Turner's exit may have effect on future of CNN
Published: Friday, January 31, 2003 at 6:01 a.m.
Last Modified: Friday, January 31, 2003 at 1:47 a.m.
NEW YORK - Ted Turner's departure as vice chairman of AOL Time Warner Inc. renewed talk about dormant merger negotiations between CNN and ABC or the possibility that Turner would consider buying back the cable network he founded.
Business analysts were mulling both possibilities Thursday, despite the tremendous obstacles that stand in front of both.
Turner, who founded CNN in 1980 but, through AOL Time Warner corporate infighting, lost any control over the network in recent years, was reportedly opposed to CNN merging operations with the Walt Disney Co.-owned ABC News.
Merger talks were put on hold by AOL Time Warner chief executive Richard Parsons last month. He said figuring out control issues was proving very complex, the same issue that scuttled past merger talks between CNN and Viacom Inc.-owned CBS News.
Those concerns aren't likely to change with Turner out of the picture. There are also worries that the deal won't save both companies the kind of money that was predicted - up to $200 million in some reports, said Ken Auletta, media writer for The New Yorker magazine who is writing a book about Turner.
"CNN and ABC is a very difficult deal to put together," said Christopher Dixon, an analyst for UBS Warburg. "Although it makes sense on paper, there are some significant cultural differences. We still live in a world where it is difficult for farmers and cowboys to be friends."
An executive with knowledge of the talks, who spoke upon the condition of anonymity, said it's simply too early to say what difference Turner's exit will mean.
Turner is "apoplectic" about what has happened to CNN, said Porter Bibb, an analyst for Technology Partners and another Turner biographer. Turner built a network with an unglamorous focus on news and, in the past few years, CNN has tried jazzy promotions of personalities like Connie Chung, Aaron Brown and Paula Zahn.
But CNN has lost its ratings pre-eminence to Fox News Channel, and the gap between the two is widening.
In an interview for "60 Minutes II" to be broadcast on CBS next week, Turner conceded it was hard not to have a role in CNN. He was diplomatic when asked what he thought of the network's direction.
"I think basically that CNN is doing a pretty good job," Turner told CBS newsman Mike Wallace. "I mean, there are some things, obviously, that I don't like, but I'm the old fuddy-duddy that it reported to for 22 or 23 years, so, I mean, obviously any changes are going to give me trouble."
Wallace took Turner on a walk from the AOL Time Warner office in New York to CNN's new streetside studio a few blocks away.
"Shall we go in?" Wallace asked.
"If they let us," Turner said.
Auletta, said his immediate thought after Wednesday's announcement was that Turner might try to reacquire CNN. But he concluded it was unlikely.
Turner, who told Wallace he has lost between $7 billion and $8 billion because of the tumbling AOL Time Warner stock, may no longer have the resources to buy back his creation, he said. Turner also has extensive philanthropic commitments, including a $1 billion donation to United Nations causes.
AOL Time Warner may be interested in selling some of its resources, but less likely to shed the profitable and prestigious CNN, he said.
Maura Donlan, a Turner spokeswoman, would not comment on Thursday when asked if her boss would be interested in buying CNN. Tricia Primrose, an AOL Time Warner spokesman, noted that Turner said he wanted to devote more time to his philanthropic interests when he told Parsons he was living. "Anything else is speculation and we don't comment on that," she said.
"I think it's likely that he will make a bid for CNN," Bibb said. Turner cares deeply about the network and is clearly disturbed at its direction.
Turner may not have the funds, but he could attract investors, he said. And though it doesn't make sense to sell it, he could see a scenario where some AOL Time Warner board members would encourage that.
"It has a two-year death spiral going on, and if it continues, people who don't understand the business may say, 'what's the value? Let's get rid of it,"' Bibb said.
Auletta said personal reasons may prevent Turner, 64, from getting involved in his old company.
"One of the reasons Ted Turner is stepping down is because he's tired," he said. "He's moving toward retirement, not toward a more active life in business."
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