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A while back, I wrote a piece about the future of CNN. It seemed to me then, as it does now, that chances were (and are) good that Warner Brothers Discovery (WBD) would soon begin the process of selling CNN to the highest bidder.
The reasons were straightforward: (1) news is not a “core business” for WBD, (2) WBD is carrying massive debt (~$50 billion) that needs to be paid down if (3) WBD’s share price is ever going to regain the ~60 percent of the value it’s lost since it started trading as WBD.
A sale of CNN would generate potential buyers and a reasonably handsome price, especially with the approaching spike in advertising revenue from the 2024 presidential campaign. More to the point, a sale would ease Wall Street “concerns” about WBD’s debt load and thus its future prospects. The stock would go up. Institutional investors would breathe easier. A sale would change the WBD “narrative” overnight.
Who would buy it?
Back in the day, Rupert Murdoch would be circling, in the same way that he’s been circling The New York Times for decades. Those days are over. Lachlan Murdoch is in charge at Fox and he’s in the process of transforming Fox into a sports/e-sports/gambling combine, that uses the cash generated by Fox News to underwrite the “future” company’s growth.
Private equity investors would be interested. Never underestimate the yearning of egomaniacal CEOs to be on TV. (David Rubenstein’s on TV, Why not me?*). Headline deals in the “legacy” media business these days are few and far between, but investing in strong brands always reassures investors. And although CNN no longer throws off $1 billion in cash, it still throws off a lot of cash (~$750 million). First-rate financial engineers at top-tier private equity firms can squeeze margin out of a business like CNN.
There’s reputation risk, for sure. The sale of CNN would be endlessly scrutinized. Commentary about a sale of CNN to private equity would be aggressively negative. Analysts would question the business model and point out that cable news thrives on opinion, not fact. Indeed, from a ratings point of view, CNN’s “pivot” to “the center” has been a disaster.
Private equity aside, the acquisition of CNN makes the most sense for a buyer or group of buyers who are (1) interested in amassing power and (2) willing (and happy) to go with what the marketplace offers.
In the market for opinion cable news, the liberal/left audience is well-served (MSNBC, much of CNN and virtually all of broadcast network news). The middle-of-the-road market doesn’t rate. The conservative/right-wing market is dominated by Fox News, which has grown increasingly tedious over the years.
Keeping the CNN news-gathering operation in tact, while replacing its primetime programming schedule with smart, sharp right-wing/conservative commentary, would generate a hybrid network that could be both the place to go for “live news” and right-wing opinion. That network would generate a ton of interest and (if properly managed) a serious challenge to the Fox News primetime programming schedule.
In the words of one leading conservative columnist/commentator, “there’s nothing wrong with Fox News that 40 extra IQ points couldn’t cure.” The opportunity in cable news is to provide those extra 40 points for the vast politically conservative audience. Whatever else it might do, it would far “out-rate” the current CNN primetime lineup.
Who might this mystery buyer be; willing to champion a “new conservative news outlet” and take on the Fox News Goliath? One person who comes to mind is Peter Thiel.
Thiel’s political ambitions have grown since 2016, when he backed Donald Trump for president. Last year, he essentially underwrote the successful JD Vance for US Senate campaign in Ohio and the unsuccessful Blake Masters for US Senate campaign in Arizona. For his troubles, he was criticized by Republican elected officials and campaign operatives for not “doing enough” to help the GOP recapture control of the US Senate.
You can imagine how that went over in the Thiel household.
Editor alert: What follows is speculation; I have not talked to Thiel or his closest confidants. But I think it makes sense:
I suspect that for Thiel, there were two lessons learned from the 2022 mid-term elections. Lesson #1 was that no matter how big a donor you are or might be, you are but one of many in GOP politics. Blackstone CEO Steve Schwarzman wrote a check for $15 million for the GOP’s run-off election campaigns in Georgia in 2021. Citadel CEO Ken Griffin put in $10 million at the same time. In that kind of environment, the only way to acquire leverage is to back one or two individual campaigns (rather than be a “Republican donor”). And even then you might come under fire for not “doing enough” to help the cause.
It cannot be lost on Thiel that the one person who is both (a) never criticized and (b) enormously influential is….Rupert Murdoch. No one tells Rupert Murdoch what he should or shouldn’t do. Ever. Senior figures like Sen. Mitch McConnell ask (politely) for Murdoch’s help.
Murdoch enjoys this special status not because senior Republican elected officials like him (although most of them do), but because he owns Fox News and, in so doing, controls access to the largest pool of active GOP primary voters and shapes much of the national “conversation” in conservative/right-wing politics.
This leads to Lesson #2: The “national conversation” in conservative/right-wing politics is brain dead. That’s not me talking, that’s Thiel. This from Yahoo! News:
(GOP losses) came despite this year’s midterms being “structurally” set up for GOP wins, Thiel said, citing issues like inflation and rising gas prices.
“If you can’t sort of win in that kind of a context, how are you ever going to win?” Thiel asked, arguing that Republicans failed to put forward a “substantive agenda” and ran a “discombobulated” campaign overall.
“Diversity was more of weakness than a strength in our party,” he said, comparing the GOP to the “ragtag rebel alliance” in the Star Wars film series.
Thiel also knocked Senate Minority Leader Mitch McConnell (R-Ky.) and former Speaker Paul Ryan (R-Wis.) as examples of the party’s failings.
“There was sort of a Mitch McConnell intuition that you shouldn’t talk about anything substantive at all, sort of a nihilistic, maybe a passive-aggressive form of nihilism or something like that … which is kind of uninspiring,” he said.
“And then there was maybe his sort of a opposite problem, something like the detailed Paul Ryan policy wonkery, where you go into a lot of details, but somehow the ideas are unpopular and you’re checkmate on move one.” (italics mine)
Assuming Thiel’s political ambitions continue to grow, the surest path to greater power is owning a powerful media outlet. If he wants to put forward his ideas for a “substantive agenda” the place to do that is in primetime on TV. And if he wants GOP elected and party officials to do his bidding, owning a newly retooled, right-wing opinion CNN would require all of them to show respect. Always.
Obviously, it is possible that Thiel has little interest in acquiring and managing a “legacy” media company and that the speculation above is just that. Thiel has plenty of other work to do. But if he wants to be the next major power-broker in GOP politics, CNN is his ticket to ride.