Things might look gloomy at CNN with layoffs, salary cuts and a new digital programming model that may or may not work. But On The Money has learned that private equity firms have been crunching the numbers on a possible acquisition of the ratings-challenged network.
Don’t exactly hold your breath for anything happening soon, my sources both at CNN and in the private equity business tell me. The network’s parent, Warner Bros Discovery, isn’t yet shopping CNN.
Indeed, no firm has made a bid, my sources tell me: the PE people I spoke to don’t really know how to really value the thing because of its troubled business model.
That said, I know of at least one major PE firm (and likely more) that has crunched the numbers. Analysts believe CNN makes what looks like a decent amount of money, around $750 million this year. Sounds good until you realize that’s down from over $1 billion in 2020; cord cutting is taking its toll as people stop watching cable news, meaning declining cable fees. CNN is an international news operation so it has high overhead.
When people cut the cord you can’t charge as much for ads. WBD’s balance sheet says ad revenues are down to $1.5 billion for the third quarter, compared to $1.7 billion for the quarter in 2023.
Another issue: PE executives also believe the programming still veers too much to the left, where there is a dwindling consumer market or Kamala Harris would have been elected president.
As one executive at a top PE firm told On The Money: “Yes lots of sniffing but people think it’s a wasting asset.”
That’s too harsh. Full disclosure: I have friends at the place and I respect the work of its top people and producers. I know WBD chief David Zaslav well, and I honestly believe he wants to make the operation work, tamp down on what some right wingers say is its left-wing political bias. He might keep it if he can stem the bleeding. Zas and his team believe news can make money if they can just find the right strategy.
Plus, Mark Thompson, CNN’s CEO, is a serious media executive who helped craft the New York Times successful digital strategy. If Zas and Thompson can make CNN work, attract those cable-fleeing eyeballs to the evolving digital product they will have created a news business model for the future. They might not have to look far for buyers.