From AJR,   December 1997

Gunfight At the All-News Corral   

Only one of the nation's cable news channels is likely to survive.

By Douglas Gomery
Douglas Gomery is the author of nine books on the economics and history of the media     

Today there are more news channels on television – around the clock – than at any time in history.

But expect fewer in the future. Only one of the big three – CNN, MSNBC and Fox cable news channel – can survive.

CNN proved an all-news channel could make money. Yet today the news is that the ratings are no longer growing, down about 5 percent during the past year, and down nearly 50 percent since the heady days of O.J. Simpson trial coverage. Currently the average CNN rating is less than one-half of 1 percent of the audience.

CNN struggles to continue to be known as "The World's News Leader" as it constantly reworks its schedule with talk and magazine shows.

"Burden of Proof," with Roger Cossack and Greta Van Susteren, an outgrowth of the Simpson trial, is now featured at midday and in prime time.

CNN's Sunday night magazine "Impact" tries to break from the pack through a weekly collaboration with corporate partner Time magazine.

Expect more changes.

CNN can no longer even count on future growth from expansion around the world. Back in 1990, CNN reached 60 million households, mostly in the U.S. Today the figure approaches 200 million, mostly outside the U.S.

Two well-funded news organizations challenge CNN. Rupert Murdoch, godfather of Fox cable news channel, has taken this competition with CNN personally. During the 1996 World Series Murdoch ordered his directors to avoid showing Atlanta Braves owner (and CNN founder) Ted Turner on camera. He also apparently approved his New York Post running the headline: "Is Ted Turner Nuts? You Decide."

Yet, a year ago, when Murdoch convinced cable system behemoth TCI to carry the Fox cable news channel, it looked like he had a winner.

Today his number crunchers tell him Fox cable news channel is watched by more than 22,000 households on a daily basis – a tenth of what CNN gets.

Yet Murdoch seems personally committed, and he hates to lose. He has not only taken on Ted Turner in a nasty public spitting match, but also agrees to pay cable operators $10 a subscriber to carry his service. (Usually cable operators pay the network.)

It's hard to imagine Murdoch backing off. He faces a richer foe in CNN's parent corporation, Time Warner. Murdoch also is challenged by MSNBC, backed by two of the largest corporations in the world – General Electric and Microsoft.

MSNBC has the deepest pockets of any TV news operation in history, and is trying anything and everything. This fall it moved away from its former target audience of Generation X by canceling "the Site," its self-consciously all-too-hip technology show, and announced it would beat CNN and Fox on breaking news.

It also tries for tiny niche markets. Earlier this year, for example, MSNBC launched a new weather service on satellite television. The venture is an expanded version of an online MSNBC weather service and challenges The Weather Channel, a long established cable service with 65 million subscribers. When MSNBC debuted its weather channel last April its universe amounted to just 1.7 million subscribers.

Thus so far the numbers for MSNBC are low; it is regularly watched in fewer than 40,000 households. As a consequence few insiders were surprised in late September when MSNBC began firing staff, saving the news venture from losing even more money.

Through this experimental phase, little has worked. Despite upbeat public pronouncements, executives at CNN, Fox cable news channel and MSNBC know that the economics dictate that only one will survive.

The growth of cable news audiences has crested. The numbers indicate subscribers want movies and sports. The fastest growing network is TNT – a combination of old movies and NBA basketball.

A less reported but as serious threat comes on the local level from such CNN clones as New York 1 and NewsChannel 8, based in Washington, D.C. When a local story is hot, these 24-hour news operations steal audiences directly from CNN and company.

And they are doing that more and more. In Washington, D.C., for example, NewsChannel 8 attracts a larger audience than CNN most of the time. New York 1, covering Time Warner's New York City universe of 1.5 million cable subscribers, claims that on average 32,000 households tune in through morning commuting time. This is in the same ballpark as the national audience of Fox cable news channel and MSNBC.

The growth in cable news is no longer national, but local. Expect more New York 1 clones in the top 20 markets that don't already have a local version of CNN.