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Ownership

Ownership

By the Project for Excellence in Journalism

The basic ownership picture of Cable changed little in 2006. News Corp., the company managed and controlled financially by Rupert Murdoch, owns Fox News. General Electric, the corporate conglomerate that owns NBC and Vivendi Universal studios, owns MSNBC. CNN is a part of the Time Warner-AOL empire.

Below the surface, however, subtle changes tell a dynamic story. When it comes to management, MSNBC is the channel gearing up for the most change in 2007. After some top-level changes in 2006, it is likely to see shake-ups throughout the organization in 2007 as it moves facilities to New York near NBC News.

At Fox News, Rupert Murdoch celebrated the channel’s 10th anniversary and strengthened his hold on the parent company, News Corp. At CNN, Ted Turner did the opposite — removing himself from the board of Time Warner and breaking his ties with the news channel he created.

MSNBC

Cable’s perennial third-placer finisher in 2006 saw three significant changes. With the departure of its co-owner, Microsoft, NBC and its parent General Electric (GE) gained more freedom to make changes. GE then announced a series of cuts and reshuffling throughout NBC and MSNBC, including closing down the news channel’s New Jersey headquarters and moving operations to NBC’s Rockefeller Center offices in Manhattan. And MSNBC put new personnel in charge of the news channel, which seems to have hit upon a new style and brand — politics and opinion.

All of that began at the end of 2005 when NBC Television took over sole charge of the channel after 10 years of joint ownership with Microsoft. It was described as a move to revitalize the channel and align it more closely to NBC News, according to NBC’s president, Steve Capus.

That began to take shape in October 2006, when NBC Universal, the parent division of NBC television (which includes both MSNBC and NBC News) announced what it labeled “NBC 2.0” to assure future growth and to “exploit the opportunities of the changing media landscape.”

The initiative coincided with the release of GE’s third-quarter figures, where profits were lower than expected (6% increase) partly because of NBC Universal’s 10% drop in profits. That provided the context for what turned out to be cuts mostly at NBC Universal. According to the company, the reductions would be “shouldered by NBC U’s key profit center: news at its national broadcast and cable networks, and local owned-and-operated TV stations.”1

According to various media reports, the company planned to trim the news division budget through attrition, buyouts, layoffs and the elimination of duplicate newsgathering processes. The official press statement said management would be cutting about 700 jobs (5% of the total workforce) by 2007. But Capus said the cable channel would not be targeted for heavy cuts.

One change that was clear was closer integration through physical proximity. As part of the 2.0 initiative, NBC announced it would move MSNBC operations — 600 personnel — out of its Secaucus, N.J., headquarters and shift it to New York (with NBC News) and Englewood Cliffs, N.J. (with CNBC). NBC said its aim was to create one digital hub for news, and pool reporters from all the various news businesses.2 It was also, however, one way to save money.

The changes followed a reshuffle in top management earlier in the year. In May 2006, Rick Kaplan, the veteran from ABC and CNN, stepped down as president and general manager of MSNBC less than three years after taking over the struggling channel. Media critics attributed Kaplan’s exit to his lack of programming success, especially with the shows he created (see News Investment). He was, however, credited with building morale within the channel after an era of program shuffling and newsroom turmoil under his predecessor, Erik Sorenson, and with creating a better relationship with NBC News.

Kaplan was succeeded by Phil Griffin, who was appointed President of MSNBC in June 2006. Griffin is a successful newsroom veteran at both NBC and MSNBC, where he was most recently senior vice president of prime-time programming. He also continues to oversee NBC’s morning “Today Show,” which he has led since 1995.

Griffin in turn named Dan Abrams, the channel’s legal-affairs reporter and anchor, as general manager, though Abrams remains a legal correspondent and will contribute to both NBC and MSNBC. His promotion was a surprise not just because he had no management experience, but because cable networks rarely put news anchors in their executive ranks. For one thing, TV anchors historically have more job security than general managers and vice presidents. Media speculation was that the appointment was a result of his familiarity with both the channel and with Steve Capus and Phil Griffin. All three have been involved with MSNBC from the early years. Abrams has been with MSNBC since 1997 and has been the anchor of “The Abrams Report” since 2001. Capus was executive producer of an MSNBC prime-time newscast in 1999 and in charge of daytime programming when the channel launched in 1996.

According to MSNBC, Abrams’s immediate goals were to build on the success of the channel’s two most popular shows, Keith Olbermann’s Countdown and Chris Matthews’s Hardball (see more in Audience).

By fall, it was clear that meant trying to brand MSNBC around politics, and with a lineup that was now heavily influenced by opinion and talk in prime time (Tucker Carlson, Matthews, Olbermann, and Joe Scarborough are all political talk). With a pivotal mid-term election, the strategy seemed to work, especially in prime time (see Audience). The press began to write promisingly of the idea. As Variety put it, politics might help bring “cultural relevance to a channel that has long struggled to find its niche.”3

In part, the move suggests that Abrams and Griffin recognize the growing difficulty of building a news channel around breaking headlines, or what we have called news on demand. Creating a brand around a subject area, the way ESPN does around sports, or CNBC does around business, is a logical alternative. CNN may also have helped create the opportunity. Its changes, such as cancelling its Inside Politics program and to a lesser extent its cancellation of Crossfire, moved it more explicitly away from politics. CNN certainly devotes time to the subject, but its franchise is less defined. Fox News’s viewership in this area, in turn, is decidedly more conservative, potentially leaving another niche.

As 2007 began, the strategy still appeared to be working. In January, MSNBC drew in 525,000 viewers in prime time, an impressive increase of nearly 53% over its numbers for the same month last year (344,000). That was far better than the gains made by CNN (13%) or Fox News (9%).

News Corp. and the Fox News Channel

Rupert Murdoch, Chairman of News Corp., had reason to toast Fox News and its chairman, Roger Ailes, during the 10th-anniversary celebrations of the channel in October, 2006. The Fox News channel continued to be a News Corp. star performer, not just in its category (cable networks) but among all the U.S. operations of the media conglomerate (see Audience and Economics).4

Fox News turned 10 on October 7, 2006. Proving forecasters and skeptics wrong, the network overtook CNN — the biggest name in cable news at the time — in audience within six years of its launch.

When Murdoch created the news network in 1996, he marketed it as an antidote to what he termed the left-wing news media. In an interview with the Financial Times in October 2006, Murdoch reflected on the channel’s beginnings and said Fox News had changed the political equation in country, because it “has given room to both sides, whereas only one side had it before.”5 Murdoch hired Ailes, former president of CNBC and a former political strategist for the Republicans, to head the network. Ailes hasn’t just changed the style of TV news presentation, he has challenged existing TV news agendas.

Undoubtedly the force behind the channel, he brought with him not just a talent for marketing and political hard-sell, but knowledge of television and a no-nonsense style of leadership. He combined these with the belief, more hinted at than explicit in Fox News marketing, that American viewers would empathize with the idea that mainstream media were tilted to the left. His slogans, “Fair and balanced,” and “We Report, You Decide,” implied that those were not qualities available in other media.

Ailes also did something else. He succeeded (where CNN rarely did) in creating distinct programs that people would tune in to — so-called appointment programming in TV language. Bill O’Reilly’s program was distinct from Hannity and Colmes, which in turn was different from Brit Hume’s, and that in turn from Neil Cavuto’s. There were differences in style and tone, and different anchors played, in a sense, different characters.

There was also a new look with graphics, sound, editing, pacing and more. The combination of a polished look, populist language and opinion-laden journalism has hit the target with many viewers.

Even a former president of MSNBC, Erik Sorenson, admits, “Fox News convinced millions… that Fox’s reporting was indeed fair and balanced, when compared with CNN and broadcast news.”

The channel took off in 2001, after the September 11 terrorist attacks and during the war in Afghanistan, when it took on an outspoken pro-American posture. Its position — which implied that the other news channels weren’t pro-American — created a strong and loyal viewer base.

The channel’s rise has also been tied to news-watching’s becoming partisan. According to the latest Pew survey on news consumption, Republicans are increasingly watching Fox News, while Democrats stick to CNN.6

Despite being the biggest cable news channel in the U.S. and part of one the largest media conglomerates in the world, News Corp., Fox News has succeeded by playing off the impression that it is a lonely young upstart challenging the rest of the colossal, liberally biased media.

When asked directly, the network vigorously denies any charges of political or ideological bias. It has had to constantly defend its credibility as a straight news source. A recent example occurred in an October 2006 interview on Fox News Sunday with Bill Clinton — when he flared up and accused the host, Chris Wallace, of doing “a conservative hit job on me.”

Fox News executives say their channel succeeds — and gets attacked — only because it offers a different perspective. Roger Ailes was quoted in USA Today as saying that the liberals “hate (Fox News) for coming on the scene and… making the people look at both sides of issues.”7 Shepard Smith, one of Fox News’ marquee news anchors, argues that critics need to recognize that the channel offers two kinds of shows. On one hand are the talk shows that reflect their hosts’ views, he says, but all the others, including the two news reports he anchors, are straight news reporting. Ailes concurred, arguing that Fox News’s critics “mash (opinion shows and the journalism) together and act as if Sean Hannity is doing the evening news, which is just nonsense.”8

This report is not an attempt to settle the issue of Fox News’s fairness and balance, but to assess its position in the marketplace at its 10-year mark. Whatever its critics might argue, there is no denying that Fox News has made newsrooms re-think their business, both in format and content. The success of Fox News’s talk shows has led to opinion journalism’s becoming almost staple fare in the TV news business; notable competitors with Fox being Keith Olbermann on MSNBC and Lou Dobbs on CNN. Olbermann’s recent ratings climb has coincided, indeed, with his on-air crusade against the Fox News talk-show host Bill O’Reilly.

The success of Fox News has also sparked off debates on whether objective news is even relevant in a time when ordinary Americans give vent to their opinions through the Internet and blogs.

But while his American news channel in 2006 gave him few worries, Murdoch had a close shave with his stake in the parent News Corp. itself. For much of the year, Murdoch was locked in a battle with Liberty Media Group’s chairman, John Malone, over the controlling interest in News Corp. The battle was finally settled in December when News Corp. reached an agreement with Liberty Media to ensure Murdoch’s control of his company.9

Liberty and News Corp. were equally stubborn negotiators, and, as analysts had predicted, they compromised. The final deal, which will come into effect later in 2007, stipulates that Liberty will acquire News Corp.’s 39% stake in DirecTV, three regional Fox sports networks and $550 million in cash.10 In return, Malone will retire his 19% voting stake in News Corp. by selling it back to the company. Malone’s stake has roughly the same value as the DirecTV stake and other assets he gets from Murdoch, making the deal an even swap.

The final deal also raises the Murdoch family share in News Corp. to about 40%, making it the biggest voting stake in the company.11 Murdoch and his two sons currently own about 30% of News Corp., giving them managing control of the company, and it is widely reported that Murdoch hopes to keep control within the family.12 So it was no surprise he reacted strongly when that control was threatened.

The fact that News Corp.’s share price was up and earnings rose 19% in the fourth quarter of 2006 would undoubtedly have bolstered Murdoch’s claim that he knew best how to run the company.13 In addition, he had the public support of Prince Alwaleed bin Talal of Saudi Arabia, who owns a 5.7% stake in News Corp. The measure helped protect the Murdoch family’s control of News Corp. until a deal was reached, and also helped them avoid a lengthy battle in court, where the dispute would have ended up if the deal was not agreed on in time.

Another, smaller footnote regarding Murdoch’s activities in the U.S. was the setback his publishing company, Harper Collins, experienced in December 2006. It attempted to publish and market a book entitled “If I Did It” by the ex-football player O. J. Simpson, acquitted in 1995 of killing his wife. The plan was harshly criticized and the book had to be withdrawn.

“If I Did It” was heavily marketed before is scheduled launch, including promotion of an interview to be aired on Fox TV stations with Simpson himself on November 27 and November 29, 2006 — two of the final three nights of the November sweeps, when ratings are watched closely to set local advertising rates. The interview and the book faced immediate outrage, both among the public and in the media (including local Fox affiliate stations and Fox News’s Bill O’Reilly). Murdoch had to personally step up to say the company had made a mistake and issue an apology.

Time Warner Company & CNN

The year 2006 saw CNN’s founder and Time Warner’s most prominent personality, Ted Turner, break his final ties with the company.

In February 2006, Turner announced he would not be standing for re-election to Time Warner’s board of directors at the annual meeting; he officially said goodbye in May 2006. He remains Time Warner’s largest individual shareholder, with 33 million shares, but has been cutting back on his holdings.

Turner’s decision to step away comes 11 years after he sold his cable company, Turner Broadcasting Networks, to Time Warner, and 26 years after he helped launch CNN.14 His effective departure from operational involvement, however, had come earlier, with the merger in 2000 of Time Warner and AOL. Now, his departure from even the board of Time Warner marks the formal end to a career at the Turner companies in which he stands as a pioneer in the latter half of the 20 th century in televised American news, entertainment and sports.

Tuner was the first to see the potential of cable as a viable alternative to the broadcast networks and to make the potential a reality both technically and economically. Leo Hindrey, former head of TCI cable, lauded him as a visionary. “Without CNN, the cable industry would never have evolved as it did. The rest of us were putting in wires. Ted gave us something to watch.”

He is credited with pioneering the use of satellites to distribute ad-supported cable channels nationwide, which had never been tried before. Turner was also responsible for introducing the dual revenue streams for cable: advertising revenues and, particular to cable, subscriber revenues from cable distributors (see Economics).

And while he may not have grasped the potential of the Internet, he did introduce television viewers to an on-demand media world when he launched the 24-hour news channel CNN, effectively weaning viewers away from the notion of fixed schedules for news.

Ted Turner had long played a prominent role in Time Warner’s decisions, but in recent years had complained that he was being sidelined. In a shakeup in 2000, just before Time Warner merged with AOL, the CEO at the time, Gerald Levin, had relieved Turner of most of his responsibilities.

He became increasingly vocal in his disagreements with Time Warner, and was even quoted as saying his decision to merge with the conglomerate was the “biggest mistake of my life.” His most recent decision follows his resignation as vice-chairman of Time Warner in 2003, a post he had held since the 1996 merger.15