October 9, 2014

Cutbacks at CNN highlight the cable news paradox

CNN cable news TV audience falls, digital audience growsTo some, the news this week that CNN Worldwide is cutting 8.5% of its workforce at the same time that it is enjoying a healthy, double-digit profit margin might seem confusing. The original – and largest – 24-hour news channel is in many ways faring just fine financially.

But a closer look at CNN reveals a larger problem, with cable news business struggling to find its feet in a shifting media landscape where its audience is not matching up with revenue trends. In terms of TV viewership, cable news peaked as a medium around the 2008 presidential election and, while showing impressive potential in digital, the business model is uncertain.

Over the past year (January-September 2014 compared with the same period in 2013), CNN’s prime-time audience has declined by a quarter to a median viewership of 495,000, according to Nielsen Media Research data. During the day, the channel has fared better, but is still down 4% over 2013 levels. Along with declining viewership, research firm SNL Kagan projects that CNN will experience a dip in advertising revenue of about 5% to $302 million.

But CNN isn’t alone. All three major cable news channels have seen their audiences decline in recent years. MSNBC’s prime-time viewership has declined 4% over the same period in 2013, and 17% during the day. Fox News Channel, while growing slightly in prime time (2%), has lost 5% of its daytime audience.

The total prime-time audience for the three channels combined, hovering at around 2.8 million viewers, amounts to just a fraction of the more than 20 million people who tune in to one of the three commercial news broadcasts airing on NBC, ABC and CBS each night.

And yet, business — by and large — is still good. Profit margins continue to be staggeringly high, between 30% and 55%, thanks to the cable system’s dual-stream business model. The news channels generate revenue from both advertising and license fees, which they receive from cable companies in exchange for carriage in households. Individual channels regularly renegotiate those fee rates upward, resulting in business growth even if advertising falters. For 2014, projections show slight gains in total revenue for each of the news channels — 1% for CNN, 4% for Fox and 4% for MSNBC.

There are some signs that the cable TV business model is headed for disruption. The number of Americans (around 100 million) who pay for some form of pay TV, including cable, fell for the first time in 2013. Meanwhile, eMarketer forecasts robust growth in digital TV viewership on a variety of devices. As news habits and technology adoption continue to become more digital, cable news outlets are thinking beyond the main screen.

By this measure, CNN’s digital operation is leading: It had 42 million unique monthly visitors in 2013, according to Nielsen — two-thirds greater than that of Fox News (25 million). Digital may not yet be where the money is at; CNN Worldwide has said at one point that it accounts for about 10% of its total revenue. But the company is showing that it’s keeping pace with where the audience is going.

Topics: Digital Media, News Media Trends, State of the News Media, Television

  1. Photo of Jesse Holcomb

    is an associate director of research at Pew Research Center.

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11 Comments

  1. Gary Swerdlow1 year ago

    I never miss watching CNN , Wolf Blitzer. He is a very good Newscaster.BUT
    When the next program Erin Burnett ” the Motor Mouth ” comes on , I Switch channels to FOX News because when Erin gets going ,she Motor Mouths all her words together and I do Not know what that Women is saying !!. My friends and I over 65 years old have the same problem with all Young Women ,, they talk too fast for our ability to process the words .

    While I am complaining , I cannot understand why so many Programs and Commercials have such Loud Backdrop Noises that Noise over the spoken words. It is especially way to noisy for Ear Hearing Aids that multiply sounds. Thanks

    Reply
  2. Rick Starr2 years ago

    Not exactly a great analysis. It’s of 8-11PM, which Fox happily admits is “not news”, but “entertainment” programming. (Yes, that’s correct, Bill O’Reilly is not “news.”) A 24 hour comparison would be better (although Fox would probably still win thanks to their overweight evening numbers for their red-meat talk shows.)

    Reply
    1. Jesse Holcomb2 years ago

      Rick– we’ll have more viewership data for you when we update our annual State of the News Media key indicators database, including 24-hour and daytime numbers for each of the news networks. Spoiler alert: Fox does dominate, and not just in prime time. Thanks for reading!

      Reply
  3. Steve Biko2 years ago

    MSNBC getting more internet visitors and Fox getting more cable subscriptions confirms that MSNBC has a younger audience, while Fox has old folks, who are richer, rigid and loyal. Or they simply forget to cancel their subscription.

    What should worry MSNBC is the steady rise of Fox. They should bring on really catchy personalities. Getting Jon Stewart might have worked, but they really need an attractive superstar

    Reply
  4. Michael2 years ago

    Did anyone else notice that while FOXNews is watched much more than the other two networks, the website is not nearly as popular. Does this mean people who watch FOXNews don’t have internet access and/or don’t like to read news? Hmmmm…

    Reply
  5. Listerene Joe2 years ago

    The audience for cable news is old. The audience for television is old (not quite as old). As the boomers continue to die off, the ratings for cable news will die off as well.

    Younger people hate advertising. They don’t want to have to be bothered by it.

    Reply
    1. Steve Biko2 years ago

      it’s so lucky websites don’t have ads then!!!

      Reply
  6. Kitty2 years ago

    I am more and more turned off by CNN because of the unbelievable number of ads that come every 4 to 5 minutes. NBC, CBS et all are not far behind.

    Reply
  7. Claire Elensen2 years ago

    Having just become a cable cord-cutter, I thought I knew how much I would miss CNN and MSNBC’s live reports and cogent analysis. I so wish CNN and MSNBC would allow “independents” like me, who are not as interested in all the sports and entertainment media cable companies foist upon us with their bundling, to subscribe to them directly for their direct feeds. If they did, I believe there would be a boost in their viewing stats closer to the network news operations. Citizens like me who want to be on top of national and world news events and analysis shouldn’t have to be forced to watch the cable conglomerates at bundled rates when they do not take our interests into account.

    Reply
  8. Dan2 years ago

    I used to watch CNN cable rather avidly a few years ago. But the continuous advertising interruptions, the frequent turnover of their news personalities and their often silly, immature antics caused me to stop watching. Fox, in my opinion, is little more than a Republican/Murdoch propaganda channel; their programming is so very biased. Rachel Maddow often presents more intelligent stories.

    Reply
  9. Packard Day2 years ago

    “By this measure, CNN’s digital operation is leading:…” Really? Although this is a somewhat of a radical proposal, I might suggest that CNN (and MSNBC) consider an ideological programming change in order to just survive. Simply trying to imitate the stable of cookie cutter “Fox Island babes” will not save the two laggard cable networks from their own failings. They will need to lose their widely recognized label of being a reliable tool for one particular political party. Good luck…tell em Candy.

    Reply