Everybody Wins   

Fox News Channel and CNN are often depicted as desperate rivals locked in a death match. In fact, the cable networks aren’t even playing the same game. There’s no reason they both can’t flourish.

The cable news wars are over. Fox News Channel has won. And so, too, has CNN.

That's not the way it looks from the outside, of course. To judge from the press coverage, to read the networks' own corporate cross talk, Fox and CNN are still engaged in slow-motion combat. They are portrayed, and sometimes portray themselves, like the dailies of 1920s Chicago, embattled and battling. CNN snatches Paula Zahn from Fox News; Fox counters by spiriting Greta Van Susteren away from CNN. One side starts running an on-screen crawl, and the other quickly copies the move--and then both squabble over which was first. On more substantive issues, such as scoops and the other guy's alleged ideological bias, the sniping remains constant.

Fox crows that it is winning, and winning decisively, in the court of public opinion: the Nielsen ratings. CNN, with a 16-year head start, invented and defined the 24-hour news genre, establishing many journalistic milestones before Fox and MSNBC arrived in late 1996. But Fox News, the brash brainchild of Roger Ailes and Rupert Murdoch, has blown past its senior rival with astonishing speed. Fox's average daily audience first surpassed CNN's in January 2002. Last year, it captured an average of 667,000 viewers a day to CNN's 536,000 (MSNBC is a struggling third with 266,000). And absent a war or a dramatic, and unlikely, overhaul of its programming, CNN will probably remain No. 2 in viewers for years. Fox likes to point out that it got to be No. 1 despite CNN's enormous distribution advantage (Fox still reaches about 4.5 million fewer cable and satellite TV homes than CNN).

So the game's almost over?

In fact, with each passing month, Fox and CNN seem not to be in the same game at all. Both cover news, offer opinions and provide analysis of daily events. But they've become so different, in tone and style and emphasis--let's not even start on political orientation--that they've almost become separate solar systems within the same galaxy. Increasingly, the compare-and-contrast exercise isn't just misleading, it's irrelevant.

A study of the two networks by ADT Research, a New York firm that monitors TV newscasts, put it succinctly last year: "Cable news networks appeal to two distinct audiences: highly ideological so-called news junkies whose daily entertainment derives from the overheated debates of the political class; and a less-committed group who rely on experienced newsgathering when a global crisis hits the headlines. CNN's operation is designed as a resource for the latter; FNC's for the former."

The difference between CNN and Fox is less about news and journalism, or even politics, than about marketing. When Ailes, a former Republican political operative, started Fox News, he never contemplated a frontal assault on CNN, despite some feisty slogans ("Fair and Balanced," "We Report. You Decide") and cheeky newspaper ads. With a small, inexperienced staff and virtually no foreign presence, there was no practical way for Fox News to beat CNN on the depth and quality of its news reporting. Instead, Ailes successfully pursued what's known in marketing as a segmentation strategy.

Just as Gatorade can prosper in a soft-drink market dominated by Coca-Cola, or Lexus can coexist with General Motors, Fox sought (and captured) a niche distinct from CNN. Rather than compete directly with CNN's massive journalistic heft, Fox found its own footing by offering flashier television: brighter graphics, crisper presentation, more opinionated and combative personalities--more tabloid-style "edge" than CNN.

"We said from the beginning that we had to be different," says Jack Abernethy, FNC's executive vice president and Roger Ailes' first Fox hire. "We couldn't be 50 percent as good. We had to be better, and the only way was to be different."

Walter Isaacson, CNN's soon-to-be-former chairman and CEO, distills the essence of the two cable news brands this way: "CNN is fundamentally a reported journalistic network. Fox is driven by opinionated hosts." Isaacson says MSNBC, which recently hired former Minnesota Gov. Jesse Ventura and flame-throwing radio personality Michael Savage as talk-show hosts, is remodeling itself in Fox News' image, not CNN's.

While that may sound like excuse-making for CNN's failure to keep pace with Fox, there's no question both networks have tried to define themselves as something the other guy isn't. The stylistic gulf between the two is evident in their signature programs: "Larry King Live" on CNN, and "The O'Reilly Factor" on Fox News, hosted by the peppery Bill O'Reilly. O'Reilly displaced King as the most popular personality in cable news more than two years ago by being the anti-King. Where King is nonconfrontational, O'Reilly emphasizes verbal combat; where King is nonideological, O'Reilly showers his viewers with opinions. Where King is blandly respectful to all comers, O'Reilly is predictably sulfurous. "No one watches Larry King to find out what he thinks about the issues," says Isaacson.

The same spirit pervades the rest of the networks' prime-time lineups. Other than the histrionics of "Crossfire," CNN's programs feature the sedate Lou Dobbs, Connie Chung and Aaron Brown. Fox consciously counter-programs with the breezier, noisier and more combative O'Reilly, "Hannity & Colmes" and Greta Van Susteren.

Even then, it's more about packaging than politics. In reviewing a week of programming on the three cable networks last year, ADT found that CNN, Fox and MSNBC all invited similar numbers of left- and right-wing guests to their chat and interview shows. The major difference was that Fox's hosts offered more of their own opinions, and interrupted guests more frequently, than CNN's interviewers.

The news is presented very differently, too. CNN's most famous reporter is Christiane Amanpour; Fox News' is Geraldo Rivera. While that alone may symbolize the divergent cultures, a more telling contrast might be between CNN's prime-time news anchor, Aaron Brown, and his opposite number on Fox, the kinetic Shepard Smith. Where Brown is courtly, even patrician in introducing the taped reports of CNN's correspondents, Smith is jaunty, quipping his way through dozens of stories small and large during his 7 p.m. "Fox Report." Unlike Brown, Smith isn't shy about letting viewers know where he stands; a quick eye roll is usually enough to convey his thoughts on a particular story.

Preceding Smith is "Special Report," hosted by Managing Editor and chief Washington correspondent Brit Hume. Hume, a 23-year veteran of ABC News, doesn't play it completely straight; his show is half plain-vanilla newscast, half pundit-fest, with a daily roundtable of opinion-spouting panelists.

All told, Fox News has converted its "opinion-talk" brand into several important marketplace advantages. Fox not only wins the daily ratings contest with CNN, but its viewers tune in longer (535 minutes per quarter versus 294 for CNN, according to Nielsen) and are more upscale (household income: $56,371 versus $49,390 for CNN viewers). Fox claims it reaches younger viewers than CNN in prime time, but the difference is slight over the course of a day (59 years old versus 60).

Fox's managers take pride in the fact that they do all this with just 900 employees, less than a quarter of CNN's 4,000-member workforce. "We had three people in Afghanistan when CNN had 30 people there," says Paul Rittenberg, Fox News' senior vice president of advertising. "I don't know that viewers could tell the difference." (What Fox neglects to mention is that CNN's journalists supply news and programming to a global web of 35 outlets, including CNN Headline News, CNNfn, CNN International, a radio network, Web sites, a paging service and others.)

Despite all this, CNN's "brand" may actually be the more valuable of the two.

CNN's emphasis on journalism helps explain its happy--and highly anomalous--situation: The second-place network is actually first in the hearts of advertisers. CNN and Fox officials quibble over the specific numbers, which aren't publicly disclosed, but neither side doubts that CNN captured more revenue than Fox last year. The gap is considerable--by Rittenberg's own estimate, CNN collected more than twice FNC's total annual revenue, which he says was $200 million last year (others at the network say the figure was $130 million).

Some of this has to do with CNN's long head start ("It takes time for advertisers to catch up to the fact that we're ahead," argues Fox's Abernethy) and some has to do with the notion that CNN attracts a larger number of grazers than Fox News--casual viewers who tune in for only a few minutes to catch a headline or two. On average, about 73 million people check out CNN at some point each month, compared with 54 million for FNC. But another factor should comfort journalists: Advertisers like CNN's reputation, and are willing to pay handsomely to be associated with it.

"The CNN brand is still the most respected out there," says Andrew Donchin, who directs national television buys for Carat USA, a New York-based agency. "It's the first place people go in times of needing news.... And it has the biggest newsgathering operation out there."

He adds, "Fox always claims, 'We report, you decide.' Well, there are a lot of people out there who think it's got a more conservative bent, and that CNN has a liberal bent. I don't want you to think I'm playing it down the middle, but there is something for everyone here. Depending on your views, there's a network out there. With the kind of audience fragmentation we live with now, both can live very nicely."

An anonymous ad buyer told Mediaweek magazine in February, "There's no comparison in the quality of the journalism – CNN is light years ahead in objectivity and reporting--and I don't think Fox's 'New York Post on TV' approach appeals to the most desirable consumers."

Indeed, according to a poll last year by the Pew Research Center for the People & the Press, CNN was considered the most reliable news source on TV, bar none. Some 37 percent of those surveyed by Pew agreed that they believed "all or most" of what CNN reported. Only 28 percent said that of MSNBC. Fox News received 24 percent.

Much to Isaacson's regret, such nuances are often missing in discussions of the cable news battles. "The people who write about us always get it wrong," he says. "It's very destructive to this network. If all we wanted to do was get better ratings, we'd put on car chases or wrestling, and we'd get 10 times the ratings of a good piece by Christiane Amanpour.... But thank goodness Madison Avenue still sees value in being in this kind of classy environment."

Isaacson knows all too well about the struggle to preserve CNN's soul. It's not just the external competition with Fox and MSNBC; internal tempests besetting CNN's successive parent corporations--first Time Warner and then the merged AOL Time Warner--have been equal distractions. After founder Ted Turner sold to Time Warner in 1997, CNN pursued a number of mostly unsuccessful "synergies." A cable sports network venture with Sports Illustrated called CNN/SI flopped, as did the prime-time newsmagazine show "Newsstand," which was coproduced with Time magazine, whose editor at the time was Isaacson.

Other than getting an influx of America Online house ads, CNN seems to have benefited hardly at all from the AOL-Time Warner merger over the past two years. Isaacson has guided the network through the rocky, morale-stunting post-merger era, during which the parent company's stock price has pancaked and the boardroom has been in turmoil (chief executive Gerald Levin out, chairman Steve Case out, vice chairman Turner out, then in again). Soon, Isaacson himself will be out, quitting sometime this spring to become president of the Aspen Institute, a Washington think tank.

Early last year, Isaacson held a fateful meeting with CNN's top managers and his boss, Jamie Kellner, at Isaacson's loft in Atlanta. There was, he says, some discussion about nudging CNN more toward Fox News' discussion-opinion model (indeed, early in his tenure in mid-2001, Isaacson sounded out Rush Limbaugh for a talk gig). But, Isaacson says, "There was a solid consensus to stick with our emphasis on reporting. We knew we could get better ratings the other way, just as we knew we could sell more newsstand copies of Time with a certain cover. But it's not always about ratings or newsstand sales. Having a sense of mission is important, too."

"Someday," he adds, "a more crass corporate management than the kind we have now won't get it. They'll say, 'You've got 40 bureaus. They have four. You have a thousand journalists. They don't.' They'll say, 'Geraldo parachuting in somewhere gets better ratings than having a bureau. Why not go that route?' "

Replies Fox's Rittenberg, "The day will come when we'll catch up [in ad sales]. And then how will they justify their business model? How will they not cut the Brussels bureau?"

That's a primary reason why Isaacson and others at CNN advocated a merger with ABC News. Proponents of the idea say it would have resulted in tens of millions of dollars of savings for both sides, as the partners split the costs of news coverage and spread them over a vast broadcast-cable news empire. But talks formally ended in mid-February, with both sides saying other corporate issues were more pressing. Nevertheless, the concept makes sense for both CNN and Fox, which has discussed news-sharing arrangements with CBS News.

In the meantime, CNN's strengths--and Fox News' shortcomings--were in evidence when the space shuttle Columbia broke apart over Texas on February 1. While all the broadcast and cable networks scrambled for pictures, CNN was first on the air nationally with the telling shots of the shuttle's jagged contrails. CNN used live video from Dallas station WFAA, an ABC affiliate and one of many broadcast stations that have affiliation agreements with CNN. Lacking its own agreement or a regular aerospace reporter, Fox resorted to grabbing CNN's pictures from WFAA, complete with CNN's logo on-screen. The result: For 19 embarrassing seconds, CNN was Fox News' primary on-air source. CNN compounded the humiliation by switching to its correspondent, Miles O'Brien, who survived on Fox's air for several seconds before Fox cut to a pool shot of Mission Control in Houston.

Further result: CNN dominated Fox in providing details of the disaster, winning a rare ratings victory for two days running. And that's as you might expect, says Andrew Tyndall, the president of ADT Research, the firm that studied the news networks' programming last year. "CNN has always maintained an operation that is oversize for its core audience," he says. "It's like the Rose Bowl, a massive stadium that sits empty for 350 days a year. But when there's a major sport event, or a major breaking news story, there's no place better equipped to handle it."

CNN believes its newsgathering skill gives it a huge advantage over Fox News in covering major news stories, such as a war in Iraq. Isaacson invokes the memory of the first Persian Gulf War, when CNN's ratings soared to their all-time high, and the network gained maturity and credibility. But that was then. In cable news, one size no longer fits all. Fox has its place, too. As Tyndall puts it, "The course of world events will determine which network is better suited for the times."