The Diana Story: A Breakthrough for MSNBC?   

Amid the reams of information whispered into MSNBC anchor Brian Williams' ear the night of Princess Diana's death were two small, but significant, directions. "Welcome the CNBC viewers" and "Welcome the NBC viewers," producers told their lead anchor as MSNBC went live on its sister networks.

Williams and the fledgling 24-hour cable news network had come face to face with their largest audience to date and their first real test as a legitimate alternative to CNN during breaking world news.

"It just started to crash around me like a wave," says Williams, who spent the night sifting through conflicting reports of the Paris car crash live on the air. The cable operation, accustomed to measuring viewers by the thousands, was reaching millions.

But not all is rosy for the nascent network. MSNBC came under harsh criticism in an article by Washington Post media writer Howard Kurtz for plunging too deeply into news lite.

By most accounts, though, on the night of Diana's death MSNBC rose to the occasion. While the other networks were caught without key personnel — CBS struggled to get something, anything, on the air, and CNN let a hoaxer through with a fake account of the crash scene — Williams calmly anchored the most evenhanded live coverage of the historic night.

"For MSNBC, the 14-month-old cable channel, the tragedy might prove to be as big a bonanza as the gulf war was to CNN," Sarah Lyall wrote in the New York Times in the aftermath.

MSNBC executives don't deny that the network inadvertently benefited from the tragedy. "It exposed us to a large number of people," says MSNBC Vice President Mark Harrington. "I think it certainly was a watershed period for us."

And it was a much-needed booster shot to a network entering its sophomore year in the doldrums. For MSNBC, Diana's untimely death on Labor Day weekend could not have come at a better time.

On the West Coast, MSNBC's Internet division was preparing to lay off 20 percent of its workers, mostly contractors, after an overhaul of its Web site. A highly acclaimed, but little watched, computer show, "The Site," also got the ax.

On the East Coast, the Secaucus, New Jersey-based newsroom was in a malaise after embarrassing early reports put MSNBC's average daily audience at a paltry 24,000 viewers — roughly 60 viewers for each staff member in the cable division.

CNN President Tom Johnson was dismissive of his chief competition in the flurry of first anniversary stories in July. "I was concerned that with the combination of the multimillion-dollar anchors and that massive promotion that was running on NBC, MSNBC, in print, could have a damaging impact on CNN," Johnson told reporters. "It has not happened."

MSNBC was launched with high hopes in July 1996 as a joint venture between Microsoft and NBC and the first real run at competing with CNN. Brimming with familiar faces like Katie Couric, Jane Pauley and Williams, the network hyped itself and its Internet component as a hipper, deeper extension of NBC News.

Rupert Murdoch's Fox News Channel was quick to follow, but got off to a slow start, as it was mired in a legal battle with Ted Turner and Time Warner to get space on key cable systems.

Three days after MSNBC's launch, Williams anchored spotty live coverage of the explosion of TWA Flight 800. But Diana's death was the first real worldwide test of the cable network's mettle.

Williams was visiting a friend in the hospital in Connecticut, still dressed from doing his usual Saturday night stint on "NBC Nightly News," when his pager went off with news of the Paris crash. He rushed to the studio.

CNN was first on the air with the accident story and had a much larger audience, but critics say MSNBC held its own. Fox News was first to announce Diana's death, thanks to feeds from the Murdoch-owned SKY TV in London.

Williams said he had a chance to be first on the air with the news, but held off for confirmation from a third source. "The choice was in my right hand on a piece of paper, and I didn't go with it," Williams says without regret.

Though the cable news networks had their week in the spotlight during Diana's death and funeral, all the talk about the competition among them seems to be mostly talk, considering average ratings numbers, analysts say. For all the money thrown into the cable networks, the number of people actually watching at any time other than during a major news event is startlingly minuscule.

"My guess is that Fox News and MSNBC have a smaller national audience than a Phoenix-size" affiliate, says New Yorker media writer Ken Auletta.

Though the moguls behind MSNBC and Fox News predicted their entry into the all-news market would bring more daily viewers to the game, there has been no real increase in the everyday numbers, Auletta says. The new choices are "cannibalizing" the already tiny audience of cable news junkies.

MSNBC says the post-Diana bump edges it closer to the 100,000 mark for daily viewership. But it prefers to focus on "apples to apples" analysis of homes that carry CNN and MSNBC. Those studies show MSNBC beating CNN in some half-hour periods in some markets, says MSNBC spokeswoman Lauren Leff.

But CNN executives counter that overall numbers still show their network trouncing the competition with a vastly larger audience nationwide.

MSNBC and Fox face an uphill battle, hampered by their poor channel position in nearly every market and CNN's 17 years of name recognition. According to Leff, MSNBC is in 38 million households. By 2000 the network should be in about 60 million homes, which is still well behind the 78 million households where CNN is available.

But the news networks are not necessarily about ratings, making money or even good journalism, says Auletta. With backers like Time Warner, Rupert Murdoch and Bill Gates, they're more about empire building and ensuring prominence in coming Web site-TV hybrids.

"Essentially, they're saying, 'This may be a good business one day, and I want to be the first to plant my flag on the moon,' " Auletta says. "What if they didn't do it? What would that cost?"

Diana's death showed audiences are still hungry for blanket coverage during major world events, but market realities show cable cannot sustain many 24-hour news networks. CBS has no plans to launch one, and ABC abandoned its plans to jump into the fray.

Despite small audiences, the network news wars are creating jobs and lots of time and space for innovative reporting, Auletta says. Even if no one's watching, the freedom is refreshing. "It probably helps," he says. "For morale, it's fabulous."

After a year as the face of MSNBC, Williams says he knows his ratings aren't stellar. But he says he doesn't mind. "If I was in this for the raw number of viewers I'd beg [NBC News President] Andy [Lack] to put me on 'Dateline,' " he says. "I have never once gone on the air saying, 'If only.' I go home saying, 'Just wait.' "