The word inside CNN is that staffers are thrilled that their parent, Warner Bros. Discovery, agreed to merge with Netflix instead of Paramount Skydance. They fear the latter’s Trump-friendly owners, Larry and David Ellison, would kill the network once they get their grubby hands on “The Most Trusted Name In News.”
The Ellisons may be MAGA- friendly, but there’s low odds they’re in this to kill CNN, as I will explain in a bit. Meanwhile, the likely scenario under the Netflix deal, according to my Wall Street sources, is far worse for the CNN rank-and-file: The cable channel, which still generates cash, will be spun off as part of a public company answering to public shareholders. Not fun, given the debt on its balance sheet and demands to show a profit.
Even worse, Wall Street executives say the network will ultimately be spun out of that spinout and sold — likely to a rapacious private equity firm that sees news as a nuisance, opting to slash and burn to generate ever-bigger profits so it can eventually sell what’s left to somebody else.
Consider, for a moment, what the Ellisons are offering. Unlike Netflix, they’re buying not just the streaming and studio business, but the cable properties as well. People who work for the father-and-son duo say they want to grow cable as part of a global, integrated media empire that sells both CNN and CBS in cable packages.
CNN staffers are said to particularly loathe the idea they would be working for Bari Weiss, who runs CBS for the Ellisons and has moved the Tiffany Network to a more friendly posture to conservatives (aka the 77 million people who just voted for Donald Trump whom you want as viewers).
But Weiss is hardly channeling hard-line MAGA at CBS, and the Ellisons’ partner in the pursuit of WBD, RedBird Capital, is run by savvy veteran media banker Gerry Cardinale. He employs a handful of journalists, including former CNN anchor Chris Wallace and longtime CNN chief Jeff Zucker. Wallace, I understand, will play a key role in CNN’s future if Paramount Skydance prevails.
Indeed, it’s CBS that could be moving its news-gathering operations to CNN’s Atlanta headquarters, I am told. It will be the Tiffany Network’s cash-strapped news operation that needs to downsize the most as they combine operations, which makes sense if you compare the numbers of both networks.
CNN churns out an estimated $500 million to $600 million in annual cash flow, I am told. (WBD doesn’t break out its financials; this is an estimate from an ex-senior exec.) That’s pretty darn good considering the network’s third-place ratings among the cable news giants, and it shows there’s a business here because cable news carriers believe it has an audience.
Ellisons wouldn’t kill it
It’s also why the Ellisons wouldn’t kill it as the many inside the network fear despite the fact cash flow has been halved from just five years ago. There will be cuts and those dreaded synergies that bankers talk about, but that’s a far better future than CNN being at the mercy of some PE bean counter.
No matter how much shade is thrown at Larry Ellison’s backstop of his son’s hostile offer for Warner Bros. Discovery, the Oracle co-founder is still worth more than $240 billion and will use it to invest in a business where CNN won’t be a nuisance but the tip of the spear in Paramount’s news operations.
And if you’re at CNN and worried about the Ellisons’ political motives (Larry was an early Trump supporter), I don’t think they’ll be Trump patsies. Based on recent comments by the president (he said they weren’t such great friends), neither does he.
Suffice to say, lots of paranoia here, and real proof that many journalists need to spend some time taking finance 101: Netflix in “winning” the monthslong WBD bake-off is just buying WBD’s Warner Bros. studio and HBO Max streaming service, while CNN and WBD’s other cable properties are spun out to the wilderness as a publicly traded company with an estimated $15 billion to $18 billion of debt.
That’s right: A news company with lots of debt answering daily (based on its stock price) and quarterly (based on its earnings) to analysts and investors demanding a return in a business that’s declining because of cord cutting and more.
CNN has been busy slashing costs in recent years, but this means cuts will get steeper to make the numbers work given the trajectory of rising debt service payments while cash flow from the cable properties is going in the opposite direction.
For the record, I’m not gloating over CNN’s uncertain future. True, I work at a competitor, Fox News, along with my duties at The Post, but I’m a journalist who believes the business needs to survive because you can’t have a functioning democracy without it. Trump rips the network’s political commentators, but CNN’s news product is formidable, with bureaus around the world reporting 24/7.
Journalism writ large is a tough business, so if you’re in it like I am, you better hope for an owner who doesn’t see news as a nuisance.
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