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Cable News Investment

News Investment

While there are few hard facts available on the newsroom investment in cable, the trend is clear. The success of Fox News has transformed the model of how cable is put together and has transformed the kind of news people receive from cable news in ways that most viewers only sense but may not quite put their finger on.

Fox News has transformed cable from a medium that tries to cover the world with a broad network of bureaus and correspondents to a medium that relies on a handful of hosts and just a few correspondents who are doing live talk rather than taped and edited pieces. In a recent interview, Fox News chairman Roger Ailes acknowledged that Fox News could do more enterprise work: “We keep looking at how to do more long-form [journalism], which is very expensive.”1

The impetus behind the Fox-inspired transformation has been the desire to reduce costs.

When AOL purchased Time Warner in 2001, one early move of the new company’s executives, according to sources who spoke to the authors of this study on background, was to institute a cost per minute analysis of the network. How much did it cost Fox News to produce a minute of its news versus CNN to produce a minute of its programming?

The result of the AOL analysis was this: CNN was spending too much. It needed to rid itself of people and bureaus – as it turned out including many of its more senior journalists. The network announced a plan to eliminate 400 jobs, or 10 percent of its workforce, only two weeks after the AOL-Time Warner merger became official.2

In quick succession, some of CNN’s most familiar on-camera faces were gone, as well as many behind-the-scenes staff.3 Over the next year or so, a good deal more familiar names decided to take buyouts or not renegotiate their contracts, including CNN’s Washington bureau chief, Frank Sesno; its Supreme Court correspondent and former senior White House correspondent, Charles Bierbauer; a Washington correspondent, Brooks Jackson, and a leading business correspondent, Allan Dodds Frank.

Even with the cuts, by June 2000, CNN’s staff was still four times that of Fox News – 4,000 at CNN, 1,000 at Fox News and 500 at MSNBC, according to an article in American Journalism Review.4 According to a New Yorker piece on Fox News, Fox News had roughly 1,250 employees when the Iraq war began in 2003, including both full-time staff and freelancers, while CNN had about 4,000. Fox News also has fewer bureaus, 17, compared to CNN’s 42.5 MSNBC has 11 bureaus, all of them shared with NBC.

Cable News Programming Costs
1997 to 2002
Design Your Own Chart
Source: Kagan World Media unpublished data, www.kagan.com
* CNN figures include Headline News

The three channels’ programming costs reflect their histories. In 1997, for instance, CNN’s budget was as much as Fox News and MSNBC combined. Today CNN’s budget is 83 percent of Fox News’s and MSNBC’s combined.

Fox News initially ran on a shoestring, with a budget in 1997 that was $30 million less than MSNBC’s. As it gained viewers it has ramped up its size. Now Fox News and MSNBC each spend about $130 million to $140 million a year on programming costs. CNN, by contrast, spends $222 million.

The cuts also hit what was once a bastion of CNN, its vast foreign bureau system. CNN had been expanding its foreign bureaus every year since its inception in 1980, but it has now cut back there as well, closing four of them. Nevertheless, it still maintains four times as many as Fox News, 28 versus 6.6

Fox News is not at all shy about its lack of spending on news. “We don’t put more crews out than we need,” Ailes said in an interview with Broadcasting & Cable. “We try not to spend money we don’t have. We just pulled back on a story in the Philippines that, when you looked at it, just wasn’t cost-effective…. It may become critical, and I may end up having to spend a lot of money to cover it, but it’s not there yet.”7

The result of all this, however, is a sweeping and only vaguely understood transformation of cable along the Fox News model away from packages and toward live, away from dozens of stories a day to a handful. The model of cable news, in some ways, is more today like local news than it is like network. (See Content Analysis)

There was a time when cable was aiming for something quite different. MSNBC, for example, tried seven years ago to build a high-minded, hour-long program in prime time around the anchor Brian Williams that had echoes of PBS’s “NewsHour,” only more modern. That experiment ended abruptly, however, when the network grew impatient with slow ratings growth, particularly with programs that were then more popular such as “Geraldo Live” on CNBC, and saw quick ratings spikes in wall-to-wall coverage of tabloid stories like the death of Princess Diana. In the late 1990s, before the AOL merger, CNN tried to build magazine programs in prime time. They were built as concept shows on the model of broadcast network prime time magazine shows, particularly the “appointment-style” magazines of the 1980s, like “20-20″ and “Prime Time Live,” and were designed to take advantage of supposed synergy between CNN and Time Inc. magazines. Both network efforts foundered and have given way to anchor-centered talk shows, more on the order of the success of Fox News’s talk radio-style television programs.

Footnotes

1. “Roger’s balancing act,” Broadcasting & Cable, October 27, 2003, p. 28.

2. “CNN downsizing,” The NewsHour with Jim Lehrer, January 29, 2001. The FCC had approved the AOL-Time Warner merger on January 12, 2001. Available at: http://www.pbs.org/newshour/bb/media/jan-june01/cnn_1-29.html.

3. See Phyllis Furman, “CNN sacks big names,” New York Daily News, January 3, 2003. Available at: http://www.nydailynews.com/01-03-2003/business/story/48274p-45419c.html.

4. Kelly Heyboer, “Cable clash,” American Journalism Review, June 2000. Available at: http://www.ajr.org/Article.asp?id=410.

5. Ken Auletta, “Vox Fox,” The New Yorker, May 26, 2003. Available at: http://www.kenauletta.com/voxfox.html.

6. Lucinda Fleeson, “Bureau of missing bureaus,” American Journalism Review, October/November 2003. Available at: http://www.ajr.org/Article.asp?id=3409.

7. “Roger’s balancing act,” Broadcasting & Cable, October 27, 2003.