ABC-CNN news merger discussed
By The Associated Press
09.25.02
NEW YORK — Executives have been discussing a merger of the CNN and ABC news operations, a deal that could help cut costs for troubled parent companies AOL Time Warner Inc. and Walt Disney Co.
Both companies confirmed the talks, which were reported yesterday in the Los Angeles Times, but said no deal was imminent.
CNN, owned by AOL Time Warner, has held merger discussions with both ABC and CBS in recent years that bogged down over questions about control of the news divisions.
"We've had conversations for the last 18 months and no deal has been reached," said Zenia Mucha, Disney spokeswoman.
CNN chairman Walter Isaacson, in a statement sent to the network's staff yesterday, said CNN's newsgathering operation and international distribution complemented a strong broadcast-news unit.
"Models already exist that combine broadcast and cable news networks," Isaacson said. "So the idea is intriguing and we expect that these talks will pick up again from time to time. At this time, CNN is not close to making a deal, but we will always explore scenarios that can make our journalism and our business even stronger."
One scenario being discussed would be to spin off ABC and CNN's news operations into a separate company. AOL Time Warner would own a majority stake, from two-thirds to three-quarters, with ABC's parent Disney owning the rest, according to the Los Angeles Times.
The two divisions would have a combined revenue of more than $1.6 billion, with more than $1 billion coming from CNN, the report said.
Relations between ABC News and Disney have been tense owing to the company's unsuccessful pursuit of David Letterman to take a late-night slot, upending ABC News' "Nightline." Some at ABC News felt undermined by those discussions.
ABC News shares with CBS and NBC the prestige of being one of the three main broadcast news operations. But in an era of cutbacks for the networks, CNN has built the larger international news operation.
AOL Time Warner board members are under pressure to cut costs. The company's stock dipped below $10 per share this summer after trading above $50 a year ago.
Disney's operations have been dragged down by the ABC network's poor performance over the past year, although ABC News has managed to keep its ratings relatively strong.
ABC News president David Westin addressed the story at a regularly scheduled editorial meeting yesterday with news division executives.
"Because of all your efforts, ABC News is stronger than it was a year ago," Westin told the executives. "That means we have the luxury of doing nothing at all and continuing to grow our business. It also gives us the luxury of doing a deal, if any is done, from a position of strength."
One analyst said that if such a merger did happen, it probably wouldn't happen quickly.
"It may save some money, but the issue is that AOL Time Warner is such a large conglomerate that the impact I think would be minimal," said Youssef Squali, an analyst at First Albany.