Network NewsChanges: JustA Matter of Time

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, 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.”

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