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Besieged by competitors, its audience shrinking, CNN shakes up its management team. But can its new leaders, all CNN insiders, find a bold new way to regain momentum?

ON A CORRIDOR WALL in CNN's Washington bureau hangs an oversize chart resembling a topography map of a mountain range. It's a timeline, a graphical depiction of CNN's rise and fall in the Nielsen ratings. Here's the steep jagged line, soaring like Everest, representing the audience for CNN's coverage of the Persian Gulf War in 1991. And here's another peak for the O.J. Simpson verdict in 1994, and still another indicating the death and funeral of Princess Diana in 1997. The number of spires is impressive, but the pattern is unmistakable: The peaks keep getting smaller, as if the mighty range were crumbling.
And in a sense, it is. In late August, CNN tacitly acknowledged what the chart on the wall makes clear. In announcing a reorganization of its top management, the network that redefined TV news essentially admitted that its latest effort to turn itself around had flopped. Though CNN's official press release made no mention of him, the network's would-be savior, Richard Kaplan, was reorganized right out of headquarters in Atlanta. Kaplan had met the day before with two senior executives from Time Warner, CNN's parent. They read the names on the new organization chart. Kaplan learned he was out of a job when his wasn't one of them.
The shake-up was the most visible result of a summer of soul-searching at CNN. As many as 35 senior executives took part in retreats aimed at assessing where CNN stands and where it should go. Senior managers recognize that the network, which just reached its 20th birthday, is approaching another crossroads. Three years ago, CNN was swallowed by Time Warner. As early as this fall, America Online will swallow Time Warner and CNN. As a result, CNN will be an even smaller piece of an even more massive corporate portfolio. "We've got to get ready for a new era," says Tom Johnson, chairman and chief executive of the CNN News Group. "We are positioning this company for convergence and the next wave. That's going to require tremendous teamwork." He adds, without naming Kaplan, "You can't really have a one-man band in that kind of environment."
While Johnson tries to sound optimistic, there's no denying CNN's downward drift. The good news is that the money keeps rolling in, thanks to a healthy international business and a strong domestic ad market. CNN is esteemed, even vital in foreign capitals. But on most days, it's a negligible presence in its own country. Domestic ratings have been in decline for two years. The numbers were so bad in the second quarter (touching levels unseen since the latter days of the Reagan administration) that CNN had to give away airtime to advertisers who'd been guaranteed bigger audiences. Even the vaunted CNN news machine appears to be in need of a tuneup. The network's coverage of the summer's political conventions was panned as lackluster, even lackadaisical--it "seemed to be slogging through molasses" wrote one newspaper critic, John Carman of the San Francisco Chronicle.
While CNN seems to recognize all this, it's not clear it knows what to do about it. The four news executives elevated in the wake of Kaplan's dismissal--editorial chief Eason Jordan, international boss Chris Cramer, domestic networks head Jim Walton and Sid Bedingfield, who runs CNN/U.S.--are solid, accomplished pros. Jordan, a lifelong CNNer, wins especially high marks as a newsman. Yet covering the news seems to be the least of CNN's problems. As the chart on the wall makes clear, CNN is fighting harder than ever to attract viewers even on the increasingly rare big stories, its stock in trade. The bigger question is whether a management team that has presided over CNN's decline can be expected to engineer its recovery.
"What they've done is guaranteed they won't change," says Al Primo, a veteran TV news consultant. "They've taken all these people who are products of the system and put them in charge. It may be a good way to run General Motors, but it's not a good way to run a TV network."

T O BE SURE, GOING OUTSIDE Atlanta headquarters for leadership didn't work the last time. When Kaplan arrived in 1997, he seemed the right man at the right time. A much-decorated broadcast veteran, Kaplan had spent almost 20 years at ABC News developing the sort of "appointment" programs like "PrimeTime Live" that smooth out ratings peaks and valleys in the absence of wars and plane crashes. The year before, two well-financed threats to CNN's national news franchise had emerged: Rupert Murdoch's Fox News Channel and MSNBC, an alliance between NBC and Microsoft. Having Time Warner as a parent looked to be a huge plus, since it gave CNN direct access to the resources of the world's biggest news and entertainment company.
But Kaplan's initiatives, like the prime time newsmagazine "CNN NewsStand" have been almost ignored. Although they didn't realize it at the time, CNN may have been fighting the last war. CNN tried appointment shows just as the format began to crest and fall elsewhere. (NBC and ABC are having just as much trouble with programs like "Dateline" and "20/20" nowadays, too.) "People are too busy with other appointments to show up for these generic newsmagazine shows," says Tom Rosenstiel, director of the Project for Excellence in Journalism. "It's also a very difficult thing to do. The last time someone put on a successful appointment show, they had to put a bunch of castaways on an island."
Within CNN, Kaplan became a polarizing figure. A faction thought he offered the creative spark long missing at the network; others found him arrogant, demanding and difficult. "He could explode on people," says one senior manager who worked closely with him. Among those who reportedly clashed with Kaplan were Eason Jordan and Lou Dobbs, the "Moneyline" anchor who eventually left CNN for his own online venture. After a brief reversal of fortune during the Clinton/Lewinsky saga, CNN began to backslide again. When Kaplan arrived, CNN was being watched in an average of 463,000 homes a day; when he left it was averaging 288,000.
Kaplan lays some of the blame for this at CNN's feet: "What I was doing was not succeeding by itself," he says. But, he adds, "If you don't promote what we're doing, it doesn't matter what you put on the air; you're not going to get an audience." Tom Johnson, for one, concedes the point. For years, CNN promoted itself largely by running ads on other networks started by CNN founder Ted Turner. It didn't start its first major advertising campaign until last year, long after the competition had arrived.
"We spent a tremendous amount on newsgathering and news bureaus in places like Havana and Baghdad," Johnson says. "But frankly, we haven't spent enough on marketing and promotion. I need to tell you who we have tonight on 'Larry King.' I take full responsibility. It was inadequate." If that's the case, one of the key people to watch could be Wonya Lucas, a Turner Broadcasting veteran who became CNN's first senior vice president of strategic marketing in September. Lucas will be responsible for promoting the domestic networks.
To a great extent, however, what happened to CNN was going to happen no matter what the network did. CNN was a novelty and a revelation when it began in 1980--and for years it had the all-news field to itself. Few gave Ted Turner's brainchild much of a chance of filling its 24-hours-a-day newshole, let alone attracting an audience and advertisers. Fortunately for Turner, CNN was able to develop in what now seems like a news vacuum. Although regional news channels--mini-CNNs--began cropping up by the late 1980s, it took 16 years before another national cable news competitor appeared. As a result, CNN still holds a huge lead over MSNBC and Fox News in distribution, though the gap is closing (at last count, CNN reached 77 million homes, MSNBC 61 million and Fox 52 million). The proliferation of channels was bound to loosen CNN's lock on the news audience, just as NBC, ABC and CBS suffered as cable competitors came on the scene. Equally important, CNN grew to prominence long before the Internet put news on the desktops of millions.
But like its failure to promote itself adequately, some of CNN's problems now appear self-inflicted. Rather than a plus, the supposed synergy with Time Warner actually was a minus. Synergistic programs such as "NewsStand: CNN & Time"--combining the resources and brand names of the network and the magazine --probably mystified far more viewers than they attracted. In a more macro sense, the network's brass was slow to respond to the rising threat of CNBC, which began in earnest in 1991 (the year NBC bought and renamed the Financial News Network). CNN didn't start CNNfn, its still-developing financial-news offshoot, until four years later. Even today, people at CNN bristle at the notion that CNBC is in the same game as CNN. It rankled them when Nielsen reported that CNBC's ratings in the second quarter had passed CNN's for the first time, and media accounts began describing CNBC as "the most-watched cable news channel." Bill Bolster, CNBC's president, retorts that CNN has "lost relevance" in an era in which the news is "local and personal."

N OWADAYS, CNN IS NO LONGER the scrappy outsider with a refreshingly seat-of-the-pants approach. The CNN News Group is massive: four domestic cable networks (CNN, Headline News, CNNfn and CNN Sports Illustrated), 10 international networks, two radio networks, 14 Web sites, nearly 4,000 employees. The sprawl gives CNN unparalleled news resources, but it also leads to bloat. Earlier this year, managers discovered to their chagrin that they had unwittingly sent three crews to the same computer trade show in Las Vegas.
Further, CNN's proud history of doing things "the CNN way" may be as much a problem as a virtue. Some of the internal resentment of Kaplan may have stemmed from his attempts to invigorate an institution known for its authoritative, but often bland, approach to the news. He persuaded management to spend $7.5 million to make over CNN's dowdy news set and spruce up its shabby graphics. He spent undisclosed millions more on "NewsStand," which was supposed to be CNN's signature program at 10 p.m., following the popular "Larry King Live." He also went outside and recruited former ABC personalities Jeff Greenfield and Willow Bay. Even so, few would describe CNN's overall look as zippy or glitzy today.
Some CNNers acknowledge that the network has struggled to keep up with a changing business. "There's a danger in any institution that comes up with a winning formula that all they have to do is what they've always done," says CNN anchor Judy Woodruff. "It's happened to companies that make cereal. It's the same with news. We have to keep thinking about what we can do to be relevant. We not only have to cover the news, but connect it to peoples' lives."
Indeed, everyone agrees CNN knows news, but there are lingering doubts about whether it knows television. To this day, it hasn't seemed comfortable with creating a star system. Woodruff and Bernard Shaw are competent and intelligent (and Larry King is familiar and accessible), but CNN doesn't have anyone who symbolizes the network like Peter Jennings, Tom Brokaw or Dan Rather. CNN's competitors, meanwhile, have cultivated younger, more dynamic talent. MSNBC has built its prime newscast around rising star Brian Williams; it also has vets like Forrest Sawyer and can count on drop-in visits from Brokaw, Matt Lauer and Jane Pauley. CNBC has motormouths Chris Matthews and Geraldo Rivera, and a snappy daytime talk show called "Squawkbox." Fox News has made a star of the feisty Bill O'Reilly.
People at both CNN and its competitors say the network underestimated the appeal of "Moneyline's" Dobbs, and should have done more to retain him. "They've been learning the hard way that you've got to have personalities you can promote," says Primo, the news consultant. "Personalities can take you to the stars. I learned early on in life that your anchorman has more power than all your stories combined."
One reason for the lack of star power may be CNN's tradition of tightfistedness. Kaplan, with his big-spending network background, apparently didn't make many friends among his superiors over his insistence on spending money on sets and newsgathering.
CNN may be waking up to the personality gap, albeit slowly. In an attempt to attract younger viewers, it's been developing a political talk show with a younger cast of talking heads, including Weekly Standard writer Tucker Carlson. Johnson suggests CNN could make a run at a big-name anchor (just as it did some years ago when it unsuccessfully courted Brokaw), and switch to a single-anchor format on some shows. Says Woodruff, "Historically, it's true we've stressed news over personality. It worked for a long time. Whether that's the way to go in the future is an open question."
Frank Sesno, CNN's Washington bureau chief, poses another set of questions. "What I think we need, and what's been under discussion here, is to ask ourselves, 'What is news today? What does the audience want?' The audience wants perhaps more depth, but it has less time.... The point is, the mission doesn't have to change, but the way you accomplish the mission may."
One answer may be for CNN to discard some of the "CNN way" and take some risks. "They've had a hard time saying, 'Let's do something crazy,' " Rosenstiel says. " 'Let's create a pool of money for some young documentarians to experiment with. Let's hand over a couple of hours a week to people under 30 and see what they come up with. Let's do a high-tech show for real high-tech freaks.' There's no reason an MTV News couldn't be on CNN, or a news show for kids, or something on health, or on consumerism or even aviation. There are a lot of wild things that just might fail."
Another unanswered question: Just who'll be in charge of the new CNN. These days, the most important presence at CNN isn't Tom Johnson or his boss, Turner Broadcasting System chief executive Terry McGuirk, or even McGuirk's boss, network founder Turner. With Turner's role in the new AOL Time Warner unsettled, the key man is Bob Pittman, the vice chairman of America Online. As the executive who will inherit authority over CNN once the Time Warner-AOL merger closes, Pittman could have the biggest influence over the network's direction. A one-time deejay turned marketing whiz, Pittman has helped double AOL's subscriber base and expand its content offerings during the past three years He was also one of MTV's early executives, ran Time Warner's theme-park business and briefly headed Century 21. CNNers who have read the résumé point out what's missing: news experience.
Although it's gone largely unmentioned in the press, the August management shakeup wouldn't have happened without Pittman's blessing (and indeed some say he orchestrated it). CNN's brass has been talking with the AOL executive, though Johnson won't reveal much about the discussions. (Pittman wouldn't talk for this article.) "He's given us a commitment of support," Johnson says. "I think he has tremendous respect for the CNN brand. But he's a strong, results-oriented guy, too."
Is AOL boon or bane for CNN? Johnson chooses the former (he's paid to do that, after all), foreseeing a day when CNN-branded news will be distributed everywhere--on TV, radio and the Internet, via wireless phone networks and AOL's proprietary "platform," which now reaches 23 million homes worldwide. But it's not clear precisely how this will be realized ("I'm not going to telegraph anything until we're ready," he says), or whether it even will. When talking of the future at CNN, it pays to keep an eye on the immediate past. Talk of convergence sounds fine, but wasn't that supposed to happen under Time Warner, too?
A top newsman at one of CNN's rivals asks the question this way: "Does Bob Pittman have a sense of crisis? Is he thinking, 'We need to fix this now and fix it fast'? Speaking as a competitor, if he does, that can be dangerous, because that's the kind of environment in which someone comes up with a really good idea. Right now, they're too hidebound. They keep doing variations on what they've always done. If they keep that up, they'll be stuck in the mud for the foreseeable future. What they really need is a gun at their head."