CNN's New York studios have the look of a Broadway show in final rehearsals. In just days, the pathbreaking cable network will launch its first progeny--all-business cable channel CNNfn. As CNNfn top executive Lou Dobbs gave a pep talk to employees in the studio on Dec. 5, a worker steadily tiled the set behind him. "We'll be ready for the launch," Dobbs vowed.
The question is, whose launch? Suddenly, as media giants vie for cyber shelf space on television and computer screens, they're turning back to the most basic programming tool ever: hard-core news. Turner Broadcasting Systems Inc.'s CNNfn is just the start. Capital Cities/ABC Inc. on Dec. 5 unveiled plans to launch a 24-hour news service by 1997. General Electric Co.'s NBC Inc. hopes to announce its own all-news concept by early next year--possibly by converting its America's Talking channel. Rupert Murdoch, who doesn't even have a U.S. news operation, claims he might dabble in the all-news format, too.
"NOTHING." It's quite a group. And their plans would bear great promise if they weren't all targeting the same overcrowded distribution system: the nation's cable companies. Forget the hype about 200 cable channels. For now, most systems offer fewer than 50. And they're full up with entertainment like Nickelodeon and the Discovery Channel. Indeed, when Dobbs sold Time Warner Inc.'s New York cable system on carrying CNNfn, he had to knock out one of Turner's own channels, Turner Classic Movies, to do it. (It helped that Turner is being acquired by Time Warner.) Says NBC Cable President Thomas S. Rogers: "The channel situation is so acute that simply saying you're going to do something means nothing. And I mean nothing."
The media giants are moving ahead anyway because they all have the same problem. CNN, ABC, and NBC own costly news-gathering assets that produce far more than they can air in their traditional time slots. They could easily do more. "We almost have the people in place to do [a channel] right now," boasts ABC News President Roone Arledge. Even so, ABC won't launch until 1997. The reason? There's no clear way to get the shows to the people. "Distribution will be a major problem and challenge for us going forward," Arledge says.
Indeed, Arledge can't beam his signal directly into homes with digital broadcast satellite, because the technology can't deliver the local programming he would like to provide to differentiate ABC from CNN. Delivery over fiber cables owned by telephone companies isn't near becoming a reality. Even when new cable channels become available, they'll tend to go to lucrative offerings like pay-per-view or "multiplexing"--the staggered starting times for movies and such on premium channels like Home Box Office or Showtime.
All that means NBC could have an early advantage if it moves quickly to launch its all-news service. Converting America's Talking, the network's low-rated gab channel, into an all-news format would be tricky. NBC first must negotiate new deals with cable-system operators--including Time Warner and Tele-Communications Inc., which own big chunks of Turner. But existing contracts may contain language nebulous enough to make it possible. And that would give the all-news channel instant access to the 20 million cable subscribers who currently get America's Talking.
Cap Cities President Robert Iger says he would consider an equity investment in his new channel in return for access to distribution. For his part, Turner hopes to avoid distribution shortages by bundling CNNfn with his other channels to make the sale to choosy cable operators.
Turner's CNNfn is also offering an armada of multimedia services. He's putting up a site on the Internet's World Wide Web where viewers can retrieve archived stories, check news headlines or stock quotes, or download original materials. Over AT&T's Business Network, an interactive research and communications service, they can interact with newsmakers and other viewers.
Multimedia hypesters think other news shops will quickly copy CNNfn's strategy. But Roger Ailes, president of CNBC, figures multimedia bells and whistles won't do anything if Turner can't get cable operators to buy the channel, especially when so many already carry business-focused CNBC. "Distribution is a problem, and if they're prepared to bleed red ink until it comes, that's fine. I welcome the competition," Ailes says.
Still, early results from Turner don't look too shabby. When directors approved the launch of CNNfn (for a reported $10 million) in June, the business plan called for 2.5 million subscribers at launch. Today, systems with more than 5.5 million subs are on board. Of course, a timely linkup with a major cable operator doesn't hurt. A fifth of the subscribers come courtesy of Time Warner's New York system.
That's more than a fair start. But to keep CNN growing fast enough to beat out CNBC, not to mention the all-news offerings from ABC and NBC, Turner will have to keep innovating. Harry Motro, vice-president of CNN Interactive, scoffs at the notion that ABC's news service will be a viable competitor to CNN's multiple offerings. "Good luck catching up to where we'll be by 1997," he says. There's probably only one certainty about 1997. Wherever CNN or anyone else goes, they probably won't be there alone.