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Ken Doctor
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Ken Doctor’s work centers on the transformation of consumer media in the digital age. He is the author of “Newsonomics: Twelve New Trends That Will Shape the News You Get,” which has been translated into Mandarin Chinese, Korean and Portuguese. He contributes to his own Newsonomics.com website... More
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  • The Newsonomics of Replacing Larry King 0 comments
    Jul 15, 2010 2:33 PM | about stocks: TWX, GE, NYT, CBS

    First posted at Nieman Journalism Lab

    I know. You say, who could ever replace Larry King? But I remind you that Larry’s six ex-wives have already confronted that question.

    Most of the speculation about a replacement has focused on a range of usual suspects, personalities from Katie Couric to Ryan Seacrest to Joy Behar to Piers Morgan — all around the question of who will be able to command a better audience than King, whose ratings have seen a steady decline. Indeed, his successor, who will take over the show in November, will probably come from that list, a month after the network plucked Eliot Spitzer and Kathleen Parker to fill Campbell Brown’s spot.

    Yet the changing economics of CNN’s basic business model prompt lots of questions about ways CNN could go — as well as offering print- and broadcast-based news companies some pointers on their own business model development.

    Let’s recall that CNN is a tale of two modern stories. Its flagship cable news station has been flagging badly, having fallen to a #4 position in cable news behind Fox, MSNBC, and its own Headline News Network (HLN), tabloid TV without tabloid wit. CNN is cool and confused in an age of hot and pointed.

    Online, though, CNN has built a formidable business. It ranks at or near the top of the top news sites, excels at user-gen news content and offers one of the few paid news apps.

    It’s a tale of two business units going opposite directions.

    Look at the revenue pie for CNN, and you discover more nuance. One-half of CNN’s roughly $500 million in revenue comes from what it calls business subscription fees — what cable companies pay it for carriage. Ten percent of its revenue is now coming from prime-time advertising; the same percentage from its digital businesses. Advertising outside prime time, international, and some syndication round out the revenue picture.

    We can certainly see that CNN’s revenue model is much more diverse than newspaper or broadcast companies. That payment from cable systems for carriage — averaging about 50 cents per subscriber per month, according to recent accounts — makes a huge difference in a time of great advertising change.

    We can also see that CNN is becoming more and more of a content company. It gets paid that half dollar a month from cable companies because its inclusion helps drive subscribers. Recently dropping the Associated Press, it’s moving increasingly into syndication, both video and text, and there the quality and breadth of content counts. As one of the first news companies to embrace multi-platform publishing (cable + desktop + mobile, long before others got that notion), it moved quickly to price its product for the iPhone, charging $1.99 and now ranking as the #2 news app in the iTunes store.

    So content creation — and content creation that rebounds in digital waves, even if it starts from a cablecast — is more important to CNN every day. If it could come up with more programming that provided digital multipliers — smartphone and tablet users willing to pay for access, and advertisers joining them — then the Larry King replacement might be not just good TV, but good strategy.

    What might that mean?

    For instance, how could could CNN better leverage its substantial iReport operation, a user-generated innovation that is the gold standard for TV news. Viral user-gen video is a mainstay of the digital world. Or maybe it could create an America’s Best News Videos (is Bob Saget available?), riffing on the montages that Jon Stewart has made almost mainstream. Maybe it could go The View-like, aggregating characters whose comments and rants might generate great two-three minute digital products. Or, most likely, it could find a bolt-out-of-the-blue digital age personality, like Rachel Maddow, who may well front MSNBC’s first iPad app. As MSNBC’s Mark Marvel told AllThingsD’s Peter Kafka about its coming app, it will allow users to “engage with the host of that show.” Engagement with Rachel, yes; with Larry, no. With Katie, maybe.

    Can CNN find a digital upgrade to the analog King?

    The goals here would be to produce great digital content, not just ratings. Sure, TV has seen some pick-up of memorable interviews — think CBS’ Katie Couric and Sarah Palin, or more recently the half-million pageviews after-market that Maddow generated with her Rand Paul interview. That aftermarket, though, has been more of an afterthought. If revenue growth is in the digital content business, CNN, broadcasters, and all news producers must increasingly think at least digital rebound, if not digital first. As Stephen Covey legendarily said, “Begin with the end in mind.” A good habit for highly effective media companies to adopt.

    What else might print news companies learn from the CNN model?

    First, syndication. While the Chicago News Cooperative and Bay Citizen pioneer innovative content syndication models, both with the New York Times, and Financial Times’ direct licensing model breaks new ground, most newspaper companies have failed to find other new, lucrative markets for their content. Yes, they’ve made some money from enterprise and education licensing, but if their content is really that valuable, they should be able to find other companies (Comcast, NYT, regional businesses, and more) to pay them for it.

    Second, the pay-per-subscriber model that has insulated CNN from the ravages of ad change is one news companies should ponder. CNN made itself an indispensable part of the cable mix. Is local/regional news content indispensable to any aggregators — AT&T, Verizon, Apple, Nokia, for instance — as they bundle technology and content? What would it take — in the kind and breadth of content (video?) produced — to get a monthly payment, especially in the mobile digital world to come?



    Disclosure: none
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