RELATED: Tsujihara Talks Turner
New CNN Worldwide president Jeff Zucker has only been on the job two months, but already his boss, Phil Kent, is giving the executive charged with revitalizing the news giant rave reviews for not only turning down a sprawling office at the Time Warner Center for a modest one in the newsroom, but for changing the mood at CNN and energizing the staff.
The change at the helm of the news brand is just the latest big transformation Kent has sparked in his 10 years as chairman and CEO of Turner Broadcasting System, which in his tenure has grown from 9,500 employees to more than 13,000 across 130 channels in 200 countries around the world. Last year, Kent recruited RTL Group's Gerhard Zeiler to run Turner's international business, which is now in the process of restructuring for growth.
In a wide-ranging interview over breakfast at Nougatine in New York City, Kent revealed to B&C programming editor Andrea Morabito who is really setting the timeline for change at CNN/U.S., what Turner can learn from Netflix's original programming strategy and why Dish's Hopper is bad for the business. Morabito also spoke with Zucker and recently named Warner Bros. CEO Kevin Tsujihara about the secrets to Kent's ability to leap corporate divides in a single bound (among other things). An edited transcript follows.
Jeff Zucker has officially been on the job as president of CNN worldwide for about six weeks. Give him a grade so far.
A+. It's so exciting to watch. I cannot remember ever seeing anybody come into an organization and just change the mood. The comments that have come back to me have been he appears to be everywhere at once. He's doing everything from running the editorial meetings to participating in strategy discussions. He's already made some interesting moves with talent, thinking about some new shows. I couldn't be more pleased.
I heard he took an office in the newsroom.
I was very impressed by that. As I thought I should, I offered him one or two more comfortable, more presidential-like alternatives and he said "No, I want to be right in the thick of things, right in the middle of the operation," and he took an office that most companies, you'd probably have a manager [or] newly-promoted vice president, and he's very happy.
What has been Jeff's greatest contribution or change so far?
I would say the mood of the place, the energizing of the staff. In terms of what you see on-air, you're already seeing, I don't know if the word is higher story count or better pacing. We're about to, in a couple weeks launch a new morning show, which I'm really excited about. Hiring Jake Tapper was big, getting Chris Cuomo was big. He's starting to hire some good behind-the-camera talent as well.
So will Chris Cuomo and Soledad O'Brien be paired together in the mornings for a while?
You're going to start asking questions that you should ask Jeff Zucker. I don't want to speak for him.
What kind of timeline did you and Jeff talk about for making changes, and for seeing results?
Not overnight, not short-term. He and I both know this is a marathon not a sprint. In fact, I have probably said more times than I needed to say "you don't need to do any Hail Mary moves." We have a good business, we get a great CPM premium. We need more "M's," yes, but let's do it the right way. Let's get the fans back. I think the biggest problem that CNN has had over the last couple of years is the ratings go up and down with the news environment. We lost fans because of inconsistency. What he and I talked about-and this is where I have great comfort that we're on the same page-is people need to know what they're tuning into when they tune into CNN and it has to be deemed essential by more people again. What that's going to do is not only get the ratings up the right way through the acquisition of getting back old fans and getting new fans, but also in the affiliate side, which again, half our revenue comes from advertising, half comes from affiliate revenue; there's nothing better than to be deemed essential by a hard-core pocket of people.
You've said before the problem with primetime was largely operational, not talent. Do you still believe that?
I think we have a lot of good talent. I think what we've had, quite frankly, is not enough great behind-the-camera talent. I think we have a number of fantastic producers at CNN but we need more. A lot of attention was given to on-camera talent but probably not enough commensurate attention to producing talent, and Jeff understands even more than I do how important that is-TV is a producer's medium.
Everyone knows I was very close to, and was a big fan of Jeff's predecessor, but Jim [Walton] was more into running the whole business of CNN and would be the first one to say that he wasn't the content person. With Jeff Zucker we get the benefit of not only somebody who is a good businessperson and has the ability to lead a large organization, but he is a real expert in news content. He's an impresario. And that's what CNN needed-a news content impresario.
What operational changes has Zucker made?
One of the early ones was he eliminated the managing editor position.
And you supported that decision?
Yeah, I thought it was an unwieldy structure. Look, Mark Whitaker's a really good guy, it just didn't work out the way we thought it would.
So you're comfortable with Jeff driving the editorial vision?
Yeah, and look, he will eventually build a core staff around him. Right now he's learning the people that he has. I'm sure that over time he will make one or two key hires to help him so he doesn't have to do as many things himself as he's doing right now. He's a first-class, experienced senior executive who has had bigger jobs than I've had and I don't need to tell him any of this. He knows what to do. We have a great relationship and we talk about certain things, but he's really off and running. He's running CNN.
The daypart that gets the most attention is primetime but we haven't seen any changes there yet.
Yes, but it's only March.
Did you talk about a timeline for making changes to primetime?
It's his timeline. The last thing I want to do is box anybody in by making public statements about what I expect. He knows I want to do this the right way. And I wouldn't be surprised if I'm even more patient than he is. I want him to be very thoughtful and launch a show when he thinks it's ready and hire who he thinks he should hire.
In terms of getting a core pocket of fans back to CNN, making it essential-can you do that with the existing lineup, or do you need some new faces?
We certainly need a new morning show, that starts the whole day. I think we need at least one new primetime show.
Well you've got Anderson Cooper on twice right now.
There's lots of things you can speculate on. But I think it's more than just any one or two shows. It is the tone of the network and it's really fulfilling the expectation of how we've marketed CNN but haven't always delivered.
For the morning show competitive set, you've got GMA and Today doing lighter stuff, CBS taking a hard news approach, Morning Joe is inside the Beltway. What white space can CNN fill?
A smart morning show but that's a comfortable show for people to watch in the morning. But I really don't want to speak for him because it's not fair to him. He's got an idea in his head about what he wants to do and he's working on it right now.
One critique of CNN is that it relies on splashy hires like Piers Morgan or Erin Burnett. Do you think CNN needs to do a better job of developing the next star anchors internally like Fox News and MSNBC do?
Yes, I do. I think we need to do all that. I think we need to work our own, for lack of a better word-only because we used to own a baseball team-I think we need to work our own and develop our own farm system better. I think we always need to be on the lookout for a great talent that might be available when they become available.
CNN's wall-to-wall coverage of the cruise ship Triumph docking was mocked in some media circles for being over the top. What did you think of the coverage?
I thought it was very compelling.
Can we expect to see more of that type of stunt programming? Is that a good marker for CNN under Zucker?
These are decisions that are made on a daily basis by the heads of news organizations. If there had been a gigantic news story somewhere else in the country or somewhere else in the world that day, you might have seen it differently. This isn't something that the CEO of Turner Broadcasting makes a pontificating speech about. This is a real-time decision made by Jeff Zucker and the EPs of the individual shows. That was a very compelling story. There are a lot of people who go on cruises, think of going on cruises, never think of something like this happening. I know certainly it will affect my desire to go on a cruise.
One of CNN/U.S.' strengths is its international bureaus. Now Al Jazeera, which has a great overseas presence, is starting a U.S. channel. Do you see them as a competitor?
Everything is competition. We have a lot of options with CNNi. It's a fantastic network. It's available in the U.S., we just haven't made it available other than the New York and Atlanta markets for a lot of reasons in the past. That's all being re-evaluated right now. I don't know in what form or how soon we would make it more widely available, but it's available if a cable operator wants to buy it, they can buy it today. Certainly the deal with Al Jazeera and Current has raised our awareness of rethinking how soon and how broad we should get CNNi distributed. What fashion that will happen is being discussed. It's too early to talk about.
What's the biggest misconception about CNN?
That it's a liberal news network. It drives me crazy. It's not.
So how do you change that?
I think [if] people watch it more critically and not just listen to what other people say about it-I won't mention names-they'll see that it [isn't], and I think one of the things we fix is make sure we have the right balance of voices on CNN. That we have good conservatives, good liberals, experts in all areas. It's a serious news network.
You have several distribution deals coming up for renewal in 2013-15. You're looking for big bumps. What do you expect you can get in the marketplace?
Well, I don't want to give you a percentage. That's a state secret. We're going to get significant increases and we deserve significant increases. We made significant investments in very valuable... content, and we made these investments years ago and we haven't fully been compensated for them because we've had to wait for existing deals [to expire]. So a lot of these distributors have been getting fabulous content from us for the last two years-particularly the NCAA men's basketball tournament's a great example... and still paying us at the old rates when we didn't have it.
There's been some programmer-operator hostility lately: Time Warner Cable putting lower-rated channels on notice, Cablevision suing Viacom for bundling of channels. Are you concerned at all going into these deals?
I'm quite proud that at Turner-and it's actually been part of our strategy-we were a company, we didn't launch a plethora of small digital channels once upon a time. In fact, the only one that you could even plausibly say fits in that category is Boomerang. You will find more [of our] networks that fit into top 10 and top 25 than you will with almost all of our competitors, maybe all of our competitors from my own recollection. They have more networks but our networks are widely viewed. TNT and TBS and even now truTV, and even CNN, whose ratings are not in the top 10 or top 25, it is essential viewing to people particularly at certain points of the year. So we like to think of every one of our channels as a must-have, with a very strong cult following. I actually think we're a very good deal in terms of how we price our channels to our customers including the rate increases that we're going to be seeking in this next cycle.
Who's the toughest operator to make deals with?
I'm not going to say that on the record. They're all tough. And it's their job to be tough.
Where do you fall on Dish's Hopper-what's your opinion on the product? Whose side are you on?
It's not our fight. Now just because it's not our fight, I'm not in favor of a technology that enables the automatic skipping of advertising, I think it's bad for the business.
You've said before you need a healthy broadcast business because they provide content for your networks.
You took the words right out of my mouth on that one. I'll give you another reason. I wish that the advertising business would have a stronger voice in all of this. The advertising business is so diffused across so many advertisers, so many agencies, that there's not a strong voice to speak up for them. What keeps getting lost in all this is the importance of national advertising in original programming. It's certainly half of Turner Broadcasting's revenue. And I think that any technology that's for free-and we'll get to pay later because there's always ways people can pay to avoid commercials-but any technology that enables the consumer to avoid attention to advertising is bad for the business because it's not only part of the lifeblood of the business, it's part of the lifeblood of the economy.
You've got the NBA through the end of the 2015-16 season. With sports rights costs rising as astronomically as they are, are you looking to lock up that renewal early?
That timing will be determined by the NBA. We have a relationship with the NBA that's over a quarter of a century now. We're partners with them not only in television, but we manage the digital businesses for them. We have a terrific relationship. I have every confidence that we're going to continue that relationship. Will it cost more money? I could say fairly absolutely. It will cost more money in the future.
News Corp. just announced Fox Sports 1. How is having another rights player going to affect your sports business at Turner?
I think in the long-term, any new entrance becomes a competitor for the acquisition of rights. It's not a tomorrow problem. Who knows in the next couple of years when these deals come up. I have to fall back on the strength of our networks, the strength of our relationships with these leagues. And the truth is, we make a lot of money and we have the ability to pay for these. Now there will be a point someday-our attitude has never been â€˜at any price.' There are things that we've walked away from before. But as long as we can prove to ourselves first, to our parent company and our board second, that we can make a very good return on investment on these sports investments, we'll continue to do them. And we'll bid aggressively.
ABC just announced that it will offer guarantees to advertisers across platforms. Are you prepared to do the same at Turner?
I don't know yet.
Is it something you would look at?
I would leave that decision to David Levy [president of sales, distribution and sports for Turner Broadcasting System] and Greg D'Alba [president, CNN News Networks & Turner digital ad sales and marketing] and Donna Speciale [president, Turner Entertainment & Animation Ad Sales]; they're the experts in that.
Given new Warner Bros. CEO Kevin Tsujihara's expertise on piracy and digital media, and Turner's leadership on TV Everywhere, do you see those areas becoming more collaborative throughout Time Warner?
I think there's been enormous cooperation already. I don't think it's any different. This has been a high priority at the company. I think Kevin comes to the job with expertise in certain areas and will quickly learn the other areas.
How closely do you work with Warner Bros. chairman Barry Meyer now?
It's a terrific relationship. And one of the great advantages of Time Warner is that the largest television studio, one of the largest network groups can have really deep conversations about where the business is going. We have very thorough conversations about what's the right approach to VOD, to SVOD, a lot of conversations about TV Everywhere and digital rights. And the other thing we're very conscious of is we know we can't set precedents just between the two of us. We have to do things that will work with other cable networks and with other studios, for them and for us.
FX is talking about splitting its drama and comedy programming on two networks, as TNT and TBS has done for years.
Sounds familiar doesn't it?
Does that prove your strategy works?
I've always felt the model we had was the right one. You will see the programming mix of TNT evolve in the next couple of years to a lot more originals and less dependence on acquired. The acquired will be more in daytime, much more dependence on originals in nighttime. We own a lot of fantastic comedies for many, many years to come. We brought 2 Broke Girls, we're getting better at developing some of our own.
How does FX's play change the landscape that your networks operate in? Does it add competition for carriage fees?
Competition is competition. The answer is yes. To the extent that I'm worried about it? Not that much. It takes a while. I understand why they did it, I don't know all the reasons they did it, but like us, they own a lot programming, they have the ability to produce a lot of programming and it's just an opportunity to make more money in sub fees and more money in advertising.
Off-network programming doesn't last as long as it used to. Besides rare exceptions like The Big Bang Theory, syndication is generally losing value.
Being a public company, we manage the company for shareholders, for profitability. Not everything is ratings because, if this is a question of value proposition, having the acquired programming in the daytime also helps our margins. The original programming, sometimes it costs more-it all depends what you pay. If you end up in hindsight overpaying for an acquired series, than an original doesn't look as expensive.
A&E said last year it would move to 100% original programming. Do you ever see Turner networks making that same choice?
Not anytime soon. I think we're always going to look at acquired that's coming along. We're going to be very, very conscious of what we pay for it given how fast some of them are cycling. Again there are exceptions like Big Bang. I have high expectations for 2 Broke Girls but it's still some time before that happens. Now truTV is at or near 100% originals.
How do you feel about the batting average of original programming on TNT and TBS? You've had some recent hits like Major Crimes and the new TBS comedies did OK, but Dallas isn't as big in season two, The Wedding Band was canceled.
I'm really happy with the quality of it. I've been pretty happy with the batting average. Monday Mornings was a personal disappointment to me because I just thought it was one of the finest pieces of dramatic programming, and for whatever reason it just didn't resonate with the viewers. But I think [president, head of programming for TNT, TBS, TCM] Michael [Wright]'s had a good track record in scripted drama and I think our track record in original comedy is getting better.
Do you need to be doing anything different to break through the clutter?
Everyone always wants to have that great buzz-worthy show. I think that would be nice. Again, we're managing these businesses for profitability, but one can help lead to another. I mean look at what Walking Dead has done for one of our competitors. Ideally I'm hoping-I don't sit in those development meetings every day-but I'm hoping that they're meeting with the widest range of potential creators. I'd like to see the age average for TNT get younger and that's a big focus, they're really focused on that right now.
You have Gerhard Zeiler leading the charge for your international business. What are the markets with the biggest growth potential for you?
Strong emerging markets, trying to do some things at scale in all the regions. We have a great success story in Latin America, which he's going to help make even better. Europe, we've had a tough first quarter, Gerhard had to make some very tough decisions about restructuring. We did a lot of staff reductions to [correctly] size the organization, to get it ready for years of growth. We hired a terrific new head of Europe, he's just made a very significant hire in Giorgio Stock from the Walt Disney Company, will start in a few weeks. And he's been spending a lot of time in Asia too, getting to know the people and getting to know the key partners and customers that we have there. It's going to be continuing organic growth and smart M&A in markets that matter, opportunities of scale. Where we've made some mistakes quite frankly was going into some hot emerging markets but too small.
Are you looking to make more investments in free-to-air channels internationally?
Very possibly, all depends. We're-particularly now with Gerhard running it and having enormous credibility in that business-we're much more willing to do things like that because we know we have somebody running the organization who has [broadcasting experience], most of our people had deep experience in the pay business.
In terms of future M&A, do you see any opportunities where acquiring another domestic cable channel or international channels would be attractive?
Sure, we'll look at everything. These things don't come cheap. The multiples are high. We have to be convinced that we can improve it enough or bring enough added value to it to make sense.
A CBS-CNN merger has been talked about for years, but you've never been able to work it out. Would you look at other suitors?
Honestly, there hasn't been an attempt to make it work in 10 years. It's old news. There's absolutely no discussion whatsoever of that going on.
With anyone, or just CBS? Has anyone else approached you?
With anyone. There are potentially interested parties out there; there's been nothing recent. I think eventually, and I mean eventually, it could be five, 10 years from now, that all the broadcast news organizations will want to have an affiliation-whether it's a joint venture, a sourcing agreement-with a 24/7 news operation. Just to help them with their own cost management. We're open to discussing it with anybody. Right now there's nothing going on, we're not focused on it.
Speaking of joint ventures, how does the ABC News-Univision channel launch affect the landscape for CNN and CNN en EspaÃ±ol?
Everybody needs to do what's best for them. What we've determined is right for us right now is-and I don't know if you'd call it a programming block or a syndication service-we've rolled out CNN Latino which is going to be a number of hours a day on Hispanic over-the-air stations, and it's just getting started. That's our first move into the U.S. Hispanic market besides what we've already done in terms of getting some distribution for CNN en EspaÃ±ol on cable.
A few years ago Netflix was almost a taboo subject with TV executives. Now people seem to have warmed to it. Do you see them as friend or foe now?
I don't see them as an enemy. I see them as a friend in certain ways, a competitor in other ways. They are here to stay. It's a good product and it's going to be a very important part of what we all call the television ecosystem. They're going to play a critical role in the funding of original programming for broadcast and cable, maybe even more so for cable because the back-end is a little more elusive, particularly for drama.
We just did our first deal with them; we started with animation. Warner's done quite a few deals with them now. What we're trying to do is window everything smartly so we don't undermine the value proposition we bring to our cable and satellite operators, but also, it's really in a lot of ways made up for some of the shortages in the DVD business. It's the same consumer behavior.
I feel so strongly that the model for TV Everywhere should be five episodes at a time. There's been a push by some distributors now to make TV Everywhere season-pass. I don't agree with that. I think that's the home entertainment business. I think that requires being compensated additionally because you're undermining either a studio or a revenue stream for the content creators.
It's always possible for any given distributor to bully or bribe a network to do a broader grant of rights. Being maybe more frank than I should in an on-the-record interview, we're too strong to be bullied and we're with rare exception too principled to be bribed. Absent a really compelling financial proposition, which again is not TV Everywhere, I feel really strongly that TV Everywhere should be one price -- whatever rate the cable operator pays us, they get the VOD, they get the five episodes. If they really want more than that then they should pay for it because it undermines another revenue stream.
Did you learn anything from the launch of Netflix' House of Cards that you can apply at Turner? In terms of releasing all the episodes at once and relying on Big Data to choose programming.
What I've said to my colleagues is let's pay attention to this concept of binge viewing, and let's think through carefully what does it mean to us and do we ever want to experiment with it? I don't know how soon we will, what show we will. I will confess that I've succumbed to it myself, to binge viewing on one or two shows when I was not feeling so well and didn't like the offerings on television that day.
I think what the problem is, it's hard to build anticipation when you just put everything out there at once. Will there be a day where you launch a show and season one, it's a traditional pattern, and then you find it's got a certain addictive nature and there might be a reason to do six episodes in one time? I don't know. Some cable network, ours or someone else's, is someday going to try this and everyone's going to be fascinated with the result. Right now it's exclusive to the over-the-top services.
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