CNN: Veering right and aiming low

A little perspective: During August 2000, in cable households where viewers could choose between both news channels (CNN is in 82 million cable households, Fox News is in 68 million), CNN averaged 360,000 viewers in prime time, compared to Fox's 289,000, according to Nielsen Media Research. (That's cable TV's dirty little secret: Very few people actually watch the all-news channels.)

Fast forward one year to August 2001, and riding the Levy wave CNN's average among households with both CNN and Fox News jumped to 430,000 prime-time viewers. Fox though, ballooned to 498,000.

"The numbers are terrifying for CNN," says Brent Baker, vice president of the Media Research Center.

Terrifying not just because the network is getting beat on a tawdry summer sex scandal, but because CNN even lost ground on the biggest legitimate news story of last year, the Florida vote recount. When the story first broke Americans reflexively tuned to CNN, which drew the largest audience. By the time the Supreme Court handed down its ruling in Bush vs. Gore, Fox was on top in prime time.

"CNN's in a tricky spot," says Dow Smith, associate professor of broadcast journalism at the Newhouse School of Public Communication at Syracuse University. "In terms of the evolution of the organization, if they screw this thing up they could kill CNN. They could ruin the brand, ruin the value."

Kill a media giant that turned a profit of $350 million last year? It's possible, says Smith, who points out that in the world of cable television economics, perceived value is everything. That's because local cable operators pass along a portion of each subscriber's monthly bill to cable networks in exchange for allowing the operator to carry the programming. CNN, along with ESPN and MTV, is perceived as a must-have and receives among the highest compensation rate from cable operators. (One industry source estimates roughly half of CNN's $800 million in revenue last year came from subscription fees, the rest from advertising.)

But if Fox continues to gain viewers at a breakneck pace (the network is up 144 percent year-to-date) and leaves CNN in its ratings wake, while MSNBC develops into a solid second or third choice, the day could come when operators decide they don't have to pay CNN as much in sub fees, or even leave CNN out of the channel mix all together.

"Those cable operators are brutal," says Smith. "If there's no value, they won't pay."

This, at a time when AOL Time Warner bosses, having just laid off 400 CNN employees, are looking for the network to post double-digit gains annually.

The stakes couldn't be higher, which is why Isaacson may be remembered as the man who either saved or lost CNN. (He was not available to comment for this article.)

This isn't the first time Isaacson has been called in to turn around a venerable news title. Prior to CNN, Isaacson was managing editor at Time magazine, where he was credited with rejuvenating Time, breathing new life into the stodgy title with a mix of young writers and a populist, even daring, approach to cover stories. Isaacson jumped the gun by pronouncing John F. Kennedy Jr. dead on the cover of a Time "Commemorative Issue" three days before authorities found the remains of Kennedy, his wife and her sister. Some critics called the move presumptuous, but the bold stroke paid off at the newsstands; the JFK crash cover was the magazine's bestselling issue of the year, posting 1.3 million in sales.

Isaacson's makeover of Time did not translate into more readers, though. The magazine's circulation has remained essentially unchanged (albeit creeping downward slightly) for nearly a decade.

While the selection of Isaacson to run CNN was widely applauded, the move did come with one uncomfortable irony. As Time magazine's managing editor back in 1998, it was Isaacson who was forced to pen a full-page apology to readers for the Tailwind fiasco, that infamous, synergistic debacle between newly married CNN and Time. The later-discredited blockbuster investigation reported that in 1970 the U.S. military used deadly nerve gas in Laos and killed American defectors. "Valley of Death" aired on CNN. Its producers wrote a print version for Time magazine, both of which are owned by Time Warner. Time published the story (albeit with a question mark in the headline) despite questions about "the substance and the sources and the evidence of the story," according to one Time editor at the time.

American Journalism Review dubbed the incident "one of the biggest journalistic embarrassments in the news weekly's 75-year history."

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