and also the MSNBC Web site. In 1999, CNBC alone brought in revenues of nearly $400 million and pretax profits of $200 million. According to the journalist Marc Gunther, NBC's average cost per hour of news fell from $250,000 in 1994 to just $50,000 by 1998.⁷

NBC sells itself to cable system operators as a package of MSNBC, CNBC and an agreement to carry NBC's broadcast stations. Part of the appeal for cable systems is NBC's strategy of spreading Olympics coverage among all three channels, although some smaller cable operators have complained that NBC's practices, which obligate them to pay fees for three networks at once, are unfair.⁸