Business Movers: Making the News - Ted Turner and CNN | The Cable News War | Episode 4

Introduction

In this gripping fourth episode of Business Movers, Wondery delves deep into the tumultuous early years of CNN and the fierce competition it faced from the Satellite News Channel (SNC). Hosted by Lindsay Graham, the episode chronicles Ted Turner's relentless drive to establish CNN as the premier 24-hour news network and the strategic maneuvers he employed to fend off competitors like SNC. Through a blend of historical reenactments and insightful narratives, listeners gain an intimate look into the high-stakes world of cable news during the early 1980s.

The Birth of CNN and Initial Challenges

Summer 1982: Atlanta, Georgia

The episode opens in downtown Atlanta, where a young Ted Turner is visibly stressed, grappling with declining ratings for CNN following the launch of its competitor, SNC. Turner’s Chief Financial Officer, Bill Bevins, tries to present encouraging numbers, but Turner remains unconvinced.

Key Moments:

• Ted Turner’s Determination: At [00:00], Turner declares, “I’d rather see CNN dead in a ditch than surrender it to someone else,” signaling his unwavering commitment to CNN’s success.
• Facing SNC: SNC, backed by ABC, poses a significant threat with deeper financial resources, forcing Turner to consider aggressive strategies to maintain CNN’s viewership.

Strategic Moves and the Price War

As SNC gains traction, Turner initiates a price war to undercut the competition. He lowers CNN’s subscription prices and reduces charges for advertising slots in an attempt to retain and attract viewers.

Notable Quote:

• Turner on Price War: “[...] if it turns into a war of attrition, they can afford to bleed far longer than we can” ([00:45]).

However, this aggressive pricing strategy quickly erodes CNN’s revenue, leading Turner to cut staff wages—a move that inadvertently weakens CNN’s operational strength.

The Rift with Reese Schoenfeld

Reese Schoenfeld, Ted Turner’s former partner and CNN’s newsroom manager, becomes a pivotal figure in the unfolding drama. Their strained partnership, marked by disagreements over budget allocations and editorial control, culminates in Schoenfeld’s demotion.

Critical Interaction:

• Turner’s Reluctance to Sell: When Bill Bevins suggests selling part of CNN to buy time, Turner responds firmly, “It’ll always be no. I’d rather see CNN dead in a ditch than surrender it to someone else” ([00:55]).

This decision leaves CNN vulnerable as Schoenfeld, exasperated by the internal conflicts, contemplates an offer from ABC to lead the new SNC.

Acquisition of SNC

With ratings slipping and SNC leveraging ABC’s financial backing, Turner faces the grim reality of potential failure. In a bold move, he launches an antitrust lawsuit against ABC, alleging secret deals that disadvantage CNN. This legal pressure forces ABC to sell SNC to Turner for $25 million, significantly less than CBS’s earlier offer of $300 million for CNN.

Key Event:

• SNC’s Shutdown: On October 27, 1983, SNC ceases operations, marking Turner’s victory in the cable news war. A dramatic farewell message from SNC’s Washington correspondent encapsulates the end of an era ([15:47]).

Notable Quote:

• SNC’s Final Broadcast: “[...] That is it period from Washington. [...] Ted, buddy, it’s in your hands” ([15:47]).

This acquisition stabilizes CNN’s financial situation, allowing it to add millions of subscribers and significantly boost advertising revenue.

Ted Turner’s Expanding Ambitions

Even after securing CNN’s dominance, Turner’s ambitions do not wane. Inspired by Capital Cities’ acquisition of ABC, Turner sets his sights on larger networks.

Attempts to Acquire Major Networks:

• ABC and CBS: Turner’s attempt to mirror Capital Cities’ acquisition strategy faces hurdles. After failing to acquire NBC and facing resistance from CBS’s board, Turner shifts his focus elsewhere.
• Acquisition of MGM: In March 1986, Turner successfully acquires MGM for $1.5 billion, marking a significant expansion into Hollywood despite initial resistance from owner Kirk Krikorian.

Strategic Insight:

• Turner’s relentless pursuit exemplifies his strategic thinking and willingness to take significant risks to expand his media empire.

Emergence of New Competitors: MSNBC and Fox News

By 1996, CNN faces new competition from MSNBC and Fox News. These channels employ distinct approaches—MSNBC with in-depth, long-form content backed by NBC and Microsoft, and Fox News with a sensationalist, tabloid style.

Impact on CNN:

• CNN struggles to maintain its leading position, ultimately slipping to third place in ratings as Fox News and MSNBC gain prominence.

Turner’s Response:

• To counteract the declining influence, Turner merges Turner Broadcasting with Time Warner and later with AOL. However, these mergers dilute his control over CNN and lead to financial difficulties following the dot-com bubble burst in 2001.

Legacy and Reflections

The episode culminates with reflections on the legacy of Ted Turner and Reese Schoenfeld. Their partnership revolutionized television news, transforming it into a 24-hour cycle that fundamentally changed public consumption of news. However, the relentless pursuit of viewership also led to sensationalized reporting and an accelerated news cycle, impacting societal perceptions and interactions with information.

Notable Conclusion:

• Impact on News Consumption: “Their need to fill schedules and chase viewers had led to increasingly sensationalized reporting” ([28:21]).

The narrative underscores the complex interplay between innovation, competition, and ethical considerations in the media landscape shaped by Turner and Schoenfeld.

Conclusion

Business Movers masterfully captures the high-stakes battle between Ted Turner’s CNN and its competitors, highlighting strategic decisions, personal rivalries, and the broader implications for the media industry. Through detailed storytelling and poignant quotes, the episode offers a comprehensive exploration of how CNN not only survived intense competition but also set the stage for the modern era of 24-hour news broadcasting.

For listeners eager to delve deeper into the intricacies of CNN’s rise and Ted Turner’s indomitable spirit, this episode provides a richly detailed and engaging narrative that underscores the transformative power of visionary leadership in the business world.