Why the Advertising Community Still Needs CNN

In a Sea of News Boat Rockers, Network Provides Safe Harbor

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NEW YORK (AdAge.com) -- Does anyone really need CNN?

In these times of personalized Google alerts, political radio and news-with-attitude, the straight-shooting CNNs of this world seem to have less relevance in a media landscape choked with Drudges, Huffington Posts and countless online aggregators. CNN touts its authority, but viewers are a lot more fickle than in its early years; the network's big hits now typically come at moments of national crisis or freak news events -- remember "Balloon Boy"?

But while the network that Ted Turner built might not have the viewership clout it once did, there is still one audience that very much needs CNN: the advertising community.

With shrinking viewership of local news programs (who's home from work at 6 p.m. anymore?) and provocateurs like Glenn Beck and Don Imus stirring up controversy, CNN is safe ground. It's a trusted, if plain-vanilla, news source.

Viewership may be down, but advertisers still see value in CNN.
Viewership may be down, but advertisers still see value in CNN.

"Clients still see the value in CNN," said Elizabeth Herbst-Brady, president-Interpublic Group's Magna Global. Added Chris Geraci, managing director-national broadcast, at Omnicom Group's OMD: "It's nice to have a strong showing" in prime time, "but it's not necessarily why you're buying the news genre," said.

Maybe that's why CNN isn't portraying its new prime-time lineup changes as a radical departure from its usual modus operandi -- although, let's be honest, the prospect of seeing disgraced former New York Gov. Eliot Spitzer as a prime-time news host is, well, more than titillating. A new program that pairs him with co-host Kathleen Parker launches Oct. 4 at 8 p.m. The colorful British personality Piers Morgan takes over for the venerable Larry King at 9 p.m. in January. And anchor Rick Sanchez* has injected more personality into his daytime slot than is expected from CNN personnel.

The executive who leads CNN insists its U.S. network will resist the temptation to adopt the technique that has led rivals to greater ratings . Anchoring programs to a single lens or view would be catastrophic for CNN's operations, said Jim Walton, president-CNN Worldwide.

And yet, that very strategy has helped both News Corp.'s Fox News Channel and, to a lesser extent, NBC Universal's MSNBC, gain more viewer attention -- and the ad revenue that comes with it. Fox News captured about $511.4 million in ad dollars in 2009, according to Kantar Media, handily trumping CNN's $420.2 million (MSNBC notched just $131.7 million, according to Kantar). A CNN spokeswoman said the majority of CNN U.S. is sold in tandem with other venues such as HLN, which Kantar said took in around $144.2 million in 2009.

Fox and MSNBC have more viewers in prime time than CNN, according to Nielsen, with Fox News beating the network in overall daily prime-time viewers more than three-to-one through Sept. 19, 2010. CNN has also trailed the other two in prime time with viewers ages 25 to 54, typically the demo upon which advertisers judge the channels. Indeed, CNN's 25-to-54 audience at 8 p.m. has been averaging just 20% to 25% of Fox News' in the same hour, and usually trails that of MSNBC, according to analysis from Wedbush Securities' James G. Dix. A CNN spokeswoman said the U.S. network draws more viewers tuning in over the course of a month than other cable news networks.

And CNN might be losing what has been its advantage -- as the first place to turn to for breaking news, the nonpartisan Project for Excellence in Journalism's "The State of the News Media 2010" suggested. "During the weeks of the shootings at Fort Hood and the earthquake in Haiti, CNN's coverage was not enough to keep Fox News out of first place."

Things are only going to get tougher. In the not-too-distant future, analysts envision a news aficionado who goes first to digital and mobile venues to keep up on breaking news -- not cable.

Given all this, shouldn't CNN just abandon the old way of thinking and ride the new programming wave to what would presumably be success?

Radical change may not propel CNN to greater glory. CNN should contribute 12% of Time Warner's consolidated operating income in 2010, according to Wedbush's Mr. Dix -- a flow of money no one wants to see dry up. In addition to ad time on its U.S. network, CNN offers what ad buyers said is a broad reach across many different venues: overseas, out-of-home, online and more. CNN also captures subscriber fees from cable, satellite and telecommunications companies that distribute the network to viewers. And local news outlets pay CNN for use of the network's content on their air as well. All of which makes tinkering with such an established flow of revenue tough. "It's hard to reinvent something that's that important to your profit stream," said Mr. Dix.

Which brings us back to advertisers, who like the audiences news channels attract but are wary of an inflammatory host. Many cable-news outlets run ads in an arrangement known as "run of schedule" in which a marketer agrees to have ads run during a specific range of hours but often doesn't know which program or what host the commercials will be supporting. CNN provides "a neutral environment for advertisers," said Scott Pool, VP-associate director of national broadcast at Omnicom Group's GSD&M Idea City. "Certain people are leery of certain personalities on other cable networks." Fox News said it has been able to move advertisers concerned about Mr. Beck to other spots on the network, so there has been no lost revenue. An MSNBC spokeswoman said the network has "not had a problem with advertisers pulling out of 'Countdown,'" the program hosted by Keith Olbermann.

In a signal CNN is trying to push forward, it recently replaced Jon Klein, who led its U.S. network operations since 2004, with Ken Jautz, a CNN vet who in recent years has increased ratings at sibling cable outlet HLN using the likes of Nancy Grace and the now-departed Mr. Beck.

He may not be able to repeat those feats. While high-octane personalities and opinions work in prime time, "finding the right balance of attracting viewers in prime time to that sort of programming while not hurting the core value proposition is the challenge," said Andrew Heyward, a media-industry consultant and a former president of CBS News.

For now, Mr. Walton is betting on the straight stuff. "We expect Ken ... to grow his audience each month, each quarter and each year. One of the ways he will do that is by presenting and producing very relevant, compelling television programs."

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UPDATE: Rick Sanchez parted ways with CNN late last week after this story went to press.XXX

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