WBD/Paramount merger - Hollywood Reporter: A CNN and CBS News Tie-Up Would Radically Transform the Industry

Story from Hollywood Reporter:

At the turn of the millennium, when Microsoft still owned 50 percent of MSNBC, and before Fox News cemented itself as ratings leader post-9/11, CNN was cable news king.

Sure, the broadcast networks still had vast audiences, but the economics of CNN were vastly superior, with its lucrative and enduring cable carriage fees (it turns out that 2000 was just about the peak of pay TV, with around 100 million homes paying for cable or satellite), and its robust advertising business.

CNN’s unparalleled strengths: Its vast newsgathering resources, its ubiquity on TV sets in the U.S. and around the world, and its sterling reputation among consumers, led to an idea at the time that intrigued executives at Viacom, which had acquired CBS in 1999: A merger of CNN and CBS News.

The idea, according to an executive involved in the talks at the time, would have seen CNN effectively take over CBS News. Sure, CBS News programs like 60 Minutes and the CBS Evening News would still air, but the expensive newsgathering and behind-the-scenes operations could be handled by CNN, which was already operating around the world.

That plan did not go over well inside CBS News, as then-marquee anchor Dan Rather once remarked to The Hollywood Reporter back in 2001 when the notion was bandied about. But the cost synergies were real: three years earlier, when a CBS-CNN tie-up was earlier reported in 1998, Wall Street analysts suggested that $200 million in savings a year could be realized from a pact.

Or, as then-Time Warner CEO Jeff Bewkes told investors in 2010, when rumors of yet another CNN-CBS News tie-up were swirling: “There is a lot of fiscal strength at CNN that puts us in a pretty good position offering a solution to the cost problems and profit squeeze that go on in network news.”

Bewkes added that it was “no secret” that CNN had held talks with broadcast news divisions in the past — the cable news network also held talks with ABC News in the early 2000s about a newsgathering pact — and that it was still open to doing so.

Neither the 2000 talks nor the 2010 rumblings led to a deal, but a decade or two can make all the difference, accelerated by the erosion of a linear TV landscape scarred from years of cord-cutting.

Whereas before CNN had vast financial resources and an unparalleled brand, it is now tied to a cable business in secular decline. It is still profitable, reportedly to the tune of hundreds of millions, but there is no more growth to be had. Its ratings are at record lows, and its current owner Warner Bros. Discovery is looking for a lifeboat from pay TV, creating CNN Max, which is part of the larger Max content offering.

And CBS News finds itself a constant third in the network news wars in the mornings and evenings, though the venerable newsmagazine 60 Minutes remains the most-watched news program in all of TV (thanks in no small part to its Sunday NFL lead-in).

A Warner Bros. Discovery-Paramount Global merger — should it actually come to fruition — would bring the two news organizations together at last, even as both are far weaker in terms of finances and viewership than they were when the discussions first heated up two decades ago.

As it happens, CNN and CBS News already share talent in a way that other news organizations do not. Longtime CNN anchor Anderson Cooper works as a correspondent on 60 Minutes, while CBS Mornings co-anchor Gayle King also co-hosts the CNN primetime series King Charles.

Nonetheless, any deal would dramatically alter the TV news landscape, further shrinking a business that is in terminal decline. Already network news chiefs — who were once among the most powerful executives in broadcasting — are being layered a rung or two below the network CEO, a sign of diminishing influence.

And layoffs have impacted nearly every TV news division, from CNN and Fox News to ABC News, CBS News and NBC News.

One source speculated that if the two news divisions were merged as part of a larger Warner Bros. Discovery-Paramount Global play, the companies would likely pursue a similar playbook to what was discussed years ago.

A merged CNN and CBS News would save millions by combining behind-the-scenes departments like legal, human resources, technology and operations. In addition, the two disparate newsgathering divisions would be merged into one, with another veteran TV news executive speculating that “dozens, if not hundreds” of on-air correspondents and producers would be losing their jobs in the process. 17-After all, there’s no need for two bureaus in London or Tel Aviv, and crews could be consolidated to meet the slimmer structure.

CNN and CBS News programs would continue as is, and star anchors would still be necessary, but the journalism and newsgathering used to fill those hours would come from the new consolidated news team.

While 20 years ago the expectation was that CBS News would bear the brunt of the cuts, essentially handing over editorial control to CNN, it is not quite as obvious how things would be broken up this time around.

One thing is all but assured, both sources agreed: 60 Minutes would be left largely alone (the newsmagazine has infamously operated as its own separate unit within CBS News, and has its own office, staff and studio in a building across the street from the CBS Broadcast Center on West 57th St), after all, if it’s worked half a century, why mess with it now?

There are significant hurdles that would need to be overcome, and for which there aren’t obvious answers. One sticking point last time that would come up in a new merger: CBS News is a union shop, while CNN is not.

CBS News staffers in its New York headquarters are covered by the Writers Guild of America East (for writers, editors and researchers), the IBEW for camera and sound technicians, and on-air anchors and correspondents are covered by SAG-AFTRA.

Merging the heavily-unionized CBS News and the mostly union-free CNN would be challenging, and could spur more layoffs on the CNN side of the business.

And such a merger would upend the streaming strategies of each company, with CBS leaning into its broadcast roots by offering a free ad-supported streaming network, and CNN leveraging Max. In a world where CBS News and CNN share corespondents and news resources, having two streaming news services may not make sense. It’s a lesson that NBCUniversal has learned, as it has cut back on its MSNBC programming on Peacock in recent months, while leaning into the free NBC News Now offering.

To be sure, a Warner Bros. Discovery-Paramount Global merger would be a megadeal in and of itself, but if it happens, it would also mark a new era for TV news, one that acknowledges the problems facing the once-mighty cable business model, and adjusts accordingly.

In a sense, it’s back to the future for CNN, which arrived as an upstart in 1980 with uncertain financial prospects. Founder Ted Turner said at launch that $3 million a month would be invested in CNN with the expectation that he’d lose lose $2 million per month for a year and a half.

Then, in 1988, Turner came up with a crazy idea to merge CNN and Discovery Channel. Three years later, as THR reported in 1991, CBS Broadcast Group president Howard Stringer batted away speculation about a CNN tie-up, but conceded talks with “a number of outside organizations, CNN just one among them.”

No Discovery-CNN deal materialized in the ’80s, but 35 years later it came to fruition when WarnerMedia and Discovery merged amid today’s challenging environment.

While CNN and CBS News have talked many times before, now it could actually happen.

© 2023 The Hollywood Reporter.