Absence of Kaplan

CNN's dramatic power shift shows AOL's growing influence
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Everything about the CNN renovation project screams AOL. The old structure, dominated by television, gave way last week to a new regime built around content distribution. The scheme includes a news guy, a business guy, a domestic guy and an international guy.

But there was no television guy, a glaring omission that led Rick Kaplan to collect his Emmys and leave CNN last Wednesday.

"McGuirk and Heyer called me up to the office," said Kaplan, now ex-president of CNN/U.S. "McGuirk started reading through the jobs and what they'd be doing, and it occurred to me my name wasn't on that list."

Terry McGuirk, chairman and CEO of Turner Broadcasting Systems, and Steve Heyer, president and COO, then told Kaplan he could stay and produce news programs, a forte for which he's widely considered a maestro.

"If I want to do shows, I want to do it on a network with 20 million viewers, not 20,000," he said.

Kaplan's poke at CNN's ratings refers to the very straw that broke his tenure. A legendary newsman who united P.W. Botha and Desmond Tutu during the boiling point of apartheid, Kaplan was brought to CNN to stabilize ratings. Nielsens peaked in bad times and slipped in good.

Kaplan swept away an archaic set, created a polished look and launched shows designed to attract regular audiences. Among them was NewsStand, a sturdy newsmagazine show, but one that got off the ground like the Challenger. In the wake of recriminations over charges in the inaugural episode that the U.S. Army gassed its own troops, Kaplan's indignity divided loyalties at CNN, according to several former Turner executives. He was henceforth admired by a faction who thought he improved the place, and resented by another who considered him arrogant and tempestuous.

His efforts to improve ratings at CNN were fruitless. Ratings eroded, and he bore the brunt of the blame, perhaps unfairly. Prime time numbers fell 28% from 1995 to 1996, the year FOX News Channel and MSNBC were launched. Kaplan came in '97. Ratings jumped 20% the following year with the messy Clinton affair, then slipped 21% in '99 and 58% so far this year (excluding convention months). During the same period, FOX News and MSNBC grew at more than 10 million subscribers a year.

"This dispersion of audience was pretty predictable," said Tom Wolzien, senior analyst at Sanford C. Bernstein & Co. "I've built it into my models for a long time. I thought [Turner] should sell CNN three years ago. They were a monopoly player, and they were going to get diluted."

CNN's saving grace, he said, is America Online, the massive Internet player swallowing Turner parent Time Warner. CNN and its $1 billion newsgathering machine can feasibly dominate in broadband news with AOL's immense distribution capacity, a fact that doesn't escape the executives taking charge of the network.

"We want to have a structure here that can best serve all our platforms," said news guy Eason Jordan, the new chief news executive of CNN News Group, an entity that includes the 33 outlets in television, radio, Internet sites and wire service. "This was driven largely by CNN and Turner, but clearly we have a medium- to long-term eye on what's going on with AOL."

Jordan along with Philip Kent, Jim Walton and Chris Cramer were tapped from inside Turner to run the News Group. Business guy Kent, formerly president of TBS International, became president and COO; Jordan was bumped up from president of global news gathering. Walton was moved from the top of CNNSports Illustrated to run CNN's domestic operations, and Cramer will oversee international operations.

With Jordan taking operational issues to Kent, who in turn reports to Heyer, the new structure cuts Tom Johnson, CNN chairman and CEO-and adamant Kaplan supporter-out of the business loop. That fuels speculation he is next to go. Turner sources say Johnson is among senior executives whose contracts end Dec. 31, 2000, as arranged during the Time Warner takeover of Turner in 1997. Johnson said he's not leaving. McGuirk reportedly concurs. Time Warner officials wouldn't comment on contractual matters.

Executives once said the same thing about Kaplan before his departure-which wasn't even mentioned in last week's restructuring announcement.

"The press release was meant to talk about the future, not the past," said Jordan, who worked under Kaplan.

The future includes more marketing, a fixture on Kaplan's wish list, and a continued commitment to long-form reporting, Jordan said. The future of Kaplan's NewsStand, Ahead of the Curve and Street Sweep is uncertain.

"Nobody has more respect for Rick Kaplan than me, but it's not impossible to raise ratings," Jordan said. "We're evaluating everything."

Kaplan, who will be paid for the remaining 16 months of his estimated $6 million-plus contract, is going to take some time off before his next move. "I wish them well," he said.

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