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Taking the High-Income Road

Mar 17, 2003  •  Post A Comment

Cable News Network is ready to go to war, but its battle is not with Fox News Channel.
That was the top-line message when Larry Goodman, CNN’s president of sales and marketing, previewed the network’s new 2003 upfront presentation to agencies and advertisers for a small group of reporters in Manhattan last week.
“Fox will grow faster than almost anybody in the industry, and they deserve to,” he said. “The question is do we grow too, and the answer in 2002 was emphatically yes. The answer in 2003 in the upfront is emphatically yes. … It’s not us vs. Fox.”
The bottom-line message from Mr. Goodman was that CNN itself is solidly profitable, that the revenues for CNN and Headline News combined are “more than” triple those of FNC and that the loyal army of CNN viewers is substantially more upscale, and therefore more valuable to advertisers, than the larger audience that FNC musters.
“I can’t say we’re going to sell more soap [than the competition], but we’re damn well going to sell more financial services and we’re damn well going to sell more cars,” Mr. Goodman said, jabbing at his competitors. “We think of ourselves as news, Fox as noise … and MSNBC, we’re not sure what they are.”
FNC has higher ratings than CNN, Mr. Goodman conceded, but “We have better ratings.”
That Fox overtook CNN in 2002 “doesn’t affect my revenue, doesn’t affect my income,” he said, and that’s partly because the two news networks attract different advertisers.
In fact, he said, only 44 of CNN’s top 100 advertisers also advertise on Fox, and CNN”s advertisers continue to pay a premium to reach its viewers. “What’s embedded in a CNN rating point is more valuable than what’s embedded in other rating points,” he contended. “Not all rating points are created equal.”
With war now seemingly imminent, CNN plans to run the first few days of the conflict commercial free, then to slowly return to a “modified” break structure. Contingency plans for all of CNN’s advertisers are in place, and most of them want to return to CNN’s air as quickly as possible, according to Greg D’Alba, executive VP, CNN sales and marketing.
CNN’s worst-case war scenario is “God forbid, mass casualties,” Mr. Goodman said, and that worst case would mean a longer ad-free period than anyone now expects.
That worst case would affect the network’s bottom line, and its 2003 prospects, only “if we stay commercial free for a long enough period of time that we can’t make the stuff good with inventory that we’re going to use for underdelivery,” Mr. Goodman said. “It also depends on the advertisers’ willingness to … extend those make-goods out over multiple quarters.”