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Turning TowardThe Future

Phil Kenthas a lot on his plate,
and therefore a lot on his mind.
As chairman and CEO of Turner
Broadcasting System, Kent
oversees a massive group of
businesses, both domestically
and around the world. And
from shaking up CNN to driving
his highly valued entertainment
networks through a constantly
evolving marketplace,
that is no easy task. But as his
company turns 40, it is racking
up success stories—and new
talent—with properties like
Conan O’Brien, Piers Morgan
and NCAA basketball coming
to Turner networks.

With all of this going on,
Kent sat for a rare interview
withB&C Executive Editor
Melissa Grego. Conducted over
two separate phone calls—one
before and one after the shakeup
at CNN—an edited transcript
combined from those
wide-ranging conversations

You are probably aware that there is
speculation in the industry that it was
your decision to let Jon Klein go from

No, it’s not true.

So, what exactly prompted the reorganization,
and whose idea was it?

It was [CNN Worldwide President] Jim Walton’s
idea. Jim and I have been talking for a long time
about how to raise the level of the journalism,
about how to get a more global, multi-platform
journalistic voice. He told me he didn’t think
the structure we had was the right one anymore,
and he wanted to make these changes.
And I agreed immediately and supported it.
This was his decision.

So, it wasn’t a referendum on the new
primetime slate. Do you still believe in it?

Completely. It had nothing to do with the slate.
In fact it would have been probably logical to
some to wait, but we actually thought the best
thing to do was to do this sooner and not have
the launch of the new shows disrupted by a
management change. It has nothing to do with
the new shows…and if they work, Jon Klein
gets a good share of the credit.

Is there anything you would like to say
about Klein and his service to CNN?

I think Jon Klein did a lot of good here; he had
one of the longest tenures in CNN’s history as
head of the network. He brought a lot of editorial
leadership at a time when we badly needed
it six years ago. I don’t have anything but good
things to say about Jon.

How much of a concern are the ratings at
CNN’s U.S. flagship?

Well, they’re a concern because they’re lower
than they’ve been in a long time, but we’ve had
low ratings before. And I’m confident that they
will come back. It’s one part of the business, but it’s the part that people pay a lot of attention
to and it does have some reputational effect.
And over a long-term, sustained basis, it could
have a carryover effect to some of the other platforms,
though we haven’t seen any of that to
date. But it’s obviously a concern when
you’re getting much smaller audiences
for a consistent period of time
than you’re used to getting.

Have you set any time
line at CNN for getting
the ratings back on the

We all feel a sense of urgency,
but not panic. It’s
a very solid business. It’s
going to have its best year; its
profi ts are multiple hundreds of
millions of dollars. It has a very
strong dual revenue stream,
healthy subscription fees from
cable and satellite operators
and phone companies as well as premium
CPMs, so there’s no sense that the house is
on fire. But there’s a strong sense of urgency
and sheer disappointment that we’re not getting
the levels of audience that we think we
should be getting.

With Piers Morgan replacing Larry King,
do you see it as a challenge that Piers
is not known as an interviewer to U.S.

It could be a short-term challenge, but this is
the beginning of a series I hope will be on for
many, many years.

Katie Couric’s deal at CBS is up in May.
Do you see a place for her on CNN?

I would not want to speculate on that. Katie
is a brilliant journalist; she has to decide what
her future is at CBS, and I would afford her the
same courtesy others would to our talent. They
should decide what they want to do with their
current employer before speculating what
they’d want to do with others.

There’s been tons of talk about CNN and
CBS News hooking up.

Yes, for a long time.

Where does that stand; are you talking
with them?

We talk a little. We are very
friendly with that company
as you know; we
made one of largest
sports rights deals
in television history,
with CBS
with the NCAA
with the same execs
we talk to news
about, who would be
Les [Moonves] and Sean
[McManus]. Both great
guys and good friends, but there’s
nothing going on right now about that. To be
fair, we talked in the past, we’ll probably talk
in the future, and we do things together, particularly
in terms of sharing talent.

What was your reaction to Steve Burke
replacing Jeff Zucker?

I was not surprised. I expected it; not that I had
any inside information, but I expected it and I
think Steve Burke is one of the best executives
in media today.

Were you surprised about the timing?

No, we’ve been through mergers ourselves.
Mergers create a certain level of anxiety in all
the ranks and also the upper management.
I think it’s always good when the company
that’s “buying”—and I put “buying” in quotes
because it was a complicated transaction—
can make announcements sooner rather than
later. My guess is that it’s a good thing that
they at least announced that part of it, and
they have a very talented pool of executives.
Steve Burke has a very high-class opportunity.
He has very good people there, and he is truly
one of the best and most broadly experienced
executives in all of media.

How well do you know David Westin?

I’ve known him for years. I don’t know him
very well; he seems like a very nice, competent
guy. All conversations over the years have been
very friendly. I have lot of respect for what he
did there.

Have you been in touch with him since his


What about Steve McPherson?

I don’t know him at all. There’s lots of people
who used to have big jobs whom I’m friendly
with. I’m friendly with Andy Lack, I’m friendly
with Andy Heyward. But it doesn’t mean I’m hiring
them. By the way, I know those two more
than David Westin.

Do you see any of the big changes at Disney/
ABC affecting your business at all?

Not at all. All companies have executive
changes from time to time.

Of course, there has been talk about the
possibility that Disney could put ABC up
for sale. What’s your take on it?

I’d be surprised if they do it. I think the network
television business has a brighter future now
than it may have had a few years ago because
of retransmission consent payments, and I’d be
surprised if they did that. And, quite frankly,
people don’t expect someone in my position to
say this, but I want the broadcast networks to
do well because they produce a lot of programming
that we want to buy a few years later for
our entertainment networks. I would actually
be disappointed if they sold ABC; I think that’s
a good asset for the Walt Disney company.

Would you like Time Warner to acquire
all or a portion of ABC if it were put up
for sale?

I think that we are in the right businesses with
the cable networks, both ad-supported under
Turner and the world’s leading pay network
under HBO. I don’t
see the burning need
here, but that’s more a
question to ask my
boss, Jeff Bewkes.

Do you see
Turner or
Time Warner
or yourself making
any sort of big
acquisition or joint
venture a la NBCU as
part of your growth plans? Or anything
smaller? Maybe something on the Time
Warner level that would impact your

I think that’s a great question. We’ve spent
the better part of the last decade trying to get
Time Warner the right size, with the right mix
of businesses, and now since we’ve made the
decision to divest the cable business and AOL,
we have a great mix in terms of a very contentfocused
company. In terms of future M&A, we
will always look at a good domestic cable channel,
we will always take a hard look at a good
international channel or group of channels.

Andrew Tyndall was quoted in B&C as
saying that there will be no broadcast TV
in 10 years. Do you think that will be true?

I don’t think that’s true. I think that there is a
strong audience and advertiser need for local
television. I cannot imagine a country without
local television stations and local news. Yes, local
cable systems can do that, too. I guess I can
be surprised, but I don’t see that happening.

Carriage fees paid for TNT and TBS in
particular certainly come up in a lot of
the broadcasters’ retrans pitches: If TNT
is going to get a buck a sub and draw a
fraction of the audience of Fox, the operators
should be paying Fox at least that
much. Do the cable operators then ask
you the same question?

First of all, that’s mixing apples and oranges.
We also give a signifi cant amount of advertising
time back every hour to the cable operator to
sell locally, which is not the arrangement with
broadcasters. I don’t think it’s out of whack.
Still, the bulk of the networks’ revenue is going
to be advertising. This is just a deserved second
revenue stream for them. I do not think it’s an
undue burden on the cable operators.

So, you’re not concerned it is a burden
that will be passed on to you?

Oh, I’m sure, there’s no doubt, it will
be used in negotiations with us, but
our networks stand on their own.
We deliver very valuable programming
to our distribution customers,
and we keep improving the
quality of the programming. We’ll
be starting the NCAA basketball
tournament next year, and I feel completely
comfortable with the value proposition
our networks bring against the rates
we ask for.

I have to ask a Conan question, of
course. Why invest in this daypart?

Listen, late night’s been very good to this company.
Adult Swim started as a hobby there and
is now making ad revenue in the U.S. competitive
with Cartoon Network. If you look at the
demos Conan is competing with, and look at
the demos on some of the programs that will
be the lead-in to Conan, I think this is going to
be tremendous.

What is your biggest concern for your
business, or the TV business in general? 
Looking at the next 40 days, weeks,
months, what’s the biggest priority or
concern you have?

We’re at a very interesting inflection point in the business where all the technologies we’ve been
talking about for about a decade are really starting
to take effect now in terms of giving viewers
lots of alternative ways to fi nd programming. I
am concerned that in the future—it’s not going
to happen tomorrow, it’s not going to happen
next year—if we don’t make certain decisions
correctly in the next couple of years, we could
potentially help the disaggregation of network
brands, and that would be a very bad thing.

And I’m very concerned about the amount
of off-network programming for which we paid
significant prices to studios also being on Hulu
and Netflix and VOD and SVOD platforms.
Those are the things I’m more concerned about

How important is it that the industry get
on the same page?

My hope, and I’m trying not to be too Pollyana-ish about this, is that market forces and
smart people thinking rationally
about what role
some of these platforms
can play will get us to
the right place. And
that’s why I know
some people think
we have been messianic
or religious
about TV Everywhere,
but it’s not out of ego.

We think it’s a really important
development to preserve
the ecosystem. We’re trying to address
two issues: how to get to the consumer
the content, what they want, where they want
it, how they want it, but still hold up the underpinnings
of the business where content is
being paid for. And the best way to do that,
I think—whether you want to use the words
“TV Everywhere” or the technical term, “authentication”—
is authenticate that the consumer
is paying for these channels in some
form to someone, and then give them what
they want, anytime they want it, anywhere
they want it.

Do you think that figuring out this authentication
idea will add money to the

Yes, and here’s why. I think once we can give the
consumer the content they want, where they
want it, when they want it, there will be more
consumption of the content. Then, the next
challenge is to get the ratings service to measure
it in as many ways as possible.
I think it will take longer for mobile,
but certainly Nielsen has an announced
timetable for being able to
measure broadband and VOD.
Now, [this will] bring to the
advertising marketplace even
more impressions, with Internet
viewing being priced with
television costs per thousand.
And I think this could lead to
a whole new golden age of television,
where we’ll have video on
the Internet to be priced competitively
in the ad marketplace with video on
television and maybe even more so.

What would you like to say in conclusion
about where Turner is and is going at the
40-year mark?

If you look at the 40-year arc of Turner, the
first 20 years was the launching of these iconic
brands, CNN, TBS—which used to be the
superstation—and TNT. And then what my
management team has done in the last decade,
and some people before me, is really take this
amazing legacy that Ted [Turner] left us and reinvent
it from within and constantly refresh by
bringing exciting new properties to it. We’ve also
done some things like HLN and TruTV and TBS,
which stopped being the superstation and [became]
the “Very Funny” network. So, you will
continue to see this kind of large and small innovation
from us. There’s no doubt in my mind
that I think our best years are still ahead of us.

What are you most proud of personally
about where Turner is going?

I’m proud of the management team. I think I’ve
assembled a team here that is the best of the
business. Whether it’s in programming, journalism,
ad sales, distribution, I think I’ve got the
best team in the biz.

And that’s the thing I’m most proud of. There
was a handful of these amazing people like Ted
Turner and John Hendricks who forged this
industry, and I think we’ve taken it to a whole
other level. And I’m very focused now on preparing
a new generation of leaders to someday
take over for all of us. But not too soon.

What is
the plan to turn CNN around? Have you given your team any sort of timeframe for
turning things back around?

We remind people all the time, but we're launching
a new show at 8 o'clock, not without some controversy. It's a very intelligent
discussion/debate show. It's not quite pure discussion, not quite pure debate
with Elliot Spitzer and Kathleen Parker and many guests, and I think we're going
to prove you can have a really interesting discussion without people
screaming at each other. And I think that's completely within the purview
for CNN to do that. We were basically the network that created this format with
Crossfire. We're trying to do that
again. And if we produce this according to our vision, it's going to be a very
intelligent issue discussion show with very bright people who have strong
points of view. And I think that's completely within the brand purview of CNN.

What are
the primary things you're looking for this Managing Editor to bring to the

One of the things we would like to see -- in
addition to the hundreds and thousands of people who work at CNN that are very
focused on the day-to-day and the newsgathering and producing a show at 2
o'clock and producing a show at 6 -- is somebody who has been given the luxury
of perspective and oversight to focus on the handful of stories every week that
are really important; explain, using all the different resources of CNN, why they're
important, what these stories are really about, put as much perspective behind
them and why they should matter to people.

Why is
Piers Morgan the person to replace Larry King?

A lot of people know Piers Morgan as a judge and a
personality but for those who watch him in the UK, who watch his show there, he
is a fantastic conversationalist and interviewer with a range of different
guests. I wouldn't say I watched as much as Jon Klein probably did or Jim
Walton, but I've watched enough sampling of it to agree and to know that he is
one hell of an interviewer. And I thought following Larry King, to bring a
really fresh face to CNN, to fill that role of being a great interviewer, a
great conversationalist, who can work either in a news environment or a celebrity
guest or an entertainer, I thought that was just a really good strategy.

CNN has
an absolutely great brand reputation as standing for unbiased news and being a
technological innovator. But the network has been criticized for getting beat
or having a lag time in confirming news. Is that something you are looking to
have your team improve on?

As a headline, I'm much more concerned about being
right than being first. I will always choose right over first. That being said,
I'd like to see us break as much news as possible, but I'd also like to be
right, and in the age of Internet when a blog or Facebook posting can sometimes
break news, in a news organization that tries to have a strong set of standards
-- including a strong set of sources -- it becomes more challenging to be first
all the time. It's not an excuse; it's a reality.

It sounds
like, correct me if I'm wrong, you really are focused on the cable network
business, with little interest in broadcast or station assets.

Absolutely. But broadcast is an important component
in the ecosystem because we need them to be successful. Nothing would make me
happier than to see a whole new successful slate of new comedies and dramas
that we can acquire one, two, three, four years from now. I'd love to see --
with all the money the networks are getting from retrans -- them invest more
heavily in drama and comedy so we have more programming to acquire, and I would
imagine our main competitors would say the exact same thing.

vs. cable simply put is an interesting topic. The message from Turner is loud
and clear that you think there should be more parity in pricing between
broadcast and cable.


How do
you see that gap being closed?

Closed is a relative term. I don't know if it will
ever be closed but I still think an awful lot of narrowing can happen, which
gives us enormous potential for growth.

Closed is going to be challenging, given that's
depending how you count The CW, four or five of them and 40-plus, 50-plus
viable cable channels that sell ad time. Closed I think is tough. What we talk
about is narrowing the gap. We've closed the gap in cost per thousands for sports,
we've closed the gap in CPMs for news, there really is no gap in kids anymore
because the broadcast networks are basically out of the kids business. In
entertainment a milestone for us was in the upfront, selling the Conan O'Brien
show in late night. I think the opportunity is to narrow, if not ever close,
the gap in primetime entertainment.

How do
you think cable & satellite operators will pay for the retrans fees for

They are still making a lot of money. Look at their
financial statements. They're still doing very, very well. I don't know exact
payments, but the rates I'm hearing about are not unreasonable given the value
of network primetime programming and they should get paid. One of the great
misconceptions out there is they've never paid before. They have been getting
paid for 20 years; they've just been getting paid in a different way. They've
been getting paid in the form of channel launches, of cable channels. Now those
days are over.

What is
your priority for each of the main divisions of Turner -CNN we covered
- what
about TNT?

For TNT we've had, for the most part, a very good
track record for original programming. We've had a few that have not succeeded,
but for the most part we've had some solid successes, like with The Closer, Rizzoli and Isles, and solid successes like Men of a Certain Age and HawthoRNe,
Leverage. And we're also very excited
about what we're acquiring, we're very excited about getting The Mentalist in the near future.

Big Bang and
syndication, you've certainly made some innovative deals in the syndication
field, especially with models you used with Tyler Perry and Debmar-Mercury.
These deals are very important to the success of the network, too, are they

That's a great example. I think people now take for
granted the success with Tyler Perry. We took a risk of producing years of episodes
all at once. We took a small test, the results were promising and we rolled the
dice. We did it a second time, with Meet
the Browns and we did it more
recently, not with Tyler, but Are We There
And these shows are successful not only in terms of ratings but also
in terms of the diverse audience composition, which helps us to increase our reach,
which is important to advertisers.

the next model? It does shine a light on the fact that there are a lot of
different ways of doing business. How important is it that your team is coming
up with new models?

We're always thinking of new ways. I like to think
one of the things that defined the early years of Turner, and particularly Ted
Turner, was audacity and doing things that other people wouldn't have done or
thought couldn't be done. And Ted has been gone a long, long time but we
like to think we still have a lot of that audacity in our genes here. Doing
something like rolling the dice on 100 episodes of House of Payne, or Steve Koonin flying to California to meet Conan
O'Brien who had never heard of him and probably never watched TBS, was
similarly audacious. These are just examples of ambition and audacity, and we
try to be very buttoned up about our business.

On Cartoon

Cartoon is a wonderful business, I can't tell you
its financial statement, but it's a high margin business, having its best year
ever. Kids programming is getting tougher because of macro issues around
advertising, particularly around food and beverage, but the toy business is
getting stronger and we have a special position, especially with boys. And
we're building on that. I think we have some very promising new series
particularly one called Adventure Time.
Adult Swim was a hobby where we experimented with some useless hours on a kids
network and said, ‘Hey what can we do with this?' and we wound up creating a
network of nearly equal value to Cartoon.

On TruTV:

Another example, bought the half of CourtTV we
didn't own. The people who created and built CourtTV over the years did a fine
job, but we felt it maximized its potential. We kept court coverage in the
daytime but we turned it into a whole different network in the afternoon and
evening. And did a wonderful brand change. This was a real inflection point year
for TruTV, where we went into the distribution marketplace and -- I don't want
to get into the numbers -- but we set a much higher carriage rate for TruTV
than we had gotten earlier and we will be doing this as more distribution deals
come up.

In terms of the upfront, we decided there were a
lot of deals we took in the past that we won't take again. And we set a much
higher minimum cost per thousand for TruTV, which we also got it. The goal is
to make TruTV as significant a network in the near future as TNT and TBS. Again,
it's not going to happen overnight, it's not going to happen in one or two
years, but that is the long term goal.

E-mail comments to
and follow her on Twitter: @MelissaGrego