News Analysis – ABC/CNN: Marriage wows or woes?

Sep 30, 2002  •  Post A Comment

In this season of the witch, when media mergers such as AOL and Time Warner and Universal and Vivendi definitely seemed hexed, comes news that ABC News and CNN want to ride off on a broomstick together. But attention Messieurs Case and Eisner: We munchkins only cheer once the house comes down kaboom, breaking the broomstick and killing the usually ill-conceived merger.
Or let’s look at it another way. When Disney married Cap Cities/ABC/ESPN, it inherited ABC News as a stepchild-one that required attention and upkeep and occasionally talked back. Now, unhappy with its petulant stepchild, Disney wants to send it off to boarding school.
There, ABC News may or may not thrive, but at least expenses should be predictable-and containable-and it would be someone else’s responsibility to pay day-to-day attention to Koppel and Jennings and Sawyer and Walters and the rest.
Now let’s look at the other side of this potential new family. AOL Time Warner, the stepparent of CNN, has watched its stepchild fall in love with Paula Zahn, Connie Chung and Aaron Brown in the past year and a half. But now stepparent AOL Time Warner is stepping in and saying no, these love affairs aren’t working, so we’re going to arrange a marriage for you with a bigger trophy wife (and no matter that you, dear stepchild, once so ferociously spurned our choice for you, labeling her a sagging relic.)
Neither side was prepared for this sudden escalation in their long and fruitless flirtation to become public knowledge. They weren’t ready to explain how a potential marriage-one that had seemed unworkable over years of fitful exploratory discussions-suddenly might be not only conceivable but a fait accompli despite formidable complications.
When news of the potential merger broke in the Los Angeles Times last week, both Disney and AOL Time Warner were forced to straddle a very tricky fence. They had to swear they were faithful to-and proud of-their own news brands and would never make a deal that would dilute editorial control over what appears on their individual networks.
At the same time, they had to argue-in subtext-that each needed the other and each could only become stronger by joining together CNN’s global infrastructure and ABC’s unparalleled and expensive stable of stars.
Furthermore, they did it without putting new flesh on the bones of the story. All we know is that the AOL Time Warner board had been briefed about a plan that could conceivably save the two organizations $100 million. We also know that most likely the joint venture would be majority-owned by AOL Time Warner-because it churns out profits said to total more than $200 million a year, while ABC News ekes out $10 million to $15 million a year. Finally, the report said the venture would be jointly controlled and perhaps capable of producing revenues of $1.6 billion annually.
Hmmm. Talk about deja vu all over again. This is the perfunctory spin that has, forevermore, accompanied M&A discussions. The problem, of course, is that the savings and revenues rarely materialize.
Absent details from Disney Chairman Michael Eisner and AOL Time Warner Entertainment & Networks Group Chairman Jeff Bewkes and Turner Broadcasting System Chairman Jamie Kellner, the executives who took the talks to this unprecedented stage, speculation was heavy with caveats and disclaimers.
Media pundits were laying odds on the deal actually happening by weighing economic realities of today-if it makes the bottom line look good now, just do it-against the historical reality that neither Disney/ABC Cap Cities nor AOL Time Warner is regarded as a merger role model.
And the pundits were having fun whispering about the two wildly clashing cultures (CNN hogtied and spit out the last ABC News veteran, Rick Kaplan, who tried to control its editorial product) and distinct core audiences (would the CNN viewer be turned off or turned on at the suggestion that “20/20’s” Barbara Walters would sub for a vacationing Larry King?).
“Optimistically, the odds are 50/50 of it happening,” one broadcast network executive said. “Realistically it’s less than that.”
The possibility of a merger could be particularly complicated for various network affiliates, which sometimes supplement their local newscasts with material from CNN Newsource.
And there are questions for ABC affiliates as well. This group, which has yet to agree with the network on just how to share ABC’s cost of NFL programming, clearly applauds network fiscal efficiencies that don’t disadvantage the affiliates. But do they want to see the ABC News brand diluted on CNN or might this become the monster of all repurposing issues?
The ABC affiliates, who were not happy to hear about the talks with CNN in the press instead of from their network, say the prospect of a merger is fraught with unforeseen and unintended consequences.
ABC has twice turned up its nose at cable news as a business-most recently when Rupert Murdoch beat it to the gate with the Fox News Channel, and Eisner and company decided that becoming the fourth network to get into cable news didn’t make any sense.
CNN founder Ted Turner, who is back in the AOL Time Warner house at the invitation of CEO Dick Parsons, has said that if, two decades ago, ABC had stuck with the Satellite News Channel (in partnership with Westinghouse) just a few more months, it could have stunted CNN’s growth. But at that time ABC wanted to spiff up its bottom line so that CapCities would find it a more appealing purchase.
Those whose history in these matters inclines them toward pessimism say they are saddened both by the lack of protest from ABC News’ icons and executives and by the fear that history is repeating itself-that ABC is once again so focused on bricks and mortar issues that it loses what is left of its vision.
These pessimists say they don’t know how much to invest in statements by CNN News Group Chairman Walter Isaacson and ABC News President David Westin that attempted to reassure their respective staffs that no deal is near and no deal will be done except from a position of power. ABC News is described as particularly freaked out because this potential ABC News/CNN pact comes on the heels of ABC’s failed attempt to dislodge Ted Koppel and “Nightline” with David Letterman last spring.
It is, the pessimists say, hard to relax when one is in the dark in a new world where the only choice seem s to be bad alternatives.
Or maybe, sad to say, they are actually the realists.