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News Investment

News Investment

By the Project for Excellence in Journalism

When it came to news investment, the evidence suggests four major trends in 2007.

The cable news channels are three very distinct entities when it comes to their newsgathering operations, and even the way their budgets break down. Let’s take them one at a time.

CNN

The first American all-news cable channel, CNN is the most global, has the largest infrastructure and still spends the most on newsgathering, even inside its U.S. operations.

CNN and CNN Headline News in 2007 had 4,000 employees worldwide, with 10 bureaus in the United States and 26 abroad (Headline News has no independent bureaus). It had a 2006 budget of more than $600 million for its U.S. channels. While the budget grew modestly, CNN’s roster of bureaus was unchanged from a year earlier.

According to SNL Kagan, the media research firm, CNN and CNN Headline News were projected to spend $687 million on newsgathering in 2007, an increase of 5% from the year before. More than half of that money is spent on salaries, administrative costs and technology and machinery (capital expenditures). When those are removed, the two CNN channels were expected to spend $287 million in programming expenses, also up 5% from a year before. This includes the cost of going out and gathering stories, including the purchase of syndicated material from other sources and producing programs.

CNN and CNN Headline News Expenses (Estimated)
2005-2007, in Millions

2005 2006 2007
Total Expenses
643
654.1
686.8
Programming Expenses
268.3
273.7
287.4

Source: SNL Kagan, a division of SNL Financial LLC
Note: Numbers are estimates

Getting a fix on overall staffing is a little more difficult. While indicating in 2007 that it had 4,000 employees worldwide, CNN does not break this out any further.

One rough proxy for news staff is to examine the numbers that CNN does provide through the News Media Yellow Book, a quarterly publication that lists staff contacts for leading news media organizations in the United States. These figures are derived from what organizations, or their specific bureaus, choose to report and for the cable channels are typically just a fraction of the actual number of employees. According to the spring 2007 edition, CNN lists 295 news employees. This includes top management, various desks (national, international, medical, etc.), nine national bureaus and the staff assigned to specific national programs, such as Lou Dobbs Tonight or Anderson Cooper. What this does not reflect, however, are all additional people essential to getting the network on the air (from technical to promotional and sales staff). CNN Headline News reports just 30 executives, including just four specifically tied to their top two programs, Nancy Grace and Showbiz Tonight.

CNN’s domestic operations are intertwined with the worldwide organization, and in 2007, there were some big changes that could have implications throughout the company. When CNN severed ties with Reuters in September 2007, it terminated a contract worth $3.5 million a year, according to the New York Times.

According to a CNN spokesperson, the canceled contract was one of the steps of a larger multi-million-dollar investment to expand international news coverage at CNN and “to reduce its reliance on other media outlets for the content that it distributed through the Web, cell phones and other digital devices.” 1

Following up on this announcement, CNN Worldwide announced a substantial increase in its international newsgathering resources in November 2007. In what it said was the biggest expansion since the channel launched two decades ago, it announced that it was increasing the number of international correspondents, opening a new newsgathering hub in the United Arab Emirates, a new digital production unit in London and investing more in its existing properties, such as its national and international wire service, CNN Newsource (see more about the CNN properties in Ownership).

According to Associated Press, these investments amounted to just under $10 million and included the addition of about 16 correspondents to CNN Worldwide’s existing staff.2

In the U.S., the channel made some notable on-air changes during prime time: Campbell Brown was hired to take over from Paula Zahn, who left the channel after her show was canceled and Lou Dobbs was moved to the 7 p.m. slot.

Zahn’s news program, which began in 2003 and was aired at 8 p.m., was canceled in July 2007. At the time, Zahn had an average of 700,000 viewers, compared with the 2 million viewers for Fox News’ O’Reilly Factor.3 In March 2008, the time slot was occupied by Campbell Brown, who went to CNN after 11 years at NBC News. Brown made her CNN debut during a series of political specials in November 2007. Brown may have an uphill task ahead in trying to make a mark in a timeslot dominated by the most popular cable news personalities — Fox News’ Bill O’Reilly, MSNBC’s Keith Olbermann and Nancy Grace, at sister channel, CNN Headline News.

In the time before Brown took over, CNN also tested a different voice and format in its continuing struggle to counter-program Fox News’ O’Reilly. The time slot was filled by Out in the Open, hosted by Rick Sanchez, a program featuring a mix of news and opinion.4

CNN and CNN Headline News
Programming Schedule, February 2008

Time CNN CNN Headline News
6 a.m. American Morning Morning Express w/ Robin Meade
7 a.m. American Morning Morning Express w/ Robin Meade
8 a.m. American Morning Morning Express w/ Robin Meade
9 a.m. CNN Newsroom Morning Express w/ Robin Meade
10 a.m. CNN Newsroom Morning Express w/ Robin Meade
11a.m. CNN Newsroom Showbiz Tonight
Noon Your World Today Headline News
1 p.m. CNN Newsroom Headline News
2 p.m. CNN Newsroom Headline News
3 p.m. CNN Newsroom Headline News
4 p.m. The Situation Room Headline News
5 p.m. The Situation Room Prime News
6 p.m. The Situation Room Prime News
7 p.m. Lou Dobbs Tonight Glenn Beck
8 p.m. Out in the Open Nancy Grace
9 p.m. Larry King Live Glenn Beck replay
10 p.m. Anderson Cooper 360 Nancy Grace replay
11 p.m. Anderson Cooper 360 Showbiz Tonight
Midnight Larry King Live replay Glenn Beck replay
1 a.m. Anderson Cooper 360 replay Nancy Grace replay
2 a.m. Anderson Cooper 360 replay Showbiz Tonight replay
3 a.m. Larry King Live replay Headline News
4 a.m. Lou Dobbs Tonight replay Headline News
5 a.m. Anderson Cooper 360 replay Headline News

Source: Respective Web Sites
Note: All times EST

Where CNN did not have a struggle was with Lou Dobbs Tonight. As the second-most-popular show on CNN, behind only Larry King Live (see more in Audience), CNN shifted his show to the 7 p.m. hour in November 2007. The show was averaging 800,000 viewers. At the same time, CNN expanded its political coverage by extending The Situation Room to three straight hours in the late afternoon.

These programming changes may have a number of effects . For one, they may give a hoped-for boost to the lower-rated 8 p.m. slot, now book-ended between the two top-rated shows (Dobbs before and Larry King Live at 9 p.m.).

CNN Headline News saw no changes to its line-up in 2007.

MSNBC

MSNBC began as a joint venture between NBC News and Microsoft in 1996, and was taken over exclusively by NBC News in 2006. From the start, it has always relied on its bigger corporate sibling for resources. The news channel offered a way to amortize the cost of NBC newsgathering across more platforms and programs.

SNL Kagan projected that MSNBC would spend $191 million on newsgathering in 2007, up 3% from the $187 million the year before. Three quarters of that — about $145 million — would be spent on programming, up 5% from the year before. That number shows the degree to which MSNBC can operate at a lower cost than its rivals (CNN was projected to spend $287 million and Fox News $319 million). Its salaries, administrative and technical costs are much lower, thanks to its ability to rely on NBC for resources. 5

MSNBC Expenses (Estimated)
2005-2007, in Millions

2005 2006 2007
Total Expenses
238.8
186.5
191.1
Programming Expenses
138.8
138.4
145.3

Source: SNL Kagan, a division of SNL Financial LLC
Note: Numbers are estimates

In terms of size, MSNBC has no domestic bureaus of its own, – relying on NBC, which had seven in 2007. And according to the channel, it had 600 employees dedicated to the cable operation in 2007.

MSNBC also altered its programming in 2007, triggered by the national controversy generated by talk show host Don Imus, whose radio program was videotaped and aired as the news channel’s morning show.

MSNBC
Programming Schedule, February 2008

Time MSNBC
6 a.m. Morning Joe
7 a.m. Morning Joe
8 a.m. Morning Joe
9 a.m. MSNBC Live
10 a.m. MSNBC Live
11a.m. MSNBC Live
Noon MSNBC Live
1 p.m. MSNBC Live
2 p.m. MSNBC Live
3 p.m. MSNBC Live
4 p.m. MSNBC Live
5 p.m. Hardball with Chris Matthews
6 p.m. Tucker *
7 p.m. Hardball with Chris Matthews
8 p.m. Countdown with Keith Olbermann
9 p.m. Verdict with Dan Abrams
10 p.m. MSNBC Documentaries
11 p.m. MSNBC Documentaries
Midnight Countdown with Keith Olbermann
1 a.m. MSNBC Documentaries
2 a.m. MSNBC Documentaries
3 a.m. Hardball with Chris Matthews
4 a.m. Verdict with Dan Abrams
5 a.m. First Look

Source: MSNBC Web Site
Note: All times EST; *Tucker was replaced by Race for the White House in March, 2008

On the April 4, 2007, program, Imus referred to the Rutgers women’s basketball team, which was made up mostly of young African American women, in racist and misogynistic terms. (For more details, see the Talk Radio section of Radio Chapter.) Eight days later, MSNBC pulled Imus from its lineup.6

In September, Imus’ three-hour morning slot was formally filled by a new show, Morning Joe, anchored by former Republican Rep. Joe Scarborough, who was host of the prime-time news talk show Scarborough County. Scarborough had been Imus’ temporary replacement since May.

The evening slot left vacant by Scarborough was taken over by Dan Abrams, MSNBC’s chief legal correspondent, who, a year earlier, had taken on the role of general manager. Abrams returned to his former job as anchor of the talk show Verdict with Dan Abrams at 9 p.m. By year’s end, both Abrams and Scarborough were faring well on the channel (see Audience.)

Morning Joe marks a big shift in MSNBC programming because it is the first original morning programming offered (Imus was a syndicated radio show simulcast on television, a largely static shot of a radio studio). Some analysts such as Andrew Tyndall believe the lack of a distinct morning show has hurt MSNBC’s daytime ratings. If so, 2008 would be a test to see whether the new Scarborough program will make a material difference.

Although it was not explicitly marketed as such, MSNBC also appeared to be positioning itself as the liberal alternative news channel to Fox. Survey data show that MSNBC’s audience was measurably more liberal than that of the other two networks (see Audience).7

In November, rumors surfaced that channel executives were discussing giving Rosie O’Donnell a prime-time show. The talks eventually fell through. Reporters also noted how Scarborough, a Republican, praised the campaigning Clintons on air. And yet others focused on how the show hosted by conservative Tucker Carlson was on its way out – which did turn out to be the case in March 2008. Carlson’s show was canceled and replaced by The Race for the White House hosted by NBC Political Correspondent David Gregory. Carlson remained with NBC as a Special Election Correspondent at the time of the announcement.8

These changes, taken over all, and the growing popularity of Olbermann in particular, have led to MSNBC being seen as the liberal alternative to Fox News, which markets itself as fair and balanced but whose audience skews conservative (see Audience).

Fox News

Fox News entered the U.S. cable news scene at the same time as MSNBC, in 1996, but without the larger corporate support. In the past 11 years, however, the channel has built itself as the ratings leader– and for the past several years has continued to increase its spending on newsgathering.

But in overall size, staffing, bureaus and budget, it still is No. 2.

According to projections by SNL Kagan, Fox News was expected to spend $487 million in 2007, a 15% increase over the $422 million the year before. The lion’s share of that, $319 million, was expected to be spent on programming, 20% more than the $266 million it spent in 2006.

Like MSNBC, it also has a high share of its expenses going into programming – 66%, according to the projections for 2007. A smaller channel in terms of staffing and infrastructure, it spends much more on its programming than other administrative expenses.

Fox News Expenses (Estimated)
2005-2007, in Millions

2005 2006 2007
Total Expenses
366.6
421.8
486.6
Programming Expenses
221.3
265.5
318.6

Source: SNL Kagan, a division of SNL Financial LLC
Note: Numbers are estimates

In terms of its on-the-ground operations, it had 11 domestic bureaus in the U.S. in 2007, one more than CNN’s domestic tally. And it reports three international bureaus – in London, Jerusalem and Baghdad.9

In 2007, there were approximately 1,200 employees at the channel’s U.S. operations. PEJ’s analysis of the spring 2007 News Media Yellow Book found that Fox News lists 186 employees across all its divisions, including its national bureaus, more than 100 employees fewer than CNN.

In 2007, the on-air lineup at Fox News had the fewest changes — and continued to be the most watched — across the cable channels.

Fox News
Programming Schedule, February 2008

Time Fox News
6 a.m. Fox & Friends First
7 a.m. Fox & Friends
8 a.m. Fox & Friends
9 a.m. America’s Newsroom
10 a.m. America’s Newsroom
11a.m. Fox News Live
Noon Fox News Live
1 p.m. Live Desk with Martha MacCullam
2 p.m. Fox News Live
3 p.m. Studio B with Shepard Smith
4 p.m. Your World with Neil Cavuto
5 p.m. The Big Story with Gibson & Nauert
6 p.m. Special Report with Brit Hume
7 p.m. Fox Report with Shepard Smith
8 p.m. O’ Reilly Factor
9 p.m. Hannity & Colmes
10 p.m. On the Record with Greta Van Susteren
11 p.m. O’ Reilly Factor replay
Midnight O’ Reilly Factor replay
1 a.m. On the Record with Greta Van Susteren replay
2 a.m. Special Report with Brit Hume replay
3 a.m. Red Eye with Greg Gutfeld
4 a.m. O’ Reilly Factor replay
5 a.m. Special Report with Brit Hume replay

Source: Fox News Web Site
Note: All times EST

Politics and Cable News

The early start to the 2008 presidential election campaign was a boon for the three cable news channels. Not only did the cable news channels host a number of televised debates between candidates, but each channel, and especially MSNBC, also promoted its political coverage over the others.

CNN, through its programming changes, increased its daytime show, Situation Room, to a three-hour block on politics, with Wolf Blitzer as lead political anchor. The network re-branded itself as “The Best Political Team on Television” and held three candidate debates in 2007, including two in partnership with YouTube. The channel invested in high-end technology to cover the primaries and also opened temporary bureaus in the early caucus and primary states (Iowa, New Hampshire and South Carolina).

Even more aggressive in its promotion was MSNBC. The 2008 presidential election campaign offered prime content for that niche in 2007. Its first foray, Super Tuesdays, began in September 2007 and offered weekly all-day political coverage until the primaries in January 2008.

It adopted the slogan “The Place for Politics” and, at least in terms of the amount of time devoted to the subject, it offered something to back that up. In PEJ’s continuing study of content on the cable channels, MSNBC’s devotion to politics comes through. In 2007, it spent a more than a quarter (28%) of its newshole on politics, as measured in PEJ’s News Coverage Index, which examines 4.5 hours of cable programming daily. This was more than double CNN’s coverage (12%) and more than Fox News’ (15.4%). The bulk of this coverage was focused on the presidential election campaign, 24% of its newshole on MSNBC, while Fox News devoted 14% and CNN 11%.10

Debates Equal Viewers

Another political foray by cable news was candidate debates.

Each cable news channel landed its own presidential debate in 2007 and seemed to have no problem keeping more politically minded viewers tuned in as the year progressed.

MSNBC was the first cable channel to kick off the presidential debates. In April 2007, 2.16 million viewers tuned in to see the Democratic candidates debate in South Carolina. The network hosted six presidential primary debates between April and December 2007. This was one more than CNN’s five and double Fox News’ three.

CNN even offered a new kind of debate all together.

On July 23, 2007, CNN and YouTube, the leading video-sharing Web site in the U.S., hosted a new kind of debate among the Democratic candidates. Aired live and moderated by CNN’s key anchors, the presentation was unique in both format and content. Candidates submitted their own videos to open the show and then members of the general public got their turn, putting questions in the form of videos vetted beforehand by CNN.

The co-hosts, promoting the debate as a reflection of “changing technology and voter culture,”11 hoped to pull in viewers both online and on air. The first debate was watched by 2.6 million people.

CNN’s second attempt with the format, the debate with the Republicans on November 28, 2007, broke previous cable audience records for debates. According to Nielsen Media, 4.3 million viewers tuned in.12

CNN’s second venture with YouTube also did much better with audiences than the two highest-rated debates on Fox News. Fox News’ September GOP debate in New Hampshire had more than 3 million viewers tune in, while the Republican debate on May 15, 2007, had 2.4 million viewers. Its third debate, in October 2007, also saw 2.4 million viewers turn in.

All three presidential debates hosted by Fox News in 2007 were with GOP candidates. The channel did attempt to host Democratic debates, one co-hosted by the Nevada Democratic Party in August and the other by the Congressional Black Caucus Political Education and Leadership Institute in September 2007.13 But when the leading Democratic presidential candidates refused to participate, the debates were canceled.

Footnotes

1. The change will have the most impact on its Web site, which heavily featured Reuters’ material. Pradnya Joshi, “CNN Cuts a Wire to Invest in Itself,” New York Times, August 30, 2007

2. Associated Press, “CNN to Bolster Overseas Coverage,” Wall Street Journal, November 14, 2007

3. Nielsen Media Research data from Media Bistro.com, Program Ranker, Third Quarter of 2007

4. Historically, the 8 p.m. hour has been an underperformer for CNN. Analysts say CNN has always had to make the decision whether to counter-program with a hard newscast, at a time when no one else is doing one, or do opinion programming like the others.

5.The fact that it spends such a high proportion on programming is impressive, but might also reflect that it does not have too many other expenses. Total expenses are broken into two categories by SNL Kagan – programming expenses and SG&A (selling, administrative and general) expenses. According to estimates by SNL Kagan, these other expenses dropped substantially at MSNBC in 2006, at the same time that the parent company decided to merge the operations of its news divisions with NBC News (see more in Ownership and later). One reason for this may be that MSNBC restructured its agreement with Microsoft. When Microsoft was an owner, MSNBC had a contractual agreement to pay royalties to Microsoft but when it gave up co-ownership of the channel, these royalties stopped, leading to the drop.

6. PEJ News Coverage Index, “Imus Second Biggest Story of 2007 So Far,” April 8-13, 2007; Paul Farhi, “MSNBC Drops Imus’s Show,” Washington Post, April 12, 2007

7. The Pew Research Center for the People & Press, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006

8. Alex Weprin, “Tucker Out, David Gregory In at MSNBC,” Broadcasting & Cable, March 10, 2008; Also Gail Shister, “Olbermann ‘mad as hell,’ and MSNBC the winner,” Chicago Tribune, March 28, 2007

9. Fox News’ domestic bureaus are in New York, Washington, D.C., Los Angeles, Chicago, San Francisco, Seattle, Miami, Denver, Atlanta, Dallas and Boston. Personal communication with the Fox News media relations department in December 2007

10. The News Coverage Index codes the following shows: Rotation of daytime shows on all three channels (2 to 2:30 p.m.); rotation of prime time shows on all three channels, including Lou Dobbs Tonight, Situation Room (6 p.m.), Out in the Open, Anderson Cooper 360, Special Report With Brit Hume, Fox Report With Shepard Smith, O’Reilly Factor, Hannity & Colmes, Tucker (6 p.m.), Hardball (7 p.m.), Countdown With Keith Olbermann, and Live with Dan Abrams.

11. Richard Lui, “Did the CNN/ YouTube Debate Deliver,” CNNPolitics.com, November 29, 2007

12. All Debate Figures from Media Bistro.com’s Debate Ranker. Online at: http://www.mediabistro.com/tvnewser/politics/debate_ranker_72777.asp

13. Raymond Hernandez and Jacques Steinberg, “Fox News debates drive wedge between Democrats,” International Herald Tribune, May 27, 2007; Also “Democratic Hopefuls Target Fox News,” Associated Press, April 15, 2007