Making the News - Ted Turner and CNN | Ted Versus Reese | 3

Summary

Business Movers: Episode 3 – Making the News - Ted Turner and CNN | Ted Versus Reese

Release Date: March 27, 2025

Introduction

In the third episode of Business Movers, Wondery delves deep into the tumultuous relationship between Ted Turner, the visionary behind the Cable News Network (CNN), and Reece Schoenfeld, the channel's ambitious Chief Executive Officer. Set against the backdrop of the early 1980s, this episode highlights the internal struggles, financial crises, and power dynamics that threatened to derail CNN’s rise as the world's first 24-hour news channel.

The Early Days of CNN and the Turner-Schoenfeld Partnership

By the winter of 1981, CNN had established itself as a pioneering force in 24-hour news broadcasting. Despite overcoming initial setbacks and successful live coverage of major events like the MGM Grand fire, John Lennon’s assassination, and President Reagan’s shooting, the network was grappling with significant financial losses—costing Ted Turner approximately $9 million annually (equivalent to $20 million today).

Ted Turner, renowned for his bold business moves, had recently decided to launch a second news channel in January 1982, aiming to solidify his dominance in TV news. However, this expansion doubled the financial strain on his resources. Turner relied heavily on Reece Schoenfeld, who had been instrumental in CNN’s operational success, to navigate these challenging times.

Unionization Crisis at CNN

December 1981 marked a critical juncture for CNN when Reece Schoenfeld encountered unexpected internal resistance. A new technician, Deborah, began advocating for unionization among CNN’s young and overworked staff. Reese recognized the potential disaster this posed, especially with Ted Turner's zero-tolerance stance on unions.

• Key Quote:
  • "If they unionize, they're only firing themselves. Talk to them. Make them understand," — Pat O'Gorman, Reese’s wife (Timestamp: 00:12:45)

Reece, feeling the pressure, enlisted the help of his wife, Pat O'Gorman, to persuade the staff against unionizing. Pat’s heartfelt appeal emphasized CNN’s financial instability and the necessity of maintaining low wages to retain fresh talent straight out of college. Her efforts were successful, resulting in a decisive 3-to-1 vote against unionization. However, this victory was short-lived as it strained the already fragile relationship between Turner and Schoenfeld.

Ted Turner’s Intervention and Ambitions

In the spring of 1982, Turner’s ambitions led him to seek an exclusive interview with Fidel Castro, the Cuban leader. Although Reece understood the significance of this opportunity, he was concerned about the journalistic integrity of having Turner conduct the interview himself.

• Key Quote:
  • "If Ted was left in charge, the interview would lack journalistic rigor and integrity," — Reece Schoenfeld (Timestamp: 00:28:37)

Despite Reece’s reservations, the logistical challenges and Turner's waning interest eventually shelved the interview. This incident underscored the growing tension and foreshadowed Schoenfeld’s diminishing influence within CNN.

Financial Struggles Intensify

By February 1982, CNN's financial woes became undeniable. Bill Bevins, CNN’s Chief Financial Officer, revealed that the network was hemorrhaging funds, exacerbated by the launch of the second news channel. Bevins proposed a public offering to secure necessary capital, but Turner’s impulsive nature and regulatory constraints thwarted this plan.

Turner’s failed attempt to secure an Initial Public Offering (IPO) led him to discover a new revenue stream by monetizing CNN's content for local stations, replacing the old reciprocal agreements with paid licensing. This strategic pivot provided CNN with a much-needed financial boost, but the sustainability of their rapid expansion remained uncertain.

Leadership Clash and Schoenfeld’s Dismissal

By May 1982, the friction between Turner and Schoenfeld reached its peak. Despite CNN’s improving ratings, Turner became increasingly dissatisfied with Schoenfeld’s management style and discretionary spending on international reporting and high-profile hires like Mike Douglas.

• Key Quote:
  • "I like Sandy. I just find her a little temperamental to work with and I think we can do better," — Ted Turner (Timestamp: 00:30:12)

Turner ultimately decided to terminate Schoenfeld’s role, citing mismanagement and excessive expenditure as the primary reasons. Schoenfeld was offered a consultancy role with diminished authority, which he declined, choosing to leave CNN entirely. Turner then appointed Burt Reinhart, an executive vice president and Schoenfeld’s longtime friend, as the new CEO. However, the departure of Schoenfeld was a critical blow to CNN, marking the end of its foundational leadership.

Emergence of Competition: Satellite News Channel (SNC)

Shortly after Reinhart took over, CNN faced its first direct competitor—Satellite News Channel (SNC). Launched on June 21, 1982, SNC mirrored CNN’s 24-hour news format but offered a more rigid, rotating newscast structure. With broader initial availability, SNC quickly began eroding CNN’s market share.

Turner’s response involved the continuation of CNN2, a similar short-form news format. However, SNC’s aggressive entry into the market posed a significant threat, forcing Turner to adapt swiftly to maintain CNN’s audience and financial stability.

Conclusion

By mid-1982, CNN stood at a crossroads. The departure of Reece Schoenfeld, coupled with the financial strain of launching a second channel and the emergence of SNC, tested the resilience of Turner’s vision. This episode of Business Movers encapsulates the high-stakes drama of transforming a groundbreaking idea into a sustainable business, highlighting the intricate balance between visionary leadership and financial pragmatism.

As the episode concludes, listeners are left contemplating the fragile dynamics that underpin successful business ventures and the pivotal decisions that can alter their trajectories.

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Notable Quotes with Attribution and Timestamps

• Pat O'Gorman: "If they unionize, they're only firing themselves. Talk to them. Make them understand." (12:45)

• Reece Schoenfeld: "If Ted was left in charge, the interview would lack journalistic rigor and integrity." (28:37)

• Ted Turner: "I like Sandy. I just find her a little temperamental to work with and I think we can do better." (30:12)

Recommendations for Further Reading

For those interested in exploring the intricate details of CNN’s rise and the personalities behind its success, the following books come highly recommended:

• “Me and Ted Against the World” by Reece Schoenfeld
• “Mediaman” by Ken Auletta
• “CNN: The Inside Story” by Hank Whittemore

About the Podcast

Business Movers is a production of Wondery, brought to life by host Lindsey Graham. This episode was written and researched by Owen Paul Nichols and Senior Producer Scott Reeves, with executive production by William Simpson, Aaron O’Flaherty, Jenny Lauer Beckman, and Marshall Louie. The sound design team, including Mohammad Shazid and Molly Bond, ensured an engaging auditory experience, complemented by music from Thrum.

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For exclusive seasons, early access to new episodes, and ad-free listening, consider joining Wondery+ through the Wondery app, Apple Podcasts, or Spotify. Start your free trial here.

Transcript

[Lindsey Graham]

Want to get more from business movers? Subscribe to Wondery for early access to new episodes, ad free listening and exclusive content you can't find anywhere else. Join Wondery in the Wondery app or on Apple Podcasts. It's October 19, 1981, in a suburban house in Atlanta, Georgia. 50 year old Reese Schoenfield sets down his fork, dabs his chin with his napkin and leans back with a smile. It's rare that Reese gets an evening at home with his wife. He's the President of the 24 Hour News Channel CNN and his wife, Pat O'Gorman, works in the newsroom too, so it's not unusual for at least one of them to be working a late shift. But tonight there's no major breaking news. Their daughter is out with friends and Reese and Pat are making the most of it. Reece lifts his wine glass. Oh, that was a wonderful dinner. Thank you. It's nice to have a quiet evening for a change. But Pat raises an eyebrow as the phone starts ringing. Reese rises from his chair. Oh God, that's my fault. I shouldn't have said anything. Reese walks into the hallway and picks up the phone. Hello? You reached the Schoenfelds. Rhys, why aren't you in the office? I've been trying you all night. Reese instantly recognizes the voice of Ted Turner, the man who's bankrolled CNN since it launched over a year ago. Well, I'm at home having dinner with my wife, Ted. Well, you'll be able to sort this out with a call to the studio. You know I'm in Washington, right? For this thing with Congress? Yeah, the subcommittee on television violence. Well, we need a line in so CNN can cover my part of the hearings. I don't think that's breaking news, Ted. No, it'll be the big talking point of the moment. It's a subcommittee hearing. It's CNN policy that we only go live to stories of special importance. You don't think what I have to say is special, Reese? Reece considers his words carefully. Ted's been known to blow up over the smallest slides. Well, of course it is, Ted, but we have an incredible story out in New York right now. Four mass bank robbers. Oh good, good. Cover that too, after the hearing's finished. Well, it might be too late to arrange coverage of the subcommittee. What if I set up a highlights pack? If we can get a reporter to the White House minutes after President Reagan was shot, we can get a live feed in Congress for the morning, don't you think? Resigns. Okay, Ted, I'll do my best. Great. That's the thing I love most about you. You know, I can always rely on you to do the right thing. The moment after Reese Schoenfeld hung up the phone with Ted Turner, he picked it back up again and dialed cnn. But he didn't tell the newsroom to set up a live feed of the congressional subcommittee. In fact, he gave the opposite order. Cnn. CNN was not going to cover the hearing live. This was the first time in their partnership that Reese had meaningfully gone against Ted's wishes. But it wouldn't be the last. Business Movers is sponsored by Shipstation. Right now it's 4:41pm and I have 19 minutes to write and record this ad and get to my daughter's school for important parent stuff. Oh goodness. Now it's 4:43. And all of this because of a bit of chaos earlier in the day. In business, a little chaos can spell big trouble. But for those of you in charge of order fulfillment for an E commerce business, there's ShipStation. To keep your day to day remaining calm, save time and money every month by shipping from all your stores with one login, automating repetitive tasks and finding the best rates among all the global carriers. Calm the chaos of order fulfillment with the shipping software that delivers. Switch to ShipStation today. Go to ShipStation.com and use code movers to sign up for your free trial. That's shipstation.com code movers. Look, it's 4:46 shipstation.com code movers. With the Spark Cash plus card from Capital One, you earn unlimited 2% cash back on every purchase. And you get big purchasing power so your business can spend more and earn more. Steven, Brandon and Bruno, the business owners of SamCloud, reinvested their 2% cash back to help build their retail presence. Now that's serious business. What could the SparkCashPlus card from Capital One do for your business? Capital One? What's in your wallet? Find out [e-mail] SparkCashPlus terms apply from wondere. I'm Lindsey Graham and this is Business Movers. By the winter of 1981, the Cable News Network, or CNN, had been on the air for over 18 months. After initial blunders and gaffes had left the channel's reporters and bosses embarrassed. CNN's 24 Hour format had found its footing with compelling live coverage of breaking stories. Reporters were on the spot to update viewers on the MGM grand fire in Las Vegas and the assassination of John Lennon in New York City. They were live on the air within minutes of President Ronald Reagan being shot. And they were there when two overhead walkways collapsed at a hotel in Kansas City, killing more than 100 people. CNN was fast becoming America's favorite way to consume breaking news. Almost four and a half million homes across the country now had access to the channel. And as many as 400,000 new subscribers were signing up every month. But despite the surge in viewers, CNN was losing money. The channel cost its owner, ted Turner, around $9 million a year, the equivalent of 20 million today. And Ted's cash flow problems were about to worsen since competitors had begun setting up their own 24 hour news channels. But Ted was known for his bold moves in business. Rather than wait patiently for CNN to turn a profit, he'd ordered his executives to set up a second channel to go live on January 1, 1982. Ted hoped it would give him a stranglehold on TV news. But the only certainty was that Ted would now be bankrolling two news channels instead of one. So in this moment of uncertainty, Ted needed a steady hand on the tiller. He thought he had that in CNN chief executive Reece Schoenfeld. Both Ted and Reese had played key roles in CNN's success so far. But a year and a half after the channel went on air, a breach was forming between the two men. And whether Ted and Reece could work through their disagreements would determine not just their professional relationship. It would decide the fate of the world's first 24 hour news channel. This is the third episode in our four part series on the birth of CNN. Ted versus Reece. It's December 1981 at CNN headquarters in Atlanta, Georgia, two months after Rhys Schoenfeld defied his boss Ted Turner's instructions to cover his appearance at a congressional hearing. At his desk, Reese checks employment contracts for two new members of staff. CNN is still expanding, but money is tight and Reece can only shake his head when he sees the low salaries that the new hires are being paid. Oh my God, they'd make more stocking shelves at Walmart. Well, welcome to television, kids. Reese signs the contract and reaches for the intercom buzzing his secretary. All right, these contracts are ready. After a moment, the office door opens, but it's not Reese's secretary. It's his wife, Pat O'Gorman. And she looks rattled. Reese, have you got a minute? Yeah, of course. You okay? Pat sits. Yeah, I'm fine. It's. Well, I was talking to Deborah. Deborah? I'm sorry, who's that? Oh, you know who she is. We hired her straight out of college a few months back. Oh yeah, the girl with all the hair. It's the fashion. Reese. Don't be an old man about it. I'm not. I just don't. What, what would you call that anyways? What's up with Deborah then? Well, I mean, she's a good kid. She's not the cause of this. I want to make that clear. Oh, no, go on. What happened? Well, I was with her in the break room just now and she asked me what I thought about unionizing. Oh God, you're kidding. Does she know who you're married to? I don't know. I think the new technician's got to her. Filling her head with talk of raises and bonuses and extra time off. But only if they unionize. CNN can't afford to pay union wages. Certainly not now. Maybe one day, just not today. Well, that's not going to mean much to them. You should hear some of the stories about the apartments they're living in. They're sleeping on each other's couches, they're splitting meals, they work 18 hour days, they have to borrow money for gas. I'm thinking if it goes to a vote, they're going to go for it. And honestly, I don't think I blame them. Reese leans back in his chair, rubbing his chin. Okay, well, thanks for telling me. Is that it though? You're not worried? Oh, no, I. I am. But I think we have an ace up our sleeve. What do you mean by that? Well, I mean you. Me? Oh no, no, no. Well, the kids love you. You're like their CNN mom. They'll listen to you. Tell them that if they unionize, CNN won't be able to take chances on fresh talent. If we have to pay union wages, we'll have to justify every single hire. And that means more experience, fewer risks. Kids like Deborah, they would never get a shot. Oh no, Reese. Look, I work in the newsroom. I cut footage. I don't cut deals. Okay? I think I need you on this path. If they unionize, they're only firing themselves. Talk to them. Make them understand. The pro union sentiment at CNN only increased in the following weeks. Leaflets filled break rooms, posters lined the walls, and support for unionization grew quickly. Soon a vote was inevitable. And Reese Schoenfeld knew one Ted Turner, would not stand for a union at cnn. And if employees did unionize, it wouldn't just cost junior staff their jobs. It might cost Reece his too. By the end of 1981, Rhys Schoenfeld felt increasingly vulnerable at CNN. And now with the channel's young employees now talking about unionization, Reece was worried that he was losing control of the newsroom. So Reece made it clear that he wanted CNN's employees to vote no. He insisted that if they unionized and called for higher wages, it could put CNN's entire future in doubt. But he knew there was growing resentment over the demanding working conditions and low wages at cnn, so he feared the vote would be tight. But thankfully for Reese, he did have an ace up his sleeve. His wife, Pat O'Gorman. In the weeks leading up to the vote, Pat spoke to as many producers, editors, reporters and studio crew as she could. She was honest about CNN's precarious financial situation and warned junior staffers that any immediate increase in wages would put an end to the policy of hiring fresh talent straight out of college. She asked everyone to put their faith in her, in each other, and in cnn, promising that rewards for their efforts would follow as soon as they could be paid for. Pat's intervention worked. CNN workers voted against unionization by a clear majority of almost 3 to 1. Reese breathes a huge sigh of relief. But despite the union vote going his way, it didn't take long for Reece to face another challenge to his authority. This time it came from a far more dangerous his boss, Ted Turner. In the spring of 1982, Ted made a request which left Reece stunned. Although Ted was not a reporter, he wanted to appear on CNN and personally conduct an exclusive interview with the President of Cuba, Fidel Castro. This was not the first time that Ted had interfered in editorial policy. When he had demanded that CNN carry his appearance in front of a congressional subcommittee, Reece had resisted the order, but Ted overruled him and had CNN broadcast his testimony live. Ted hadn't spoken with Reese about his attempt to block this coverage, but Reece knew that Ted must be fuming. So to him, this new request to conduct an interview with Fidel Castro almost seemed like a loyalty test. Ted had come up with the concept after an initial in person meeting with Castro. Cuban officials had reached out to Ted to tell him that Castro was a big fan of CNN and that he wanted to meet its owner. Flattered by this attention, Ted agreed, and soon he was flying to Havana for a private meeting with a communist dictator. Despite the ideological differences between the two men, Ted and Castro hit it off immediately. They drank together, went hunting together, and discussed the future diplomatic relationship between Cuba and the United States. On his return home, Ted told Reece that Castro had agreed to be interviewed on cnn. But there was a condition. Ted must be the one asking the questions. Reece was not sure whether that demand came from the Cubans or from Ted himself. But it left Reece with a dilemma. An interview with Castro was an unrivaled opportunity. But Reece knew that only an experienced reporter would get Castro to answer the questions that Americans really to ask. Reese feared that if Ted was left in charge, the interview would lack journalistic rigor and integrity. Or worse, it would give Castro a chance to repeat communist propaganda to millions of Americans that would be hugely damaging to CNN's reputation. But Reece knew he couldn't simply reject Ted's idea either. After their disagreement over the Congressional subcommittee and the uncertainty caused by the union vote, Reece didn't want to antagonize his boss any further. Having no good solution to this problem, Reece decided to do nothing. He hoped that the logistics of arranging the interview would prove impossible and the problem would then solve itself. And he was right. The Cubans struggled to agree on a time when Castro would be available. And as the weeks passed, Ted lost interest in the idea. To Rhys Schoenfeld's great relief, there would be no interview between Fidel Castro and Ted Turner. Still, the entire episode left Reece looking nervously over his shoulder. He was certain it wouldn't be the last time Ted would try to affect editorial decisions. And he didn't know how sustainable his position would be in the long term if those interventions continued. In the meantime, all Reece could do was focus on his job. CNN had carved out a reputation for covering breaking news in the United States. And now Reece wanted to push the boundaries again. He wanted the channel to be a leader not just in American news, but world news as well. To expand its coverage internationally, Reece started sending field reporter Jim Michliszewski to El Salvador. A civil war had been raging in this Central American republic for more than two years. The US backed military government was fighting against an uprising by left wing guerrilla groups. And it was just the kind of important geopolitical story that Reese wanted CNN to cover in more depth. As an experienced war correspondent, Jim Michalashevsky prided himself on giving viewers an up close look at the battlefield. While other reporters sat back and waited for the official line from government sources, Jim negotiated his own access to Salvadorian units and put himself in the field alongside them. And it was while accompanying Salvadoran troops on an early morning patrol that Jim found the story of a lifetime. The U.S. army had sent soldiers to El Salvador, but President Reagan had assured the American public that they were only there to advise, not fight. But while Jim was embedded with the Salvadorans he captured footage that seemed to contradict the president's promise, showing US troops patrolling near the front lines armed with M16 assault rifles. Jim's story was quickly picked up by other media outlets, and CNN's footage was rebroadcast on channels all around the world, with stills from it printed on the front pages of the Washington Post and New York Times. Jim's expose was a huge embarrassment for the US Government and President Ronald Reagan, but it was Another boost to CNN's growing reputation for breaking the biggest stories whenever and wherever they happened. So by the end of 1981, CNN's new emphasis on world reporting had successfully boosted ratings and subscriber numbers again. But that expansion came at a cost. Employing extra teams of reporters and producers to scour the globe looking for stories was not cheap. CNN was already losing money, but now it was losing it faster. The commitment to breaking news was beginning to break cnn, and soon its growing financial crisis would threaten to bring down the entire network and destroy the partnership between the two men who had built it. Business Movers is sponsored by Attentive Imagine for a moment if you got a message from your favorite brand and it's so specific and personalized it feels like it was created just for you. Well, chances are if you got such a message, they're using Attentive, the SMS and email marketing platform designed to help brands build and connect with their ideal audience. Attentive helps marketers create unique messages for every subscriber, transforming the consumer shopping experience and maximizing marketing performance. It works like this. Attentive's AI learns what subscribers actually want based on their real time interactions with your brand. And that means it customizes the content, tone and even timing of every message so they always resonate. If you're ready to take your customers on a journey created just for them, visit attentive.combusinessmovers to learn more.

[Ted Turner]

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[Lindsey Graham]

It's February 14, 1982 at Ted Turner's favorite New York restaurant. A few days after CNN staffers voted against joining a union, 42 year old bill Bevin stabs at a piece of lobster ravioli, but he's barely tasted a bite. Across the candlelit table, Ted Turner swirls his wine, looking relaxed as ever. As the chief financial Officer at Turner Broadcasting, it's Bill's job to keep the lights on at Ted's various media businesses. And for the last two years, Bill has performed miracles, finding the $25 million a year needed to run CNN. And every week it's getting harder. Tonight, he's finally managed to pin 2 Ted down for an hour to go through the grim numbers. Bill sets down his fork so TED there's nothing left. Ted looks confused and picks up the bottle of wine. We're not even half finished. No, no, we don't have any money left. Next month we won't be able to make payroll. Oh, Bill, come on. Just do whatever it is you normally do. Move cash around, increase ad rates, get subscriber fees in advance. Heck, use the hot dog money from the Braves if you have to. No, Ted, Look, I've tried every trick in the book. Launching this second news channel when CNN was barely off the ground was a huge gamble and it's bleeding us dry. No, no, no. It wasn't a gamble. It was survival. If we didn't do it, we'd have given our competition a free pass. I had no choice. Well, neither do I. These bills have to be paid. I think we need to put a public offering back on the table. Ted's smile vanishes. No. Sell some stock and Turner Broadcasting. No. Over my dead body. We need to raise the money somehow. Then I'll refinance my house. You've already refinanced your house. A few couples at nearby tables glance over. Ted notices and forces a tight smile, lowering his voice. Well, how about I go on the air and ask for donations? You know, I've done it before when I owned the station down in Charlotte. I begged viewers to stay, send in cash to keep us afloat. And it worked. Are you serious? I'm dead serious. Well, that might work once, but it's not a long term solution, Ted. At the rate CNN is burning through money, you'll barely make your loan payments next month. You've stretched yourself too thin. If you want CNN to survive, you have to sell part of the business. Ted glares for a moment. Bill wonders if he's pushed too far, and then Ted leans back, his jaw tightening. All right, fine. We'll Go public, set it up. As Bill Bevins rode home in a taxi that evening, he began planning the initial public offering of Turner Broadcasting stock. But Ted Turner wasn't called the mouth of the south for nothing. He was never afraid to share his opinion. And his tendency to run his mouth would torpedo any chance of CNN going public. Foreign in the early 1980s, companies seeking to go public or sell existing reserves of stock faced strict regulatory requirements. Prior to any sale. The securities and Exchange Commission enforced a quiet period in which company executives were barred from public declarations that might influence the stock price and cause it to artificially increase. And if they did make statements and they proved to be false, anyone who bought stock could sue and demand compensation. But this quiet period did not suit a man as loud as Ted Turner. While his chief financial officer, Bill Bevins, worked behind the scenes to prepare for Turner Broadcasting's debut on the stock exchange, Ted agreed to a high profile interview on America's top daytime TV program, the Phil Donahue Show. There, in front of a live studio audience, and with more than 6 million viewers tuned in, Ted confidently predicted that CNN would bounce back from its recent losses and make a profit next year. This was exactly the kind of comment that the securities and Exchange Commission advised against. Now anyone who bought Turner Broadcasting stock could apply for compensation if the stock price dropped. And faced with the prospect of making payments to disgruntled investors, the underwriters Bill Bevins had hired to oversee the IPO dropped out. No other merchant bank would touch Turner Broadcasting either. So there was no hope of being listed on the stock exchange. And Ted retained full ownership of his company. But without the money from the ipo, Turner Broadcasting remained in a precarious situation. Ted kept CNN afloat by borrowing money from his other businesses. But he couldn't prop up the channel this way for forever. CNN needed to increase its income. At the time, CNN's revenue was almost entirely dependent on subscriptions and advertising. But faced with financial oblivion in early 1982, Ted came up with a third way for the channel to make money. When it first began broadcasting, CNN had negotiated a deal with a network of small local TV stations. These local news outlets provided CNN with with footage so it didn't have to rush its own camera crews to every breaking story. In return, CNN provided the local stations with select material that could be used in their evening news broadcasts. But Ted discovered that the local stations were pushing the boundaries of this deal. Some were using CNN material that was not authorized for rebroadcast. Other stations were using CNN footage without signing up to the reciprocal agreement at all. So Ted got on the phone to a few of these local stations, but for once, he didn't threaten them with legal action. Instead, he simply asked the station bosses why they were stealing CNN coverage. And their answers surprised him. The producers revealed that they'd be happy to pay CNN for the footage, but there wasn't an easy way to do it. After hearing that, Ted saw an opportunity and moved quickly to exploit it. He ripped up the old agreement that swapped local station's footage for CNN coverage. In its place, Ted set up a new department within CNN that sold coverage to local stations for a fee. Although some stations were unhappy about paying for something they'd previously got for free, that didn't stop them from signing up. And since CNN would have prepared the coverage for its own broadcast anyway, the network would essentially be getting money for nothing. This new CNN news affiliate service soon became a lucrative third income stream alongside ads and subscriber fees. And finally, CNN could pay its bills, the loans from Ted's other companies could stop, and his predictions of CNN turning a profit in 1982 looked less like an idle boast. But as soon as Ted felt that CNN was finally on stable ground, a new expanse emerged. In April 1982, Argentina invaded the Falkland Islands, a British held territory in the South Atlantic. Britain dispatched a naval task force to retake the islands and. And the stage was set for a dramatic military confrontation between two of America's allies. Reese Schoenfeld wanted CNN to cover the Falklands in the same way it had the Salvadorian civil war. So within hours of the Argentinian invasion, CNN war correspondent Jim Michlashevsky was on his way to the South Atlantic. But his kind of reporting required him to be close to the action. Jim and his crew would need ships and security to enter the war zone and none of this would come cheap. These expenses Reese was approving alarmed Ted Turner. And it wasn't only the Falklands war where he thought Reece was splurging. Reece had also recently made an offer to Mike Douglas to host a show business program. Mike's long running daytime talk show had come to an end and Reese had offered around $1 million to coax him to CNN. That was the equivalent of $3.5 million today. And Ted thought he was simply too high. Especially because Mike's show had finished because it was losing audience share. A million dollars seemed a lot to Ted for a presenter whose popularity was in decline. But Mike Douglas salary was not the only staffing issue that caught Ted's attention. Reese was planning major changes to CNN's evening lineup as well. Ever since the network launch, the coveted evening time slot had been filled by a live news discussion and interview show hosted by Sandy Freeman. But the Freeman Report's ratings had failed to hit the targets Reese had set for it and he decided that the schedule needed a shakeup. In his view, the Freeman Report was too similar to TV shows on other networks and he wanted to replace it with something more groundbreaking. Crossfire was an innovative new format in which a left leaning host and a right leaning host would debate each other in the hope of winning a guest around to their way of thinking. Reese loved this idea and planned for it to replace the Freeman Report and CNN schedules at the end of Sandy's contract. But there was a major obstacle in the way of Reese's new lineup. Ted Turner was not only a big fan of Sandy Freeman, he also hated the idea of Crossfire. Ted thought that the show would descend into a shouting match, the kind of ugly television he had entered the industry to destroy. So, hoping to find a way of killing Reese's plans, Ted got in touch with Sandy Freeman directly. She confessed to him that she found Reece difficult to work with, complaining that Reis often canceled her guests on short notice. She also felt that Reece wasn't willing to listen to differing opinions. Ted investigated further and found that Reese had other detractors at CNN too. Although many staffers had nothing but good things to say about him, a significant number backed Sandy's claims, complaining that that Reece was like a dictator, that it was his way or the highway. Ted grew concerned that Reece was keeping too tight a grip on his staff, but too loose a grip on his budget. When Ted and Reece had first set up cnn, they'd agreed that Ted would put up the money and Reece would have free rein to run the channel as he saw fit. Ted felt that he had kept up his side of the bargain. He had not confronted Reese over his attempt to block coverage of the congressional hearings. And he hadn't completed complained about Reese's lack of enthusiasm for Ted's interview with Fidel Castro. But CNN's spiraling costs and the debate over the future of Sandy Freeman finally spurred Ted to make a drastic decision about the leadership at cnn. If the man at the top couldn't change, then it was time to change. The man at the top.

[Ted Turner]

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[Reese Schoenfeld]

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[Lindsey Graham]

It's May 16, 1982, at CNN headquarters in Atlanta, Georgia, six weeks after the the start of the Falklands War. Rhys Schoenfeld leans forward, sliding a stack of documents across Ted Turner's desk. Brightly colored graphs and pie charts spill across the surface showing CNN's latest television ratings. And look at this one. It shows we're exceeding expectations in the early evening slot. We can go back to advertisers and tell them we're upping the rates to reflect the higher audience share. Yeah, I mean that slot's valuable, Ted. We're not just selling arthritis pills to the over 60s anymore. We're pulling in bigger companies. Hmm. Ted drums his fingers on his desk, eyeing the charts, but Reece knows the look on his face. Ted isn't really absorbing the numbers. He's thinking about something else. So Reese decides to wrap things up. Well, the bottom line is we've hit our targets. We're getting rave reviews. It's no exaggeration to say that when Americans wake up in the morning and want to find out what's going on in the world, they turn on cnn. Ted pushes away away the charts and meets Reece's eyes directly. You didn't extend Sandy Freeman's contract? Reece blanks, caught off guard. No, I didn't. Why not? Reece chooses his words carefully. I like Sandy. I just find her a little temperamental to work with and I think we can do better. Kathleen Sullivan is the on air talent we should be focusing on. Audiences love Kathleen. I'm extending Sandy's contract and I'm letting Kathleen go. You can't do that. That's not your role. I'm in charge of the newsroom. It's my company, Reece. And we're making other changes, too. What are you talking about? Ted looks at him. He doesn't even have to say it. Reese just shakes his head. You're letting me go too, huh? You can stay until the end of your contract, but. Yeah. I don't believe this. I've had to make this change for company morale. Company morale? There's no problem with morale. That's not what I've heard. Heard? What have you heard? That people are fed up with your management style. That they're leaving because of you. They're leaving because we pay them next to nothing. I've made my decision, Reese, and I'm not changing it. But Ted, cnn. It. It's you and me. We. We built this together. For the first time. Ted hesitates. He looks down at his desk, fingering the edge of a chart. It's the closest thing to discomfort Reece has ever seen from him. Maybe I can get you another position. Something in the back office, far away from the newsroom. Huh? Reese pushes back his chair and stands. He walks to the door and then pauses. For what it's worth, you're making a big mistake. It's just business, Reese. No hard feelings, right? For as long as Reese Schoenfeld had known Ted Turner, there had been a sign on his desk that read, lead, Follow or get out of the Way. Ted no longer believed Reece could lead, and Reece wasn't willing to follow. That left only one Ted had to get him out of the way. In mid May 1982, CNN itself made headlines. When news broke that Rhys Schoenfeld had been fired, it rocked the television industry. Experts knew that it was Reese who had built CNN from scratch and turned it into a world leader in TV news. No one had any idea that Reece's job was at risk and the speed of his fall stunned outsiders, rival networks clamored for an explanation. Ted Turner responded by laying the blame for CNN's poor financial outlook squarely at Reese's feet. According to Ted, Reece went significantly over budget by chasing every story he could and refused to rein in spending. But Ted also tried to contain the fallout by presenting Reese's departure as a mutual decision rather than an outright dismissal. Ted offered Reese the opportunity to remain at CNN by heading up the channel's European bureaus. Reece turned this job down. He didn't Want to uproot his life and move across the Atlantic. So a few days later, Ted came back with a second offer. A consultancy role that would allow Reese to remain in Atlanta. This time Reese accepted and he would remain a part of the CNN family, but has a much reduced figure with no formal power. But with Reece gone, Ted needed a new chief executive and quickly. He wanted someone who could build on CNN's early success. But more importantly, Ted wanted someone he could control. Rather than bring in an outsider who might try to stamp their own identity on the channel, Ted decided to promote a candidate from within. 62 year old Burt Reinhart was already CNN's executive vice president president. He was an old friend of Reese Schoenfeld's, dating back to their years together at United Press International Television News. But Burt's friendship with Reese did not deter Ted from offering him the promotion. And it didn't stop Burt from accepting it either. He was quickly confirmed as the new chief at cnn. But Burt didn't have long to get used to his new role before he faced a major challenge. After only one month of taking the job, CNN's first direct competitor went live. On June 21, 1982, the Satellite News Channel, or SNC, began broadcasting. Just like CNN, it was on air 24 hours a day. But unlike CNN, SNC had a rigid format. A rotating newscast that promised a full roundup of the day's headlines in 18 minutes before starting. This is the Satellite News channel. Give us 18 minutes, we'll give you the world. Ted had already tried to respond to SNC by launching CNN2, a new channel with a similar short form rotating news format. But SNC was still a real threat to CNN's market share. From its first day, SNC was available at no extra cost in 2.6 million homes across America. Almost a million more potential viewers than CNN had when it launched two years earlier. Back then, Ted Turner and Reece Schoenfeld had promised advertisers that CNN would reach 1% of all televisions in America. At the time, the prediction was seen as hugely ambitious. But two years after launch, CNN had met and even exceeded that target. The latest ratings showed that the network had secured a 1.1% audience share. Ted and Reese had achieved the seemingly impossible. But now CNN's monopoly on 24 hour news was over. SNC was bound to cut into CNN's hard won audience share and Ted would have to find a way to respond. He'd need to do so without the man who built CNN from the ground up. Reese had taken cnn. From a vague idea to a household name, from a stuttering startup to a fully fledged business. He had put together a team of journalists who were gaining a reputation for innovation and attention grabbing work and with their help he'd broken some of the biggest stories of the early 1980s. But none of that had been enough for Ted Turner. Reese Schoenfeld's time as chief executive of CNN was over and no one could be certain of what was coming next from Wondery. This is episode three of Making the News for Business Move on the next episode, CNN finally turns a profit as Ted Turner goes to war with his rivals. If you like business movers, you can unlock exclusive episodes found nowhere else on Wondery and access new episodes early and ad free. Join Wondery in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. And before you go, tell us about yourself by filling out a [e-mail] surve if you'd like to learn more about Ted Turner, Greece SCHONFELD and CNN, we recommend me and Ted against the World by Reece Schoenfeld Mediaman by Ken Auletta and CNN the Inside Story by Hank Whittemore A quick note about our dramatizations in most cases we can't know everything that happened, but all our reenactments are based on historical research. Business Movers is hosted, edited and executive produced by me, Lindsey Graham for Airship Audio editing by Mohammad Shazid Sound design by Molly Bond. Our supervising sound designer is Matthew Filler. Music by Thrum. This episode is written and researched by Owen Paul Nichols Senior Producer Scott Reeves. Executive producers are William Simpson for airship and Aaron O'Flaherty, Jenny Lauer Beckman and Marshall Louie for wondering.

[Ted Turner]

Have you ever wondered how a circus performer could become the most powerful woman in the Byzantine Empire?

[Reese Schoenfeld]

Even the Royals is a podcast from Wondery that pulls back the curtain on royal families from ancient empires to modern monarchs to show you the darker side of what it means to be royalty.

[Ted Turner]

Before she ruled an empire, Theodora was a teen sensation in circus shows featuring dancing bears, burlesque performers and blood soaked chariot races. But when her star came crashing down, she clawed her way from rock bottom to the very top, using everything from comedy to espionage to get there.

[Reese Schoenfeld]

Empress Theodora didn't just survive, she revolutionized women's rights across the Byzantine Empire, like changing laws to let women divorce men, own property and bring abusive men to justice. For all her work in pioneering, she's remembered as the most powerful Byzantine empress in history.

[Ted Turner]

Follow Even the Royals on the Wondery app or wherever you get your podcasts. You can listen to Even the Royals early and ad free by joining Wondery.