CNN For Sale?

Whenever a top job at a major mainstream news media organization becomes available, a hiring process is initiated. The point of the process is two-fold: (1) identify the executive or talent best suited for the designated role, and (2) gather as much intelligence and as many ideas about the future of the business as possible.

The latter point can be as valuable as the former. The amazing thing is it’s provided by the candidates for the job free of charge. Eager to impress, they canvass people up and down the industry’s “value chain,” gathering data and insights as they do. They then create what amounts to a pitch deck of ideas about how to fix or grow or improve or manage the business. They present all this to the “hiring committee” with no strings attached and at zero cost.

How great is that? The company doing the hiring gets 10–12 well informed and detailed proposals on how to make their business better. The candidates get ”considered” for the job and a….cup of coffee. One of the candidates, of course, will be hired. The other 9 or 11 won’t be. But all of them will have left their pitch decks behind, either verbally or, in some cases, in writing.

So there’s always a “hiring process” because why wouldn’t there be? Why would any company pass on the opportunity to listen to 10 or 12 high-powered industry veterans (and maybe a couple more from other “disciplines”) describe the future of their business and how to navigate it. For free.

They wouldn’t.

The question then is: Why did CNN hire a new CEO without even pretending to “run a process” for doing so? In the wake of the messy dismissals of Jeff Zucker and his business/romantic partner, in the wake of the Brothers Cuomo saga, in the wake of Zucker’s disastrous positioning of CNN as part of the “resistance” to President Trump, a rigorous process for choosing a new CEO might have been seen as a first step on the road to management and journalistic recovery. It certainly wouldn’t have made matters worse.

Three weeks ago, it looked like a “search” was underway. Business Insider published a list of nine candidates for the job and assessed their strengths and weaknesses. That’s standard operating procedure in high profile media job openings. All interested parties get to see who is in the running. Those mentioned in the Business Insider piece started calling their friends to solicit advice on how to approach “the interview.”

A few days after the Business Insider piece was posted and seemingly out of nowhere, came news that an accomplished television news programming show-runner named Chris Licht would be CNN’s new CEO. Period, end of story. No process. No pitch decks. No lukewarm coffee.

This raised a slightly different question: What does that mean?

Maybe nothing. Maybe David Zaslav, CEO of the newly combined Warner Bros. Discovery, had Mr. Licht in mind from the beginning. Rather than pretending otherwise, he went ahead with the announcement, checking it off his to-do list. That explanation was plausible, but denied New York media world weeks of gossip about who might get the job. It’s hard to imagine a greater sin.

And to be fair to the gossips, it did seem unlikely that “because he (Zaslav) felt like it” was the real reason for Mr. Licht’s appointment. The real reason, insiders told other insiders, was that if Warner Bros. Discovery didn’t think a search was necessary, then maybe it didn’t see CNN as part of its future. Which in turn allowed them to leap to the conclusion that CNN was, not yet but soon, for sale.

Filling in the blanks for this supposition was short work. When the Warner Bros. Discovery merger is finally and fully approved, the combined company will be carrying nearly $60 billion in debt. All agree that $60 billion of debt is unsustainable. All agree that the share price of the combined company doesn’t stand a chance of rising if it is weighed down by that much debt. Institutional investors will be looking for signs that Mr. Zaslav is serious about “cleaning up the balance sheet.” Selling CNN would be a positive sign.

Positive signs are sorely needed, because it’s unclear (to say the least) how Warner Bros. Discovery will be able to compete in a marketplace swimming with bigger fish (Disney, Netflix, Comcast) who in turn are trying to compete for everyone’s attention with even bigger fish (Big Tech; meaning Apple, Amazon, Google, Microsoft and Facebook).

This, in turn, led to the next great New York media world buzz-a-thon: Warner Bros. Discovery itself was for sale; not immediately, but inevitably, because (when you thought about it) it couldn’t possibly compete with the Netflixes and Disneys and Comcasts of the world; not without massive investments in “content” compelling enough to attract sustained consumer excitement and “adoption.” Everyone knows that that kind of success is a very long shot. Warner Bros. Discovery isn’t in a position to make “massive investments” into anything any time soon.

All of this circled back to the widely shared view that CNN itself is a train wreck and that making a massive investment in it (like, say, throwing money at CNN+, the network’s new streaming service) was probably good money after bad. Fixing train wrecks is not something a newly formed company like Warner Bros. Discovery, carrying $60 billion in debt, can afford to do.

One often-mentioned reason to do so is that CNN provides “political cover” for everything else Warner Bros. Discovery might hope to accomplish. Regulators and politicians are understandably reluctant to go to war with companies that own news outlets that command the attention of significant slices of the electorate. Jeff Bezos owning The Washington Post was, for a good while, helpful in shielding Amazon from political attack.

But the media ownership protection plan betrays a pre-Trump mind-set. Trump proved that news media companies like CNN and The Washington Post, that position themselves as part of some “resistance,” can get their parent companies into all kinds of trouble. Indeed, they can find themselves re-branded as purveyors of “fake news” and enemies of huge audience segments (MAGA world, for one). Media mogul and Warner Bros. Discovery shareholder John Malone addressed this issue recently, saying: “I would like to see CNN evolve back to the kind of journalism that it started with, and actually have journalists.”

Everyone agrees that’s an excellent idea, except for the fact that straightforward news programming doesn’t “rate.” Television news channels live and die by the Nielsen ratings. What rates is opinion and “analysis” that conforms with the views of a sizable audience segment. Fox offers this without any real competition. CNN has been offering this (and continues to do so) in competition with MSNBC, which is better at it.

All that being true, and it is, speculation that CNN will soon be for sale doesn’t seem like a stretch. The larger point of all this, after all, is a higher share price for Warner Bros. Discovery investors. Toward that end, selling CNN makes better business sense than keeping it.