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Thread.

1/ What happened to CNN?

I worked there for 18 years. This is what happened. Everyone wants to know why CNN is shifting. Let me explain why.

What Fox News gets that MSNBC and CNN don't get.... Each quarter, the cable operators release their subscriber base.

2/ For seven consecutive years, the cable operators have seen subscriber declines for 84 months. It's called in the TV biz, "cord cutters". 97% of the "cord cutters" are under the age of 50. The majority of what is left watching cable like we have known, are very very old people.

3/ As demographics for TV rapidly has changed to a very old age group, the networks remaining with any traction (ESPN, News Nets, etc.) have — have to — appeal to who is sitting on their couch watching news 24/7. Again, they are very very old people relative to the US population.

4/ In the ratings war, the scorecard is usually based on the age 18-49 demographic. But not for news. No one buys news networks going after age 18-49. No one. All advertisers on these nets buy them for age 50+.

MSNBC went left. Fox News went right. CNN tried to play the middle.

5/ The problem with CNN was they built a powerhouse in the 90s. We printed money. Cash. Hand over fist. Then MSNBC and Fox News came along. The race was on. MSNBC went velvet rope. Fox News went diner. CNN got caught in no man's land.

6/ But the money kept coming in. Then, technology changed the game.

CNN.com became the de-facto news source for America, for a good 10 years. Bernard Shaw hiding under the desk when Baghdad got bombed. Aaron Brown broadcasting for 20 hours straight during 9/11.

7/ We loved the accolades. We sold on it. But what we didn't do was take a look at what was happening.

The viewership started to splinter to MSNBC because some folks wanted a left bent. But a lot went to Fox News. In fact, between 2008 and 2016, CNN lost 60% of its 50+ audience.

8/ Fox News saw a 70% increase in the same demo during the same period (mostly men). Fox News gave the audience what they want, an aggrieved white man perspective. While we chased the "next shiny object".

Not arguing Fox News is right. Absolutely not. They are evil to the core.

9/ "Fish where the fish are."

In 2010, the team at CNN got the Fox News strategy for sales and that was their strategy (they got ours, too, and MSNBC; happens all the time). Some of us, said "Uh oh, they're right". The audience is no longer ages 18-49. Others laughed and mocked it.

10/ Trump came, and CNN started to make a shitload of money again, by being the "counter" to Fox News, but it was based on perception, not reality. No one was still watching. Why? While the rest of America is out there cutting the cord, Fox News doubled down on old people. And won.

11/ CNN saw that CNN+ will not bring in new audiences. What 65-year-old is going download and subscribe to a news streaming service with a basketball star, Rex Chapman — no offense Rex and I love ya — but the 65-year-old living in The Villages is not your fan.

News networks are not here to defend democracy. There is only one goal, and one goal only.

Higher CPMs [RM: Cost Per Thousand]. CPM is the currency used in TV to reflect the value of the programming. The higher the CPM, the higher the margin on that commercial being sold.

The most valuable programming on TV is the championship game of the NCAA March Madness Tournament. Super Bowl gets higher ratings, but the value ratio between CPM and audience is significantly much larger for March Madness Championship game vs. Super Bowl: You pay $4 To $5 million for a Super Bowl ad, but you get 100 million people watching. You pay $1 MM for a March Madness spot, but only get, at most in these day, 15 million people watching.

See the ratio premium difference? It's the same with Fox News vs. CNN vs. MSNBC.

The ratio for Fox News CPMs are much higher relative to their audience they attract, which means their margins are higher, which also means the "value" to who they are selling to is more profitable.

Chris Litcht was given one edict. Raise CPMs. That's it. That's all he has to do. And he believes this is how.

Fin.

P.S. People want to know what CPM stands for: "Cost Per Thousand". In Latin, Thousand starts with an "M".

I've been in the biz for 30+ years, and it makes zero sense to me why the C and the P are listed in English but the M is Latin. It makes as much sense as electing Trump President.

Ok, people want more.

Why did CNN remove field reporters from war zones and sub-contract coverage to local affiliates? The market cap was saturated.

News networks, and us at CNN, saw only single digits increases once we all reached the threshold of in being in 70 million homes. Then, the game changed in 2010 with Citizens United. We all were killing it, before the Citizens United ruling. But that ruling opened up the flood gates, exponentially.

Every 2 years. $1 billion would pour into the networks during election cycles. It changed how we did business. News networks make more money during the 3 months leading up to mid-terms than they do all year. Imagine candy manufacturers during October, leading up to Halloween. Now multiple that by 10x. And a Presidential year: Fuggetaboutit. Ch-Ching!

What made PACs and campaigns spend money? Was it the coverage in war zones? No way. We saw once we put people like Santorum on the air, liberal groups would pour money into our pockets. But liberal groups took a decade to understand Citizens United.

Not the people down the street on 6th Avenue. They knew. Combined with a black president, my God, they took us all to the cleaners. For every general market dollar Fox News made, they made $2 on every political campaign. They doubled the revenue vs. regular advertisers. MSNBC didn't care. They packaged MSNBC with NBC, and then eventually their cable networks like USA and Bravo. MSNBC was just a line item for an advertiser they had to buy. You want a spot on Sunday Night Football on NBC? You had to spend on MSNBC to get it. That's how this works.

I know for a fact, because I was in the room, when we told talent on CNN to not lean in on Citizens United. In retrospect, I stayed 5 years too long, because I'm disgusted at what happened to the company Ted built. Ted was fucking crazy! Crazy with a capital C.

But when the AOL Time Warner merger happened, he lost all control, and the separation between Church and State was obliterated. It was Ted that kept business and content apart from each other.

This is 'the' singular reason why no one in news talks about Citizens United. We made the decision in 2012, when $770 million was poured into news by PACs. After that, we told the anchors to stop talking about it. Lose your eyes and imagine CNN, MSNBC, Fox News without PAC spending: You can't. They can't.

If they lived in a world where PACs couldn't spend money at will, they'd all be out of jobs. Simple as that. They'll never want it gone. I've seen the books. The business would shut down.

The biggest hypocritical media story of the 2020 election was the cable networks shaming the social media giants not to accept political ads, leading up to the election while they ran Trump/Biden and Citizens United-protected ads until midnight on election night. LOL. + It was greatest sales job ever.

Do you understand that these campaigns must spend the money by election night or they'll get in big trouble? So shit, Tech is eating our lunch. Let's shame them into stopping taking the money, thus they have to come to us. Brilliant, if you ask me.

A few have not understood the dynamic of the CPM, and why it's the only value that counts. Best way to understand our business is to compare to something more tangible. This is how it was presented to me in 1993 when I entered the business with Turner Broadcasting:

Imagine the network is an airplane. The airplane is taking off no matter what at 10am. Regardless of whether there is 1 person or 200 people, the plane is taking off. Each seat on the plane represents a 30 second commercial. Our job is to make sure $100 worth of seats is sold. Doesn't matter how many we sell and at what price, but if you want to keep your job, $100 worth of seats has to be sold on that flight. One more thing, you have to guarantee that every single item that they get on that plane with they get off the plane with.

Does an airplane want to sell 2x tickets at $50 or 50x tickets at $2. Remember, the plane is taking off no matter what. Once the plane leaves, the unsold seats become irrelevant. Now all you have to do is guarantee everything arrives and delivers. The CPS (cost per seat) is $50 vs. $2 for a plane taking off, regardless.

The Risk Management decision of delivering 2x people with 100% of their items to their destination vs. 50x people reduces the liability by the airline, thus increasing the value of each seat sold. With PACs, guess what? There's no guarantee provided by the airlines/networks to get their message to their destination = no liability.

If the spot is seen by 1 person or 100, who cares? With PACs, unlike product advertisers, we don't owe them any delivery. It's just cash for us.

It's the same with networks. A spot is going to run at 10am, no matter what. Our job is to sell that spot, not at the highest price, but at the highest price with the least amount of liability exposed to the network. The higher the CPM, less liability we carry on the books.