Network News Changes: Just A Matter of Time

Execs may issue denials about possible deals such as ABC/Bloomberg or CBS/CNN, but the partnerships seem to have a whiff of inevitability

By Marisa Guthrie -- Broadcasting & Cable, 9/6/2010 12:01:00 AM

There’s a lot of juicy gossip swirling in media circles these days regarding who may be getting into bed with whom—and the potential players involved are big.

The question of “how big” leads right to ABC News. Deep cuts earlier this year ginned up the rumor mill that the division was being readied for a sale or merger with cash-rich Bloomberg TV. At the same time, persistent speculation about a CBS News deal with CNN bobbed to the surface once again. While those two networks have a history of sharing talent, Katie Couric and her lucrative CBS News contract have been an added, tangential aspect of the merger speculation this time around.

It’s all understandable: With the news industry battered by a still-foundering economy and splintered media landscape, questions of whether such marriages of convenience and economic viability are the future for broadcast news become inevitable.

Meanwhile, NBC Universal and cable provider Comcast await the blessing of regulators on a $28 billion deal that will most certainly have an impact on NBC’s news division. Comcast CEO Brian Roberts has heaped vociferous praise on NBC News, calling it the “single most awesome asset” of the deal. But NBC staffers remain curious as to exactly what a Comcast-owned NBC News will look like.

News divisions still perform an important service, especially in times of war and crisis, as witnessed by the Gulf oil spill. But technology and content proliferation have left the once-mighty broadcast news divisions between a rock and a hard place, forced to tighten belts with the insistence of a Biggest Loser contestant in the face of heightened competition from an array of video news providers. And while broadcasters have been able to plug some budgetary holes with retransmission cash from cable and satellite providers, many wonder if it amounts to a finger in the dike.

“I’m on the record as saying there will be no broadcast television in 10 years,” says Andrew Tyndall, an independent news analyst. Tyndall, who catalogs the evening newscasts on TyndallReport.com, compares the trajectory of the broadcast TV business with the swift demise of network radio.

“That’s presumably going to happen with broadcast television,” he says. “Sooner or later, either the stations or the networks are going to say this is just too much effort, we’ll just stop. And instead of turning on the channel and seeing soap operas and Diane Sawyer, you’ll see infomericals.”

Soap operas are already going the way of the 8-track; casualties include The Guiding Light, As The World Turns and ABC’s SOAPNet. And while the fate of broadcast news has yet to be written in stone, the tea leaves tell their own tale.

The news shifts
When ABC News President David Westin announced last February that his division would undergo a fundamental “transformation,” resulting in a 25% elimination of the work force, it set off a personnel exodus.

But a funny thing happened on the way to operational viability. A majority of the targeted staff reductions were achieved not through forced layoffs, but via voluntary buyouts. Hundreds of employees, some with ABC News for decades, raised their hands. Seeing the writing on the wall, they either left the broadcast news business altogether or attempted to find another port in the digital storm.

Viewers could be excused for missing a whiplash effect on the air. Correspondents, for instance, are conducting more interviews using Skype instead of being on the scene. But changes in news content overall—less foreign coverage, fewer investigations, more celebrity news—have been gradual yet universal. Network news programs have remained fundamentally unchanged even as the Great Recession has turned the financial contraction of the business into a full-on spasm. Nevertheless, the shifts at ABC News, which were preceded by more modest layoffs at CBS News, were another jump of the needle toward the seemingly inevitable.

The bigger question is: Do broadcast news divisions need the bedrock sub fees of a cable partner to survive in a radically changing landscape where news is accessible at the touch of a finger? If so, is NBC News—with its cost-, talent- and program-amortizing cable networks CNBC and MSNBC— the test case for how to position a broadcast news division for the onslaught of digital diffusion? (Last week’s hostage crisis at Discovery headquarters was the latest example of NBC’s advantage over its broadcast-only competitors.)

“It’s a challenging business,” concedes Sean McManus, president of CBS News and CBS Sports. “But it’s a lot more efficient than it used to be, and right now we don’t need a cable partner to be viable.”

Westin says the downsizing at ABC was strategic. “We needed to make sure we had everybody here we needed, and that we were not spending any more than we needed. That positions us to add to what we’re doing digitally and on-air, and have that [growth] benefit the organization rather than be absorbed by inefficiencies.”

NBC News recently hired a couple of ABC News anchors, Kate Snow for Dateline and Martin Bashir for MSNBC as well as Dateline. If those moves don’t rise to the LeBron-like level of Couric’s defection from NBC’s Today to the CBS Evening News, it’s nevertheless part of a pattern, maintains NBC News President Steve Capus.

“There isn’t a day that goes by where we don’t hear from somebody from one of the other networks; sometimes high-profile on-air, sometimes high-profile behind-the-scenes,” he says. “And we’re not sitting here salivating at this. We enjoy a reputation as a good place to work. And I think there is something to that. There have been a lot of successful places that are not fun places to work. I want this to be not just a successful organization, but a place that is thriving creatively and trendsetting in everything that we do.”

NBC News underwent its own painful downsizing in 2007 when MSNBC’s longtime home in Secaucus, N.J., was merged with the broadcast division’s headquarters at 30 Rock. But that was before the recession made operational discipline a matter of survival. And while all news divisions have forged mutually benefi cial partnerships, Westin and McManus deny that their news divisions are close to pulling the trigger on mergers with Bloomberg and CNN, respectively.

“If there is a deal that makes sense for CBS News and CNN in every way, including editorial control, efficiencies, quality control, I’m sure each of us would be willing to do that deal,” McManus says. “That deal hasn’t been reached. I don’t anticipate it being reached, and rumors about impending deals just are flat-out not true.”

But pointedly, McManus did not rule it out at some point in the distant future: “I can’t speak for 20 years down the road. But right now, the plan that we have for each of our broadcasts and our newsgathering operations, I think it’s viable for the future.” McManus says he expects the news division to be profitable in 2011, though he says it’s too soon to say if CBS News will finish 2010 in the black.

Westin would not comment on his news division’s balance sheet, but industry sources say the recent reorganization has put ABC News on the road to profitability.

Still, the appearance last spring of onetime TV news correspondent Willow Bay—wife of Disney chief executive Bob Iger—on Bloomberg TV to cover the Milken Institute Global Conference set off a new wave of gossip about an ABC News/Bloomberg marriage.

“Rumors that have gone around about a merger,” Westin says, “never had a basis in fact. We have various arrangements with Bloomberg.”

Bloomberg is a client of ABC’s NewsOne affiliate service, which means ABC News shares pool video with Bloomberg. There is also cooperation between Bloomberg and ABC’s desks in Washington and New York when covering events, and ABC News’ overseas digital reporters occasionally appear on Bloomberg TV. Westin likens those arrangements to newssharing agreements ABC has with foreign news providers including the BBC, NHK in Japan and ARD in Germany.

“We talk with [Bloomberg] all the time,” Westin says, “but it’s not capital ‘T’ talks about some merger.”

Partnerships have alleviated some budget pressures. But television news is also a star system with lucrative contracts for on-air talent. And while the disparity of pay between the anchor-stars and the rank-and-file has always existed, it is beginning to create more tension inside news divisions that have pink-slipped so many middle-class salaried employees.

In 2006, CBS News signed Couric to the most expensive network news contract ever, a reported $75 million over five years. McManus has not wavered on Couric’s significance to the news division, although the Evening News has stayed stubbornly in third place among nightly newscasts and clocked its lowest ratings in nearly 20 years during the week of Aug. 16, when Couric gamely anchored from Afghanistan. But with her contract expiring next spring, CBS executives will have a choice to make.

“We have not discussed, anticipated or planned any changes until Katie’s contract is up in May, and so at the beginning of the year, we’ll start talking about the future both in terms of a contract and going forward,” McManus says. “No comment about what the future’s going to be. We would like to see the ratings higher, but that’s an ongoing challenge.”

It seems likely that those challenges will only mount as the technological revolution—which has already claimed many victims, including newspapers, newsweeklies and our collective attention span—forces television news organizations to reinvent themselves as multi-platform information suppliers. “The thing that’s killing off network television isn’t the fact that they’ve got news divisions,” Tyndall points out. “As long as network television is alive, it’s going to need a news division.”

That’s certainly the hope at NBC News, where the proposed merger with Comcast has produced plenty of naysayers decrying a lack of consumer choice, while NBC’s future bosses declare their commitment to the altruistic endeavors of news and public-service programming to skeptical government regulators.

FCC mandate aside, the days of broadcast news divisions getting a public-service pass from corporate overlords beholden to Wall Street and shareholders are long gone. Besides, a strong bottom line is vital both for a division’s survival and its appearance on a merger balance sheet.

“We run [NBC News] as a business,” Capus says. “The reason that we do that, unapologetically, is because I want the news division to be positioned for the future. As soon as we stop being a successful business and we’re just an entity within a company with a hand out looking for somebody’s goodwill, then we’ve lost control.”

E-mail comments to mguthrie@nbmedia.com and follow her on Twitter: @MarisaGuthrie