Is Warner-Discovery "Fixing" CNN?
Firing Brian Stelter to keep John Malone happy isn't going to help anyone.
1. You Can’t Appease Bad-Faith Critics
Brian Stelter was canned by CNN pour encourager les autres. CNN’s parent company, Warner-Discovery, is in a load of trouble and “fixing” CNN has become a corporate priority. Warner-Discovery leadership believes that the way to fix CNN is to make it less liberal. So CNN head Chris Licht fired Stelter, who was a bugbear of the right.
Okay, that’s not all entirely true. I’m leaving out some details. Let me fill them in for you:
When Warner-Discovery merged, the company was saddled with tons of debt—$55b worth. Wall Street is nervous about this and has been punishing the stock almost since the very day of the merger.
CNN is not a meaningful part of this decline. The parent company, Warner-Discovery, reported a net loss of $3.4 billion last quarter. But CNN itself is a profit center: The cable network’s profitability is down to “only” a net $1 billion this year. But it’s still in the black. Warner-Discovery as a whole is not.
Also, it’s not clear how CNN’s perceived political slant is contributing to the division’s business outlook. There are a lot of cross-pressures at work on the cable-news industry:
Cable news numbers are down across the board in this relatively normal, unchaotic, post-Trump environment.
Cord-cutting is hurting all cable channels.
Cable news gathering is a high-resource, low-margin business. CNN’s bread-and-butter is reporting, which is resource-intensive.
Cable infotainment, on the other hand, is low-resource and high-margin. Which is why Fox News is a cash cow.
Television news has not yet grappled with the economic disruption caused by the internet and social media. TV lagged the other two mediums—print and radio—in confronting this disruption because it had the biggest moat. That moat continues to shrink.
Of course there may be a simple explanation for CNN leadership’s sudden mania for being fair and balanced: They have a large shareholder—John Malone—who has a bug up his ass about CNN’s perceived political bias.
So maybe the changes at CNN are just about keeping the rich old guy happy. Believe me when I tell you that dumber things have happened.1
But for just a minute, let’s pretend that the move to “depoliticize” CNN is genuine.