Vanilla cable news channel CNN is ceaselessly derided for its rock-bottom primetime ratings and gimmicky presentation but the middle-of-the-road network is actually a profit-generating behemoth. Still, you wouldn't get that from the latest New York Times report by Brian Stelter (who is well-versed on the cable new business) on its decision to cancel John King USA, which defines the company as "ailing cable news channel CNN." Stelter likely had in mind the ratings news that the network had its 20-year primetime low in May and continues to hemorrhage viewers. But here's the thing: as a business, CNN is on track to net nearly $600 million in operating profit this year, a record high, which means that in the statistic that matters most, the network is anything but "ailing."
So how does CNN make so much money with such lousy ratings? Oddly enough, the secret is its oft-derided non-partisan perspective and its international presence. In May, Jeff Bewkes, the CEO of Time Warner, CNN's parent company, told shareholders the $600 million figure was linked to its international success. Though often under-appreciated in the States, CNN International, has its tentacles everywhere, as the Financial Times' Emily Steel and Andrew Edgecliffe-Johnson reported last month. "Its global network CNN International, available in more than 265 million households across more than 200 countries, has reported record growth in audience and ad revenues this year," they reported. And if you're looking for where it compensates for its meager primetime ratings, look no further than this stat: "CNN International accounts for 20 percent of CNN’s global revenue, a spokeswoman says, or twice the contribution from US primetime ads," they reported. "About half of CNN Worldwide’s revenues come from fees from cable and satellite distributors, which research firm SNL Kagan estimates will hit $17 billion in the US alone this year, up 9.3 percent from 2011."
Part of securing those lucrative cable and satellite deals relies on CNN's non-partisan identity (if a provider is going to offer only one 24-hour news channel, it will go with the middle-of-the-road option instead of liberal MSNBC or conservative Fox News). Still, this fact is widely misunderstood. “CNN appears committed to a business model that doesn’t work,” Robert Seidman, an editor at the ratings site TV by the Numbers, said in May. The comment appeared next to a chart showing double digit ratings declines for all but one of CNN's programs in April. Clearly having weak primetime numbers is a disadvantage (that's when ads sell for the most). And, according to a report by Stelter last month, the concern goes beyond money (he says the "downward ratings trend ... drives public perception -- and employee pride"). But to say its business model is broken ignores the reality of its earnings reports.
This article is from the archive of our partner The Wire.
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