Cover Story: Shortfall Season at CNBC
With budget cuts looming, the successful business network is out to prove it's still money
By Marisa Guthrie -- Broadcasting & Cable, 11/30/2008 7:00:00 PM
VIDEO: See the CNBC "I am..." promo spots for Maria Bartiromo, Charlie Gasparino and Joe Kernen below.
Erin Burnett is obsessed with Art Hogan's bottom.
Hogan, the market analyst at investment advisor Jefferies & Co., often appears on CNBC's Squawk on the Street, the show Burnett co-hosts with veteran anchor Mark Haines from the CNBC studios at the New York Stock Exchange. Hogan may be something of a hunk, and Burnett is rather mischievous, but the “bottom” in this case is the trader's prediction that the Dow would stop falling and rest at a low of 7,800.
The double entendre is one of Burnett's running gags but the bottom is in fact worth watching. It's another day in the economic tsunami, featuring some corporate irony: One day earlier, the Big Three auto executives flew their corporate jets to Washington to beg Congress for help. And the market is now careering toward another record low.
As Squawk heads toward a break, Burnett wonders aloud how many hits a keyword search for “Hogan's bottom” would yield. “It depends on what magazines you're reading,” offers Art Cashin, grizzled trader and director of floor operations for UBS.
The conversation continues after the break. Now seated behind the Squawk anchor desk, Burnett says: “There were 2½ million hits on Google for 'Hogan's bottom.' I just thought you'd like to know that.”
Trying to suppress a grin, Haines adds: “Art Hogan is really glad his bottom hasn't been violated.”
This kind of ribald humor is tolerated—even encouraged—on CNBC. The network is understandably seeing record ratings, thanks to everyone from anxious office drones to stay-at-home moms who wouldn't necessarily know the Libor (London Interbank Offered Rate) from a Labrador, all tuning in to monitor the nation's financial meltdown—and its effect on the value of their 401(k) accounts.
While the gallows humor continues, CNBC isn't exactly laughing all the way to the bank. Despite the yuks and the huge numbers, the network is now in the process of slashing as much as 10% from its budget. People at the network, says one staffer, “are scared s---less.”
It is a different kind of corporate irony: As CNBC enjoys a new level of visibility and is about to launch a massive new marketing campaign to capitalize on the momentum, it must do so while navigating through the same flailing economy that has sent the network's proverbial stock soaring.
Since September, when the federal government took over mortgage giants Fannie Mae and Freddie Mac and Lehman Brothers collapsed, CNBC has seen the best ratings of its 19-year history, breaking half a million viewers in mid-September for its business day programming (5 a.m. to 7 p.m.) and finishing the month with an average of 373,000 viewers, an increase of 46% compared to Sept. 2007. Among news' sales demographic of 25-54 year olds, business day programming averaged just over 100,000 viewers for the month, an increase from numbers that often leveled off in the five figures.
In October, the news was even better. CNBC averaged just over 500,000 viewers for the month for business day with 150,000 in the demo.
As CNBC executives like to point out, these ratings represent in-home viewing only and do not take into account the sets tuned to CNBC on trading floors and in offices, airport lounges and health clubs. Indeed, walk into any New York City gym these days and CNBC has seemingly replaced ESPN in the cardio theater.
The network has generally been protected from company-wide contractions at parent company NBC Universal, thanks to what have been impressive profit margins (due to some of the highest CPM rates in television) and looming competition from the Fox Business Network, which launched in October 2007. That is, until now.
Unkindest Cuts Are Coming
CNBC executives are now engaged in the messy business of trimming the network's budget, part of a $500 million across-the-board slash at NBC Universal. In a memo to employees last October, NBCU President and CEO Jeff Zucker stipulated “reductions in promotional expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs.”
CNBC's longform unit has already been downsized from 25 to about a dozen, a byproduct of cancelling the newsmagazine Business Nation last summer. The unit, which is headed by CBS News alum Josh Howard, last year brought CNBC the first Emmys in its history, including one for investigative reporting for a Business Nation segment on the prescription drug industry. But the topical nature of the newsmagazine made the show difficult to amortize with extended reruns.
Despite Wall Street's nosedive, CNBC is on track to have another successful year. The network's business-day block is currently up 66% this quarter compared to fourth quarter 2007. But first quarter 2009 could be a harbinger of tough times to come as financial services companies—CNBC's bread-and-butter advertisers—are handing out pink slips like Halloween candy.
According to network president Mark Hoffman, CNBC has continued to book business in the fourth quarter, though it has also taken cancellations. “Next year is a little murkier,” he concedes. “We're in uncharted waters. It's been called a 100-year storm, and that feels accurate to me.”
Dire financial forecasts aside, the network plans to capitalize on its current position as must-see-biz-TV. On Dec. 1, CNBC begins rolling out four 30-second promotional spots each week featuring its more than 40 anchors and reporters. The crowning iteration of the “I am CNBC” campaign launched last year, the new spots depict anchors dishing out biographical goodies about themselves. They borrow a page from the American Express “My Life. My Card” commercials that feature Hollywood celebrities such as Robert De Niro, Martin Scorsese and Ellen DeGeneres spinning yarns about life and career, not to mention how their credit card made everything possible.
Reporters' Confessions
The CNBC “I am…” spots have a decidedly confessional feel. For instance, we learn that Maria Bartiromo plays the accordion and “was a proud hat-check girl in my dad's Italian restaurant.” Growing up in Brooklyn, the kids called her “Bullet,” because she was the fastest runner on the block.
It may not be surprising to learn that pugnacious on-air editor Charlie Gasparino was “a Golden Gloves prospect.” But he's also a “clothes horse,” “a fantastic cook” and “afraid of heights.”
Joe Kernen, a former stockbroker and 17-year veteran of CNBC, has a master's degree from MIT and used to do cancer research. And excitable Mad Money host Jim Cramer “once lived in his car” and was “the first reporter on the scene at the Ted Bundy case.”
Long before the meltdown, CNBC earned kudos for its financial coverage built on the business bona fides and shoe-leather reporting of its anchors. David Faber was dubbed “The Brain” after he broke the Enron story. Steve Liesman was ahead of the curve on the Fed Bailout, and Gasparino did stand-out reporting on the Bear Stearns and Lehman Brothers stories. And Bartiromo made her reputation as the financial genre's first dogged female reporter. She was a business reporter before business reporting was sexy. As she says in her promo, she was “the first person to report live from the floor of the New York Stock Exchange.”
But does revealing their lighter side—and their foibles—help the bottom line or diminish the reporters' credentials? “Our journalists are multidimensional, interesting people,” Hoffman says. “I think our audience will find it interesting to get to know a little bit more about them.”
Whether or not the campaign helps CNBC maintain viewer interest is a question. Still, one must be gratified to gain this morsel from Gasparino's profile: “My mom calls me Chucky, but nobody else better try it.”
Big Idea in Trouble?
The financial crisis has already spurred programming shifts in the 8 p.m. hour (which used to be occupied by a rebroadcast of Fast Money), with a variety of business-day programming airing. When the Dow dropped 444 points on Nov. 20, for example, CNBC Reports went live from 7 p.m. to 11 p.m., pre-empting On the Money and The Big Idea With Donny Deutsch.
CNBC is committed to On the Money, which was launched in August and is hosted by Carmen Wong. But there is equivocation about The Big Idea, according to sources. The show has struggled to grow its audience despite some recent retooling, and there have been conversations about cancelling the show.
Deutsch is well regarded at CNBC. He also hosts an occasional business hour called The Entrepreneurs and is a regular contributor on NBC's Today. His relationship with the network will likely continue even if The Big Idea does not.
Every CNBC staffer realizes he or she is on the front lines for a potentially career-making story. At a time that feels like financial apocalypse, with governments and institutions frantically maneuvering to prevent the unraveling of a system that has held together for more than half a century, CNBC's reporters have often dropped the guise of expertise to confess shock, befuddlement and awe at current events.
“I finish every day by saying, it's another day where I never thought I would live to see these things happen,” Kernen says.
Try as they might to comfort distressed viewers, the reporters often find themselves using black humor to fill the lulls. Last week, one noted that stocks of some Fortune 500 companies would soon be available at your local Dollar Tree store.
“We're on so much…and we're so exhausted,” Burnett says during a break before anchoring Street Signs at 2 p.m.
Style often sits side by side with substance in reports. The chemistry, camaraderie and even the feuds are both genuine and part of a deliberate strategy to keep the coverage swift and spontaneous. But it can get bizarre: A recent dust-up found Gasparino offering an interminable grammatical riff on the the word “got” after Closing Bell anchor Dylan Ratigan threw to him for breaking news with the question “What have you got?”
Many of CNBC's reporters, naturally, come from financial publications like The Wall Street Journal or from high-octane jobs in finance. The dynamic of the network has a natural and unstilted feel that is often missing from broadcast-honed, sound-bite-driven Q and A's viewers are used to seeing on other news venues.
“So much of what CNBC is about are the conversations,” Hoffman says. “In an unstructured ensemble setting, the personalities of our people are going to come through.”
Network Money Maker
The tanking market has roiled the capitalist agenda at some of the network's signature shows, such as stock-picking programs Fast Money and Cramer's Mad Money.
Cramer is probably CNBC's most outsize personality and the one with the most well-known back story. A successful hedge fund manager-turned journalist and stock guru, he is a lightning rod for controversy, with some criticizing his ability to move markets in and out of particular stocks and others calling into question the soundness of the advice he offers. Recently, he advised his viewers to get out of the market entirely if they were going to need their money in the next five years. It's an ironic position for someone whose show depends on viewers' continuing to buy stocks.
Fast Money, meanwhile, is made up entirely of former and current traders (with the exclusion of host and co-creator Ratigan) instead of journalists. Ratigan and his panel recognize that people aren't in the mood to buy stocks, and it may even be in bad taste to advise them to spend their money in the market now. The show has invariably been focused of late on what's gone wrong and why, how the government can fix it, and how investors can preserve what they still have.
Cramer and the Fast Money ensemble have had to be nimble and flexible in the current crisis. They've adapted their shows' formats accordingly. Instead of stock-picking shows, they've become capital-preservation shows.
It makes sound business sense, both for viewers and CNBC executives. Given the encroaching financial picture, it's a format shift the network may soon have to adopt as well.
I Am CNBC: Maria Bartiromo from Broadcasting & Cable on Vimeo
I Am CNBC: Charles Gasparino from Broadcasting & Cable on Vimeo
I Am CNBC: Joe Kernen from Broadcasting & Cable on Vimeo
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This is how JOE responds to the public!!!
Maybe you should loosen up mike... Business news can be a little dry no?
Life is short... Don't you have anything more important to worry about?
Here we are getting good natured mail from all over the world and you're
in your
Little house tsk tsk'ing... Have your friends ever tried to help you?
-----Original Message-----
From: mike [mailto:mike2200@hotmail.com]
Sent: Wednesday, May 12, 2010 6:44 AM
To: Squawk
Subject: Squawk Box Email (mike)
Name: mike
Email Address: mike2200@hotmail.com
City, ST: Chicago
Your Question or Comment: Joe Kernen's comments and statements make this
show so unprofessional I turn the TV on to get the news on what is going
on in the business world and I have to listen to his immature,
semi-embarrassing comments. I can only listen for so long and then
change channels can't you get him to be muzzle it a bit?
mike - 5/12/2010 8:17:08 AM EDT -
Stopped watching the shows when they decided to print the administrations lies without end.
The corporatized media are continuing lies by marginalizing third party voices attempts to speak out during the campaigns especially during the "debates". They are continuing to support the socialized bailout of the thefts that came about by their support of the "Free market" ideology. None of them have the guts to call out the frauds perpetrated on millions of "mortgage" holders who should have been kept from home ownership and the frauds by the bankers of bundling worthless mortgages into AAA paper sold to pensions and other institutions.
When the digital switch happens thousands to hundreds of thousands of TV watchers will leave the system of lying corporate sponsored news forever.
Good luck in regaining your moral compasses.
Time to end this form of one sided corporate capitalism. End corporate personhood. Read Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights. Take back media and take back our government. As someone else said....The Revolution will not be televised.
Stephen A. Verchinski - 12/14/2008 2:56:00 AM EST -
Those who view CNBC should relaize that it's a form or entertainment. Financial entertainment with a line up of quasi-financial hosts with stars from the financial stage. Nothing more and nothing less.
There is good information on the network, but it is always up to the viewer to decide how it fits in their context. I enjoy the show and phrases like "Hogan's Bottom" will become part of history as these are historic times.
Do you want truth? Good luck finding it anywhere.
Dane Belden - 12/2/2008 10:42:00 AM EST -
Why can't business networks also cover personal business and finance during the day... giving viewers some practical financial advice and counsel along with the "what's up/what's down" Wall Street scorecard? Give Ralph Nader a regular segment; he's the guru. The public needs "consumer news" and TV rarely does it.
Vic Livingston, former biz reporter, Fox TV Phila; columnist, members.nowpublic.com/scrivener - 12/1/2008 4:02:00 PM EST -
CNBC doesn't represent the average person with a 401 and/or IRA savings plan. All the guests are brokers, fund managers who short stocks, buy warrants, puts and calls that the average person doesn't understand.
Steve Liesman is the most level headed person on the show.Dennis ??? is the most die hard fiscal conservative along with Michelle who both appear to be beholding to the power brokers.
I started watching the program in the ninties when the tech stocks were going crazy and loss a bundle in the collapse of the bubble. I stopped watching from 02 to 07 and only started then due to the markets trend down, down. Will leave again when the recovery starts.
Lee Eaker - 12/1/2008 2:46:00 PM EST
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