I am prepared to buy CNN at any price
We know that Randall Stephenson says CNN’s not
for sale, even though he doesn’t even own it yet. As the news emerged
last week that the Department of Justice’s antitrust division has been
jawboning with AT&T Inc. on its agreed-to purchase of Time Warner
Inc., with CNN an apparent sticking point, the question quickly
followed: What would Stephenson, AT&T’s CEO, do?
Would he take the DOJ’s objection to court, or
would he agree to divest the sticking parts of the deal, most likely CNN
and parent Turner Broadcasting System Inc.?
Stephenson answered the question quickly: To the
courts, he said on Thursday, November 9, and that seemed to be the
immediate end of the question, though even Stephenson acknowledged
would-be offers for the assets already had arrived in his office.
In fact, in this nothing-is-stable media world,
all bets need to be off on who might own what come 2020. This is a media
industry — TV, film, magazine and newspaper — in the throes of
upheaval. Pick your theory of the case about the 2020-2025 reality — the
primacy of content, the age of platforms, the need for scale in
distribution, the necessity of direct consumer relationships, an age of
real convergence — and ambitious strategists could make all kinds of
combinations justifiable.
Just days before the news of the Justice
Department potentially blocking AT&T, we heard that Walt Disney Co.
had been in talks to buy substantial Twenty-First Century Fox Inc.
assets. Further, the president’s chosen Federal Communications
Commission chairman, Ajit Pai, is busily demolishing most of the rules
on limiting the concentration on media ownership, opening the potential
of deals we previously thought impossible.
At the moment, an odd economic-high, politically
low moment in America, it looks like big prized names in the American
media business could be in play. That’s a big story that will play out
into 2018, as strategists guess at what the 2020 landscape will look
like.
For now, let’s ask the question, though, of CNN.
What if AT&T decides that its court battles, while potentially
winnable, will just take too long? What if it calculates its deal value
is too diminished to bet on the judiciary? What if someone else comes
along to make it an offer that makes it easier to bid CNN goodbye?
Stephenson has newly acknowledged that
possibility. AT&T, he told CNN last week, would use “another avenue”
to “accomplish the same thing,” that is diversifying its huge but
maturing business base.
If AT&T did sell, would it have to sell all
of Turner Broadcasting, which includes TNT and TBS, in addition to CNN?
We’ll leave that question for another time and here focus on CNN.
Founded in 1980 by Ted Turner, its numbers are
impressive. It rings in US$1 billion in operating profit and has made
substantial progress in its digital transition, now earning about US$350
million in digital revenue a year. (That figure is US$150 million less
than The New York Times.) It tops the comScore Inc. charts for total
audience. Further, this year, even in — and because of — the fake news
hysteria, CNN has distinguished itself as, along with Times and The
Washington Post, with its aggressive, sometimes scoopy coverage of
national politics.
How much is CNN worth? Over time, analysts have
pegged it at US$8 billion to US$10 billion. That means relatively few
companies, or individuals, could buy it alone.
Importantly, too, as a cable network, it’s freer
of the regulatory reach involved in the selling and buying of broadcast
assets. Further, CNN’s long-standing affiliate network provides
built-in national/local connections, potentially valuable to some
buyers.
Let’s look across the media map of logical and
long-shot would-be buyers of CNN. Let’s make a short list of what kinds
of combinations, most potential, a few fanciful, may be possible. And
let’s remember: Whatever CNN is today could change tomorrow. The words
making up its acronym themselves are laughably generic: cable news
network. With changed ownership and leadership and changing faces, the
CNN we’ve known could rapidly fade into history.
Bloomberg LP
One gating principle: ability to buy. Check.
Bloomberg Media CEO Justin Smith and global head of digital Scott Havens
continue to quickly build out the nonterminal business of Bloomberg.
Just this week, they announced a new hiring of 50 journalists to create
“first 24-hour social news network on Twitter.” Smith now positions his
company alongside the embattled platforms: “In this age of the
Google/Facebook duopoly, a relentless focus on invention and innovation
is the only way to succeed. The fruits of disruption don’t and shouldn’t
only belong to the dominant tech platforms.”
One under-reported part of Bloomberg’s growth:
global licensing of its content and platform. While that push focuses
almost exclusively on business news, a Bloomberg/CNN combo could
dominate both general news and business, with even greater distribution
and advertising sales power.
Private ownership also would insulate CNN from
ever-intensifying winds of political pushback and potential corporate
timidity, should an AT&T or others take control. Namesake founder
Michael Bloomberg, who made Businessweek “Bloomberg Businessweek,” may
like the sound of “Bloomberg CNN.”
Sinclair Broadcast Group Inc.
What don’t Sinclair chairman David D. Smith and
CEO Christopher Ripley want to buy? While greatly challenged, they’re
perilously close to closing on their acquisition of Tribune Media Co.
That would give them a reach into 72 per cent of U.S. households, all
through local broadcast stations. In total, with the addition of Tribune
Media’s 42 stations, Sinclair would own 233 TV stations. That’s a
number without precedent in local broadcasting and only possible given
the paving of its way by FCC Chairman Pai.
Sinclair already has ramped up its national
presence (and nationally mandated, must-carry, fact-challenged
editorials) with a new national digital presence — Circa.
In recent months, conjecture has heightened
about Sinclair’s wont to compete with Fox News for its audience. One big
hurdle: carriage. CNN would solve that problem.
Verizon Communications Inc.
The company finds itself in the same pickle as
AT&T. Its businesses are maturing, it needs growth — and it wants to
get more digital. CEO Lowell McAdam already has bet on content, first
answering Tim Armstrong’s siren call and buying AOL Inc., and then Yahoo
Inc.’s core business. A CNN purchase could be transformative. Yet,
logically — to the logic, such as it is, of the DOJ’s objection to
AT&T-Time Warner — Verizon would find itself similarly disqualified
by the feds. Further, Stephenson wouldn’t want to end up making one of
his chief competitors potentially stronger.
Comcast Corp.
It’s another AT&T competitor, with ambitions
of greater dominance. AT&T would then have similar competitive
concerns. Further, Comcast owns NBC, and with it MSNBC. One line of
thought: It has what it needs in national and global news gathering and
in national distribution. The other: In a world of consolidation, bigger
is always better. Why play second fiddle to CNN in total audience and
other categories? Why not combine two legacy news operations and build a
single digital/TV operation that is truly dominant globally?
Disney
We know that Disney actively seeks more film and
TV assets — more content for global distribution as it contests Netflix
Inc. and the emergent digital-only movie business. Witness its talks
with Fox, which some note will be ongoing. Yes, it’s seen a reversal of
fortune with cable — ESPN, ancestral cousin of CNN at its founding, is
losing its lustre — but it does own ABC News. We could argue that ABC
needs scale, or a sale, to survive in digital times.
CBS Corp.
CBS News serves as another once-great (Big
Three!) still finding its way in the new world, though, like ABC and
NBC, it can count a large digital audience. “CNN is the perfect
complement to CBS News, lots of cost savings,” said one exec quite
familiar with both.
Viacom Inc:
It’s all cable, but after the CBS split, Viacom doesn’t have the news genes. “Wrong culture,” one exec summed up.
Hearst Corp.
This huge, private, most media-diversified of
companies has made lots of money in cable as well. CNN would be a big
stretch, especially for a company known for its fiscal discipline and
sober strategies. Yet the company has shown signs of wanting to be more
of a player in the unfolding media age, so don’t count it out.
Fox:
Yes, we know that Rupert Murdoch is, oddly it
seems, considering selling some of his prized Fox assets, but never
underestimate trader Rupe.
He’s already been accused of whispering in
Trump’s ear about the perils of AT&T’s bid. At the same time, it’s
been reported that Fox is among the companies that may have newly
sniffed around CNN, should it break loose. Yes, the next generation of
Murdochs awaits, but consider that Rupert Murdoch may now confront the
most wide-open American buying — and merging — opportunity of his
lifetime, courtesy of the deregulation he has advocated for decades.
A Fox/CNN merger? Odder than a sale but indeed
possible. Think assets and audiences — not the political hoo-hah of the
day — and a different possibility emerges.
New York Times Co.:
We know the Sulzbergers, by themselves, couldn’t
pull off such a purchase, but consider the potential news powerhouse
that would be created.
Trump times have crystallised the news media
world, promoting the top brands. At the same time, it is global
journalism that offers the most potential return in 2020 to 2030, as
Times CEO Mark Thompson said, speaking of “hundreds of millions of
college-educated English speakers” recently. While the Times’ “The
Daily” news podcast has offered up revelatory success extending the
Times beyond text to audio, the video frontier is one it should master.
CNN’s a force, but it doesn’t have the stature of the Times. Together,
they would have the largest journalistic workforce in the world.
Admittedly, this isn’t a new idea — I suggested a partnership five years
ago — but it’s one to newly ponder.
Lastly, both news institutions could see themselves strengthened against a new competitor — The Washington Post.
Jeff Bezos:
Which, of course, brings us to the billionaire
who’s shown what modest investment and confidence can do quickly in
propelling an older-school news brand into digital prominence.
“The Post is a vanity buy,” suggested one savvy news executive, when I suggested a Bezos buy. “CNN will need a business case.”
Perhaps, but at the age of 53 and almost US$100
billion in wealth, Bezos may be tempted to do in the digital age what
Turner audaciously did 37 years ago. Here, too, we see the potential of a
clear number one news giant, just as the Post itself has begun seeing
itself as much a global player as a national one. Think of the
synergies. As one wag suggested, “He could make ad-free OTT available to
Prime members or Kindle hardware owners!”
Vladimir Putin:
If an American billionaire can do it, why not a
Russian one? The Justice Department has finally acknowledged what RT
(Russia TV) has long been, an agent of state propaganda, and forced it
to register as a foreign agent. Putin’s now playing the game of the day:
false equivalence. He’s talked about demanding the license of U.S.
media trying to cover his country. Wouldn’t it be easier just to own a
worldwide cable news network?
While there may be some bothersome laws making
such an acquisition difficult, perhaps Putin’s friend in the White House
could smooth the path.
More plausibly, an exec pointed to other foreign
parties: “I wouldn’t rule out Alibaba or Tencent. Either can easily buy
it, and even the Justice Department will be very hard-pressed to make a
case on the regulatory or the foreign ownership front.”
Alibaba owns the South China Morning Post.
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