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Cable: Audience vs. Economics

By Jesse Holcomb, Amy Mitchell and Tom Rosenstiel of the Project for Excellence in Journalism

Two paths diverging would be one way of putting it.

A glance at the finances of cable news in 2010 would leave one feeling outright bullish. All three major news channels were projected to have increases in operating profits — Fox News by 27%, CNN (and HLN) by 7% and MSNBC by 8%, according to the market research firm SNL Kagan.1

And the higher profits were not due simply to cost cutting. Revenue was also projected to grow for each of the channels (17% at Fox, 5% at CNN/HLN and 7% at MSNBC). (See cable data section for more on economics.)

Even news investment budgets, where CNN/HLN and MSNBC scaled back in 2009, appeared to expand in 2010. Fox and MSNBC were projected to increase their investment in newsgathering by 7%, and CNN/HLN was projected to do so by 3% (see cable data section for more on news investment).

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The picture for audiences in cable news, however, reveals something altogether different. The medium, which has become the fourth most popular platform for news out of about a dozen in the United States, according to Pew Research Center surveys, showed signs in 2010 of having peaked.2

In prime time, the evening hours when the audiences are largest and therefore the most appealing to advertisers, median viewership at the three channels together dropped 16% to an average of 3.2 million viewers, according to data from Nielsen Media Research (see cable data section for more on audience numbers).3

And unlike last year, the declines in prime-time viewership were not limited to CNN, the channel that has attracted the most attention for audience troubles. Certainly CNN saw the most severe fall-off. Median prime-time viewership plunged 37% in 2010 to 564,000 viewers.4 Those problems helped usher in a steady parade of bad press, along with some turnover of high-profile personnel.

In 2010, however, all of the major news channels had audience declines. At the largest of the news channels, Fox, the prime-time audience fell 11% to a median viewership of 1.9 million. MSNBC experienced the mildest drop in audience, falling 5%, to 747,000 in prime time. HLN, CNN’s sibling channel, lost 17% of its prime-time viewers, falling to an average of 434,000.

In the daytime hours, the same pattern was felt across the board. Combined, the median daytime audience for cable news fell 12%, ending 2010 with a median 1.9 million people watching on any typical day.

SEE FULL DATA SET

There was one audience metric that showed CNN in the lead, though here, all channels were down compared to 2009 levels Cumulative audience, or “cume,” measures how many different viewers tune in over the course of a month. The metric reveals the breadth of a channel’s audience and thus how many different people might be exposed to a given advertisement over time. In 2010, about 42 million different people watched CNN for at least an hour a month. That was more than Fox’s 41 million and MSNBC’s 37 million, according to Nielsen Media Research.

In short, the data suggest that after 30 years, cable news has come to play a broad but somewhat more limited role in the information ecosystem. Many people tune in to it occasionally, but its role has become more refined and prescribed.  And there may be a ceiling on how much prime-time talk and opinion people will watch. Not only are there fewer “appointment” viewers for cable news programs, but there are fewer casual viewers as well, as newer technologies provide other ways of receiving breaking news.

In 2010, no channel suffered more problems or instituted more changes than CNN. It replaced the president of the news network with the executive who had run its sibling network HLN, instituted major programming changes in prime time, and worked to persuade advertisers that its global video represents far more than its prime-time lineup.

Fox locked in its on-air talent into long-term contracts. At the same time, its executives sought to maximize their advantage from the channel’s current dominance, pitching the indispensability of its content to cable operators and the value of its audience to potential advertisers.

MSNBC braced for new owners arriving in early 2011 and, after firing its most popular host, believed that it now had a liberal prime-time lineup that could survive without him (see cable data section for more on ownership).

And all three channels moved ever more aggressively into new digital platforms, a frontier that might be more urgent for cable news, given that, at least according to one measuring firm, traffic to the websites of all three cable channels fell during the last year (see cable data section for more on digital trends).

One potential threat in 2010 seemed not to materialize. Some analysts had predicted that the pay television industry would be hurt by budget-conscious Americans canceling their cable subscriptions and finding their news content elsewhere.  In the end, the cancellations proved small. It appeared there was something else to worry about instead: Americans weren’t dropping cable; they were simply watching other things on TV besides news.

CNN: Overhauling personnel and programming

One lesson of 2010 was further confirmation that cable news, particularly in prime time, has become a medium for ideological and opinion-driven talk. The two channels that fill their evening hours this way fared far better than CNN, the one channel that tried to offer reporting and a mix of viewpoints in its commentary. “When you’re clear about who you are, you actually make money,” MSNBC’s chief marketing officer, Sharon Otterman, told The New York Times in October.5

In reality, Otterman’s network does not make more money than CNN. But for the first time it solidly beat the oldest cable news channel in prime-time ratings.

Fox’s Bill O’Reilly, who hosts the No. 1 rated program on cable news, put it this way: “People in the United States now, they know the news already, because they have the internet, they have talk radio, a lot of vehicles, so they want analysis and perspective from a cable network, particularly in prime time. They don’t want to hear [the news] again.”6

CNN stuck to a strategy of trying to cast itself as the sole neutral source of unbiased journalism in the medium, especially in prime time. More of its money goes into reporters and bureaus, and its prime time lineup is not made up of shows hosted by commentators from a single point of view.  “We’re the only credible, nonpartisan voice left, and that matters,” said CNN Worldwide president Jim Walton to a group of advertisers in the spring.7

If it matters, it does not show up in the ratings. What is less clear is whether the problem is in the vision or in the execution. By year’s end, however, CNN had begun to make major changes in personnel. Between Walton’s April affirmation of CNN’s voice and early 2011 the network had replaced the president of CNN U.S. and recalibrated two-thirds of its prime-time lineup. One website that tracks the industry reckoned that CNN lost some 20 high-level reporters, producers or executives in the course of 2010. Among those were foreign correspondent Christiane Amanpour, morning anchor John Roberts, international reporter Octavia Nasr, and daytime host Rick Sanchez, who was fired after accusing his employer of bigotry.

One anchor to depart was self-effacing about the reason. “The simple fact is that not enough people want to watch my program,” wrote Campbell Brown in May in a candid assessment of the problems her 8 p.m. straight news program faced in that competitive time slot.8

It was canceled in July. By the fall, CNN introduced what it hoped would be its answer to Fox and MSNBC. Parker Spitzer, a program that would offer analysis of the day’s news but from two ideological points of view rather than one. Elliot Spitzer is the Democratic disgraced former governor of New York. Kathleen Parker is a moderate conservative newspaper columnist. At least in its first months, the program failed to generate either ratings or positive reviews, and by February 2011, it was reconfigured as a roundtable concept, called In the Arena, minus Parker.

In December, Larry King, who for years ran the most watched program on CNN, retired after 25 years with CNN, “perhaps tak[ing] with him the hourlong conversational form of interview on cable news television,” the New York Times said.9 King, whose ratings had sunk by nearly 40% in his final year, was replaced by Piers Morgan, a Briton best known in America as a judge on NBC’s America’s Got Talent.

By year’s end, the only prime-time program on CNN to remain in place was Anderson Cooper 360 at 10 p.m., but even his program’s ratings had fallen behind those of the newly arrived Lawrence O’Donnell on MSNBC.

CNN also shook up its leadership behind the camera. The most important change was replacing CNN president Jonathan Klein with another insider, Ken Jautz.10 “We’re not satisfied with the ratings,” Walton said on a conference call to journalists. During his six years in charge at CNN, Klein had publicly championed analysis and reporting over commentary, but in the eyes of at least one former CNN correspondent, Jamie McIntyre, he had also “overseen the slow, and sometimes not-so-subtle tabloidization of CNN.”11 Klein had mostly witnessed a slow, and then accelerating, erosion in ratings, and had failed to launch any major prime-time shows that were successful.

Jautz, a CNN veteran, can claim the opposite. He had been responsible for the remaking of CNN Headline News into today’s talk-show oriented HLN, a shift that until 2010 had proved successful in ratings but sometimes controversial.

On taking over CNN, Jautz suggested that the channel’s programming was dull. “Overall, we have to be more viewer-focused. We have to make our programming more interesting,” he told the Wall Street Journal in December.12 He began making changes immediately, including overhauling American Morning and replacing daytime anchor Tony Harris with Suzanne Malveaux.

It is unclear whether HLN offers a hint of the CNN of the future. At HLN, Jautz shifted from news headlines to host-oriented talk and interview programming. He hired Glenn Beck as a host, who later moved to Fox; Nancy Grace, in a true crime show; and Joyce Behar, of ABC’s The View, for a talk show.13

HLN during Jautz’ tenure had strong audience growth, but in 2010 it, too struggled. Its prime-time viewership suffered more than at any cable news channel but CNN, dropping 17% from 2009 levels. In the wake of the declines, HLN moved the Joy Behar Show from 9 p.m. to 10 p.m., making room for the debut of a new program, Dr. Drew, hosted by Drew Pinsky, a medical doctor and host of a nationally syndicated radio talk program, Loveline.14 One mainstay at 8 p.m. was Nancy Grace, who, despite a dip in ratings, signed a new multiyear deal at the end of 2010.15

MSNBC: Building a brand, losing a standard-bearer

MSNBC also was making changes in its programming lineup as 2011 began, but at least some of these arose from personnel issues rather than ratings problems.

In January 2011, the channel abruptly parted ways with its 8 p.m. star, Keith Olbermann, whose move toward strident liberal commentary helped give the network a prime time programming direction starting in 2003 after years of struggling with an identity crisis and flat ratings.

Olbermann’s ratings dropped 11% in 2010, but that was in line with the rest of cable news, and was much less seismic than CNN’s losses. The problem was more about personality. The anchor had been suspended in November, after NBC News learned he had made campaign contributions to three Democratic candidates without informing his news management, as he was required to do.16 Olbermann openly disapproved of his punishment, which turned out to be only the latest in a history of tensions with his bosses. Olbermann had a record of difficulties with previous employers, including ESPN and Fox. While contractual strictures prevented details of the parting to come out, one NBC News executive put it this way: “Give us a bit of credit for getting eight years out of him. That’s the longest he’s been anywhere.”17 Olbermann announced weeks later that he would be joining Current TV to host a prime-time show and serve as chief news officer.

After Olbermann’s abrupt departure, MSNBC reconfigured its prime-time lineup. It moved liberal commentator Ed Schultz from 6 p.m. to 10 p.m., and moved former Democratic aide Lawrence O’Donnell from 10 p.m. to 8 p.m. (O’Donnell, whose program began airing in September, was pitched as a “blending of politics and pop culture” by Phil Griffin, MSNBC president.18 (It remains to be seen whether the loss of Olbermann and shifting of their prime-time programs will put a dent in the channel’s ratings.)

There were changes on the dayside as well. During the year MSNBC hired a number of recognized TV names, including former HLN anchors Thomas Roberts and Richard Lui, as well as former ABC newsman Martin Bashir.19 Bashir was the anchor of ABC News’s “Nightline,” but he is best known for drawing 27 million viewers for a 2003 interview with Michael Jackson.

In April, MSNBC also suspended daytime anchor David Shuster after it discovered he had violated his contract by making a pilot for a new program for CNN.20 Veteran MSNBC journalist Chris Jansing returned to anchor duties at 10 a.m. and 3 p.m. in June to replace Shuster.

MSNBC also introduced a new marketing slogan during the year in a way that reinforces its more partisan approach. In October, the channel began a new campaign called “Lean Forward.” The new campaign, said the New York Times, “embraces its progressive political identity.”21

Fox: Renewing the contracts that have made its formula work

Fox News Channel, which airs every one of the top 12 rated cable news programs, did not make any changes to its prime-time lineup in 2010. To the contrary, it locked in much of its on-air talent for years ahead.

In June, Fox announced that it had agreed on a new multiyear contract with Greta Van Susteren, the lawyer turned anchor whose CNN program often used to focus on true crime but has branched out since moving.22 In October, the channel signed its hard-news anchor Shepard Smith to a new multiyear deal (his last contract had him earning between $7 million and $8 million a year).23 Smith hosts a rapid-fire newscast at 3 p.m. and 7 p.m. In 2010, he made public statements teasing his colleague Glenn Beck, whose program airs at 5 p.m.

And in December, Fox signed its Special Report anchor Brett Baier to a new multiyear contract.24 Baier, who replaced retiring Washington bureau chief Brit Hume on the program, is more openly conservative than Smith on the air, and now also exceeds him in ratings.

Bill O’Reilly, who is paid over $10 million a year by Fox, and Sean Hannity, who is paid an undisclosed but very likely high amount (Newsweek estimated his total 2009 earnings from various streams to be $22 million), have contracts that keep them on board through the 2012 elections.25 Glenn Beck, who earns $2.5 million per year, is contracted through 2011.26

Fox News also added to its ranks. In January 2011, it hired former CNN American Morning anchor John Roberts as a senior national correspondent based in Atlanta.27 Roberts had previously spent 14 years at CBS News before moving to CNN in 2006.  The network made one other prominent hire. After Juan Williams was fired by NPR in the wake of his comments about Muslims made on a Fox News program, Fox signed Williams, an occasional analyst, to a larger role worth $2 million over the course of three years.28

The network, though, did lose one prominent name: Chief White House correspondent Major Garrett announced in August he was leaving to take a job with National Journal.29

While MSNBC solidified its identity as the place for liberal views, Fox continued to be — programmatically and institutionally — conservative. In August, FEC documents revealed that News Corp., Fox’s parent, had donated $1 million to the Republican Governors Association, an amount that made it the sixth-largest contributor to Republican governors that year.30

And in December, the liberal advocacy group Media Matters obtained a staff memo written by Bill Sammon, Fox vice president and Washington managing editor, that issued pointed instructions for framing the debate around health care in terms favored by Republicans. “Please use the term ‘government-run health insurance,’ or, when brevity is a concern, ‘government option,’ whenever possible,” the memo said. The instructions, according to published reports, were based on the debate-framing advice of Republican consultant Frank Luntz.31

Making the case to advertisers and cable companies

If the audience picture of cable is becoming cloudier, that doesn’t have as immediate an effect on revenue as some might imagine. Part of the reason that cable revenues increased, even as ratings dropped, is that cable channels are able to lock in advertising and subscriber rates for extended periods of time. Being able to do that involves a certain amount of finesse on the part of the channels themselves. As they try to build their brand, they also must convince advertisers and cable operators that their programming is a key reason that subscribers sign up for cable in the first place.

A question for Fox in 2011 is whether its declines in audience and its overtly political talk show hosts will dampen its recent successes in ad rates and license fees.

Historically, CNN has held the edge in subscription fee and ad rates, or CPM (cost per thousand in Latin). In recent years, as it has flown past CNN in ratings, Fox has aggressively pushed for higher fees. In 2010, market research analysts estimated that the channel received an average rate of 70 cents per subscriber per month, up from 58 cents just a year before. And it is in the midst of a new round of negotiations, in which it reportedly seeks $1.25 per subscriber per month.32 Fox’s president, Chase Carey, even publicly argued in December 2010 that Fox News was as much of a “must carry” as ESPN, the most expensive cable channel in the U.S. at a subscriber rate of over $4 per month.33

SEE FULL DATA SET

All this is part of a campaign by Fox leadership to show that Fox News viewers are worth more to advertisers than they are given credit for and are not limited to older and conservative demographics.34

Some of Fox’s programs, however, perhaps especially Glenn Beck’s, are not without their controversy. Some advertisers have told Fox they do not want to advertise on his program after he accused President Barack Obama of being a racist.35

At CNN, the pitch, both to advertisers and to the growing chorus of critics of its ratings, is quite different: that the CNN brand is not defined just by its ratings-challenged prime time in the United States.

Part of CNN’s argument is that its prime-time ratings, which measure the audience for a given show at a given moment, do not capture the channel’s reach, as measured through cume audience.

The other part of CNN’s pitch is that it is more than one channel: CNN is a brand that includes HLN, CNN International and its popular website, all of which fall under CNN Worldwide and offer advertisers a much larger potential audience.

In 2010, CNN used the same reasoning to play down the importance of its struggles with prime-time ratings by arguing that the time slot impacts only a small slice of the multiplatform organization’s revenue pie. In May, Time Warner, CNN’s parent corporation, hosted an “investor day” where several executives, including the company’s chairman and CEO, Jeff Bewkes, called attention to the statistic that prime-time CNN advertising generated just 10% of CNN Worldwide’s overall revenue (CNN U.S., CNN International, HLN and CNN Digital are combined in this calculation).36

MSNBC in 2010 did not jockey for leverage with advertisers or cable companies, at least not publicly. It appears that there was no need to: with its relative audience stability and more viewers in the younger and more desirable demographic, advertising revenue at MSNBC enjoyed the strongest growth, 11%, among the three channels.

The next generation of digital

One obvious answer to cable news’ viewership problems is to encourage audience growth on the web. Each of the three cable brands took steps to do so in 2010, though not all three were equally aggressive.

Fox occupies the contradictory position of being the cable news channel with the highest viewership and with the lowest online audience. In 2010, according to Nielsen, the channel’s online brand drew a monthly average of 15.5 million unique viewers per month. ComScore’s calculation of Fox’s unique audience in December of 2010 was lower, but not far off from this number, at 10.2 million. Still, overall, Fox has increased its web audience in recent years to the point of being ranked No. 6 by Nielsen in 2010 among news websites. (In 2008, Fox ranked 10th.) In comScore’s list, Foxnews.com ranked No. 9 in December.

There is little to indicate that this concerns Fox News management. Foxnews.com has managed to cultivate a greater loyalty among its smaller crowd of web visitors, as Fox News Channel does on television. Its users tend to come back more often and stay longer per visit than the corresponding users of CNN’s and MSNBC’s digital homes.

In 2010, there are signs that again Fox is moving somewhat more slowly to new platforms than its rivals. Fox was last to develop specialized apps for wireless devices, for instance. It released its free iPhone app in April 2010. As of early 2011, it still did not have an iPad app, though its sibling network Fox Business Network does. On Facebook, its fans numbered 1.7 million as of February 3. Glenn Beck, one of the channel’s most popular personalities had just about the same number of fans. On Twitter, Fox is followed by nearly half a million users, less than MSNBC or CNN. Beck is followed by nearly 350,000.

At CNN, digital has become a significant economic factor. In April, CNN’s parent company, Time Warner, released internal documents showing that CNN’s digital sales were bringing in as much money as CNN prime-time advertising did.37 This would put digital sales at roughly 10% of all the CNN Worldwide revenue, enough to make it a valuable stream to cultivate. (The other parts included advertising on the company’s various television platforms, along with subscription revenues.)

CNN operates one of the more successful online news brands. By most rating agencies, it is among the top four sites for news, and while the web is not yet enough of an economic engine to lift the company’s fortunes, CNN made efforts to invest in its digital properties even as its television platform stumbled.

According to data from Nielsen, CNN.com and its affiliated sites attracted an average of 35.7 million unique visitors per month in 2010, putting it at No. 2 overall among news and information websites. ComScore puts the numbers far higher. According to that measurement company, CNN’s network of websites drew 67.8 million unique visitors on average in a sample month of December 2010. Ancillary websites draw strong audience numbers as well. CNNMoney.com, for instance, has flourished under Chris Peacock. Since he came along in 2004, the site’s traffic has more than doubled from 180 million page views per month to 450 million. Its video programming represents 42% of total streams within the business/finance category.38

In 2010, CNN, like most media players, was putting more emphasis on video and new platforms. “We have been making a big push to have much more emphasis on video on our site,” said CNN’s senior director of product development, Dermot Waters, at an April conference.39 “Mobile broadcast is certainly an option and probably another avenue for a revenue stream.”

Social media is also becoming more important in cable. During its annual presentation to advertisers, in April, K.C. Estenson, CNN.com’s senior vice president and general manager, made the case that CNN dominates its competition when it comes to Twitter. Said Estenson, “CNN is one of the most followed if not the most followed brand on Twitter.”40 A February 2011 snapshot reveals that CNN is followed by about 1.6 million users. Anderson Cooper, one of CNN’s popular and heavily promoted figures, is followed by nearly 900,000. On Facebook, CNN has 1.7 million fans; Cooper has about half a million.

In December 2010, CNN launched its iPad app, allowing users to get CNN content in broadsheet format, list view, and slide show. Its iPhone and iPod Touch app ($1.99) entered the market in September 2009. It is the No. 1 paid news app in number of downloads.

The creation of MSNBC.com with Microsoft was an important part of the strategy for launching NBC’s move into cable news. In 2010, MSNBC digital seemed to be moving in several directions. In the MSNBC.com redesign, there was more emphasis on video and photography, less on text and banner advertising. In new platforms, it was as aggressive as any of its rivals about developing new apps, though some of those are more program-based. In social media, MSNBC was also less active as a brand, letting outreach evolve host by host and show by show.

As far as the main news website is concerned, MSNBC.com, which is jointly owned by NBC Universal and Microsoft, is generally ranked among the top two or three news websites. Depending on the rating agency, the website attracted anywhere from 32 million unique visitors (Nielsen) to 48.7 million (comScore) in 2010. According to Nielsen, though, the MSNBC digital network slipped from No. 2 to No. 3 in 2010, bumped from that spot by CNN’s digital network.

One change is that that the site rolled out a new design in June that de-emphasizes text, promoting videos and photos for the first time as equally important. In an effort to innovate, the site also did away with banner ads, instead transitioning to an advertising format that relies less on page views and more on deep user engagement with content on one page.41 MSNBC.com also hired Vaughn Ververs as its political editor.42 Ververs, who worked for CBSNews.com and The Hotline, a political site published by the National Journal, was most recently senior editor at Politico.

MSNBC also took steps to share its content and interact with its audience on a variety of digital platforms. In January 2011, the news organization launched its first iPad app, for its prime-time host Rachel Maddow. MSNBC already offers a free app for the iPhone and iPod touch, introduced in 2009. The iPad app provides live access to Maddow’s tweets, as well as access to her blog and recent installments of her program.43 MSNBC’s Twitter presence is modest compared with its cable news counterparts, with about 68,000 followers as of February 3, 2011.  Maddow, one of the channel’s more popular personalities, is followed by more than 1.7 million. The MSNBC.com Facebook page had 109,000 fans as of the same date; Maddow had nearly 300,000 fans.

Branding issues may surface under new ownership. As the MSNBC cable channel packaged itself more openly as a news network with a point of view in 2010, the identity of MSNBC.com came into question. A March memo by MSNBC.com president Charlie Tillinghast indicated that NBC Universal and Microsoft, the site’s parents, were holding talks about changing the site’s name. “Both strategies are fine,” wrote Tillinghast, referring to the straight-news nature of the website and the point-of-view programming on TV. “But naming them both the same thing is brand insanity.” MSNBC and MSNBC.com are separate companies.44

The worry about names only reinforces some of the brand marketing issues that have bedeviled NBC and MSNBC since the cable channel moved overtly left. During the daytime, MSNBC relies heavily on NBC personnel for its news content, and during the 2008 election there were tensions over who would anchor during news events — opinionated program hosts or more neutral journalists. Now those concerns have spread to the website.

One factor going forward is how NBC Universal’s new owner, Comcast, is going to react.

The Comcast factor

Brand identity and the web are only one of many questions raised by the long-awaited merger of NBC Universal and Comcast in January 2011. Comcast, a Philadelphia-based cable company, bought 51% and control of NBC Universal for $14 billion from General Electric and the French firm Vivendi, which jointly owned NBCU. The deal gave the cable company management control over the NBC-TV broadcast network and its owned-and-operated local stations, NBC News, which includes MSNBC and CNBC, as well as NBCU’s entertainment cable channels, movie studio, and theme park divisions (see cable data section for more on CNBC and other cable news specialty channels).

Some changes had already come. In January 2011, Comcast’s former chief operating officer, Stephen Burke, replaced Jeff Zucker, a former NBC News executive producer, as chief executive of NBC Universal.45 Burke is perhaps known more for his consensus-building leadership style than Zucker. Steve Capus remained in charge of NBC News, a position he assumed in 2005.

It is unclear what impact the new ownership may have on CNBC, the financial news channel owned by NBC Universal. CNBC, which brings in much smaller ratings than MSNBC, generates nearly twice the amount of revenue. In 2010, SNL Kagan projected that CNBC would generate $722.9 million in revenue, compared to $382.5 at MSNBC, and generate $448 million in operating profit, compared with $172 million at MSNBC. Part of the reason is the elite and valuable nature of CNBC’s audience. The channel’s CPM in 2009, the last year for which figures are available, was $7.67, higher than that of any other cable news channel, and more than double that of MSNBC’s $3.50.

One of CNBC’s competitors, Bloomberg TV, complained that the Comcast transition could put CNBC in an unfair competitive position. Bloomberg’s concerns stemmed from potential implications of vertical integration, with Comcast, a major cable provider, controlling both the pipeline and the content. The company could, Bloomberg argued, place Bloomberg TV on a more expensive tier, and leave CNBC as a non-premium channel.46

There were no similar indications that Fox Business Network, the other financial news channel trying to chip at CNBC’s lead in that niche, was going to cry foul over the Comcast takeover. The young Fox Business channel has yet to turn a profit, although its revenue continues to grow. In 2010, it was projected to generate $104.9 million in total revenue, a mere 7% of what Fox News Channel was expected to bring in.

Should cable be worried?

Are there signs of trouble in the 2010 for cable news despite the rising revenues?

One possibility, known to the industry as cord cutting, is the fear that consumers are cancelling their pay TV subscriptions in favor of a patchwork of free online video and broadcast television.

Several studies released in 2010 offer data that counter the notion that cord cutting is an imminent threat to cable providers, and by extension, cable news channels.

In one such study, ESPN, using Nielsen ratings data, found that less than 1 percent (0.28%) of American households had canceled their cable subscriptions in a three-month period in late 2010. And even that number was partly mitigated by a small percentage of homes (0.17% of households) that during the same period switched from broadcast-only to pay TV.

SNL Kagan reported similar figures, showing that 119,000 out of 100 million dropped their subscriptions in the same time period.47 And another study confirmed that cord cutting was more of a worry than a reality: Frank N. Magid & Associates, in its annual survey of consumer video consumption, found that only 1% of those surveyed reported canceling their pay TV.48

The findings of these studies do not mean that cord cutting will never be a serious threat to the cable model; the advent of tablets, improved smart phones, seamless Internet-to-television converters, faster broadband, and improved buffering in streaming video technology may upset that model in the future. The evidence to date simply suggests it will not happen overnight.

Perhaps a more relevant concern to cable news channels is the fact that consumers are watching just as much, if not more, television as before, but they are turning to non-news channels. In 2010, according to the Nielsen Company, Americans watched more TV than ever before. Viewership rose about 1% across all broadcast and cable networks.49 But not many of them were tuning to cable news. The big cable winners were USA and TNT. The History Channel and Ion Television increased viewership by over 25%. Investigation Discovery, owned by Discovery Networks, grew 64% on the back of its nonfiction crime stories.50 In fact, it was cable news that stood out for its audience losses, even in a year that brought with it an earthquake in Haiti, an oil spill in the Gulf of Mexico and a contentious midterm election.

These audience shifts to non-news programming may have real revenue implications if the trend continues. In a Beta Research survey of 225 ad agency and client executives released in January 2011, most said they are increasing their spending on non-news networks, foremost among them ESPN.51 None of the top 10 channels, in terms of projected increase in ad spending, were news-based.

Ultimately, the “why” of cable news audience attrition is one that can’t be answered in one year. Revenue growth in the near term may buy CNN, Fox, MSNBC and the others some time to figure out the answer.

Endnotes

  1. Throughout this chapter, CNN refers to the domestic, rather than the worldwide, news operation.
  2. Americans Spending More Time Following the News.” The Pew Research Center for the People & the Press. Sept. 12, 2010.
  3. Mean viewership — the often-used but less indicative metric — showed audiences down 14% to 3.3 million for the year.
  4. In this report, prime time is defined as the hours between 8 p.m. and 11 p.m. Monday-Saturday, and 7 p.m. to 11 p.m. on Sunday. Daytime is defined as the hours between 6 a.m. and 6 p.m., Monday-Sunday.
  5. Stelter, Brian. “With Tagline, MSNBC Embraces a Political Identity.” New York Times. Oct. 4, 2010.
  6. Meyers, Jim. “O’Reilly: Obama Turning U.S. Into ‘Nanny State.’ ” Newsmax.com. March 28, 2010.
  7. McPike, Erin. “Away From Prime Time, CNN Thrives.” National Journal. May 22, 2010.
  8. Gold, Matea. “This isn’t CNN’s prime time,” Los Angeles Times, May 31, 2010.
  9. Carter, Bill and Stelter, Brian. “Larry King Prepares to Sign Off, and Everybody’s Talking.” New York Times, Dec. 13, 2010.
  10. Flint, Joe. “CNN got rid of its U.S. president Jon Klein not long after extending his deal.” Los Angeles Times. Sept. 24, 2010.
  11. McIntyre, Jamie. “The “De-Kleining” Fortunes of CNN.” Line of Departure. Sept. 25, 2010.
  12. Schechner, Sam. “CNN’s New Chief Dives In.” Wall Street Journal. Dec. 20, 2010.
  13. Jautz was replaced at HLN by former CNN chief marketing executive Scot Safon, whom Walton called a “strategic thinker” and someone who has been “involved in and contributed to all the big decisions that have been made here over the last few years.” (Flint, Joe. “CNN got rid of its U.S. president Jon Klein not long after extending his deal.” Los Angeles Times. Sept. 24, 2010.)
  14. Weprin, Alex. “HLN Switches Up Primetime Lineup.” TVNewser. Jan. 7, 2011.
  15. Weprin, Alex. “Nancy Grace Re-Ups With HLN.” TVNewser. Jan. 5, 2011.
  16. Stelter, Brian and Carter, Bill. “Olbermann Suspended From MSNBC for Campaign Donations.” New York Times. Nov. 5, 2010.
  17. Stelter, Brian and Carter, Bill. “Olbermann Split Came After Years of Tension.” New York Times. Jan. 23, 2011.
  18. Stelter, Brian. “Lawrence O’Donnell gets his own MSNBC show.” New York Times. June 15, 2010.
  19. Thomas Roberts Officially Joins MSNBC.” InsideCableNews. Dec. 20, 2011.
  20. Stelter, Brian. “MSNBC Suspends David Shuster ‘Indefinitely.’ ” New York Times. April 6, 2010.
  21. Stelter, Brian. “With Tagline, MSNBC Embraces a Political Identity,” New York Times, Oct. 4, 2010.
  22. Stelter, Brian. “Fox News seals new contract for Greta Van Susteren,” New York Times, June 15, 2010.
  23. Andreeva, Nellie. “Shepard Smith Inks New Fox News Deal.” Deadline.com. October 26, 2010.
  24. Zurawik, David. “Fox signs Brett Baier to new multi-year deal.” Baltimore Sun, Dec. 14, 2010.
  25. Gold, Matea. “Bill O’Reilly’s indie instincts.” Los Angeles Times. March 21, 2010.
  26. Leibovich, Mark. “Being Glenn Beck.” The New York Times. Sept. 29, 2010.
  27. Weprin, Alex. “John Roberts to Join Fox News Channel.” TVNewser, Jan. 3, 2011.
  28. Gold, Matea. “In wake of NPR controversy, Fox News gives Juan Williams an expanded role.” Los Angeles Times. Oct. 21, 2010.
  29. Stelter, Brian and Peters, Jeremy W. “National Journal Hires Major Garrett From Fox News.” New York Times. Aug. 25
  30. Bump, Philip. “News Corp. Enters Into Politics — Explicitly, This Time.” Mediaite.com. Aug. 18, 2010.
  31. Kurtz, Howard. “Fox News’ Spin Game.” Daily Beast. Dec. 9, 2010.
  32. Weprin, Alex. “Goldman Sachs: Fox News May Get $1.25 Sub Fee in 2010.” TVNewser. June 30, 2010.
  33. Weprin, Alex. “As Fox News Channel Enters New Round of Carriage Negotiations, It Sets Its Sights on… ESPN?” TV Newser. Dec. 8, 2010.
  34. Hampp, Andrew. “Fox News: We’re an Upscale Buy on Par With Mainstream Nets.” Advertising Age. March 22, 2010.
  35. Apple announced that it would no longer advertise on Fox and Clorox announced it would no longer buy advertising on political opinion programs.
  36. Weprin, Alex. “This Is Where CNN Makes Its Money.” TVNewser. May 27, 2010.
  37. Gold, Matea. “This isn’t CNN’s prime time.” Los Angeles Times. May 31, 2010.
  38. CNNMoney.com’s brand of business journalism.” Talking Biz News. July 19, 2010.
  39. Cohen, David. “CNN Thinks Mobile at Think Mobile.” Web Newser. April 7, 2010.
  40. Gillette, Felix. “Yada, Yada, Primetime: CNN Touts Twitter Dominance Over Cable News Rivals.” New York Observer. April 13, 2010.
  41. Shields, Mike. “MSNBC.com puts on the banner ban.” Media Week. June 27, 2010.
  42. Vaughn Ververs Named msnbc.com Political Editor.” News on News. June 30, 2010.
  43. Cohen, David. “MSNBC Launches Rachel Maddow HD iPad App.” WebNewser. Jan. 11, 2011.
  44. Stelter, Brian. “Memo Hints at Name Change for MSNBC.com.” New York Times. Oct. 6, 2010.
  45. Ariens, Chris. “Steve Burke to Become CEO of NBC Universal After Comcast Deal Closes.” TVNewser. Sept. 26, 2010.
  46. Weprin, Alex. “Bloomberg Wants More Time to Weigh In on Comcast-NBCU.” TVNewser. June 16, 2010.
  47. Stelter, Brian. “ESPN Study Shows Little Effort to Cut Cable.” New York Times. Dec. 5, 2011.
  48. Winslow, George. “Magid Study Finds Little Cord Cutting.” Broadcasting & Cable. Nov. 30, 2010.
  49. Stelter, Brian. “TV Viewing Continues to Edge Up.” New York Times, Jan. 2, 2011.
  50. Stelter, Brian. “TV Viewing Continues to Edge Up.” New York Times, Jan. 2, 2011.
  51. Lafayette, Jon. “More Buyers Plan to Step Up Cable Spending: Beta survey.” Broadcasting & Cable. Jan. 11, 2011.