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Cable TV

Intro

By the Project for Excellence in Journalism

Cable television news showed further signs of maturity in 2007. After a year of losses, the medium regained viewers, especially at prime time, though the roster of winners is changing.

MSNBC, still lagging in sheer numbers, saw the greatest growth. CNN, stemming years of losses a year earlier, grew just slightly while sibling CNN Headline News grew more. Fox News, which saw substantial growth for nearly a decade, enjoyed the least amount of growth even as it remained the audience leader.

But the medium may face a more long-term challenge. For the second year running, there were no significant audience spikes from major events, which may reflect a slower news year but could also reflect a structural change in where audiences go for breaking news. Instead, prime-time programming, built around cable personalities, is what viewers were tuning into more substantially.

Financially, cable news remained a robust business. Fox News increased its profits most, MSNBC inched its way into healthier economic territory (exceeding projections) and CNN & Headline News remained steady.

MSNBC, as part of a broader corporate decision, moved in with NBC News in New York to make the organization more efficient and share resources. Time Warner, parent of CNN, brought in a new CEO, while News Corp., the parent company of Fox News, kept analysts busy with the launch of the long-anticipated Fox Business Network and its purchase of Dow Jones & Company.

CNN & Headline News continued to spend the most money on news gathering, even as the company announced plans to build up its international newsgathering resources, after breaking ties with Reuters. In many ways, with a greater reliance on correspondents producing taped packages and fewer talk shows, CNN is more focused on traditional reporting.

Both Fox News and MSNBC were expected to add to their spending in news in 2007, as well. But our content analysis reveals that MSNBC is the least oriented to correspondents preparing edited packages and, with the smallest reporting staff, depends far more heavily on interviewing and reporters answering questions from anchors.

Meanwhile, Fox News finally came forward with its business news channel, coinciding with its parent company’s purchase of Dow Jones, but the launch of Fox Business Network was a decidedly low-key affair.

The 24-hour news channels outside the U.S. -- BBC, France 24 and Al Jazeera -- marked the first year of their American operations without much growth but remained optimistic. Current TV, with its unique offering of user-created current affairs, did see growth in audience, and economic projections bode well.

Content Analysis

By the Project for Excellence in Journalism

For all the time it has to fill, roughly 18 hours of original programming each day, cable news has become in many ways a niche medium that offers viewers narrow formula rather than a broad-based agenda of the events of the day.

That formula in 2007 was a combination of controversial opinion, a dose of tabloid-tinged crime and celebrity, edgy personalities, and, during the daytime, a focus on the immediate.

In emphasis what is defined as significant amid this formula varies significantly, too, by the channel one watches, the time of day and to some extent the program. More than any on other medium we have studied, the definition of news differs depending on the outlet.

• In general, cable news focuses much of its time on three or four topics a day and relies on wires and brief “tell stories” for much of the rest of the news.
• There are distinct differences among the different channels, only some of which reflects the demographic differences of their audiences.
• MSNBC, at least in terms of time spent, was indeed the place for politics in 2007 — by nearly double over its rivals in the percentage of time studied (28% vs. 12% on CNN and 15% on Fox News). Fox, in turn, spent less time on the war in Iraq than the others (10% vs. 18% on MSNBC and 16% on CNN). And it was more oriented to crime, celebrity and the media than its rivals (28% vs. 19% on MSNBC and 16% on CNN).
• The host-oriented culture of cable, particularly in prime time, now translates into notably different agendas and character even among programs on the same network. Not only does Lou Dobbs have a news agenda of his own on CNN, but so does Anderson Cooper versus Wolf Blitzer on CNN, and Shepard Smith versus Brit Hume on Fox News.
• In a medium that relies heavily on being “live” and not on taped and edited packages prepared by correspondents, MSNBC is the most ephemeral and live-oriented of all, despite its connection to a broadcast news division or perhaps because it must borrow correspondents from its NBC sibling. Only 10% of time studied was made up of taped, edited packages, versus 45% on CNN and 28% on Fox.

There are also two distinct parts of the cable day. Daytime is more focused on crime and disaster. Nighttime increasingly is more about topics that spark controversy and suit the particular audience that tunes in to each channel.

These are some of the findings of our study of cable news, an analysis of 17 shows, 885 hours of cable news over the course of the year, a total of 22,823 stories.

Breadth of Topics

The cable news agenda is measurably different and narrower than other media platforms. With its focus in prime time on talk, it tends toward the political and the controversial, with a clear focus on crime and celebrity mixed in as well.

As an example, cable news spent a smaller percentage of its time than did network evening news covering the broad range of domestic issues, from the environment, to transportation, health care, Social Security, welfare, education, economics, race, gender and more. It also spent half as much of its airtime on the economy and business. And it was among the lowest of media sectors studied in the percentage of time it devoted to foreign affairs that did not involve the U.S. directly.

The medium devoted twice as much of its time to politics and the wide-open campaign for president as network nightly news or cable’s new chief rival for breaking news, news online Web sites, and five times as much on celebrity and entertainment. It also spent twice the percentage of its time on crime.

Collectively, the broad range of domestic issues including the environment, education, transportation, development, religion, domestic terrorism, health care, race — everything but immigration — made up 13% of the time on cable (compared with 26% on network evening news). The three topics of celebrity, crime and disasters, in contrast, accounted for 24% of cable’s time.

To put that into perspective, if one were to have watched five hours of cable news, one would have seen about:

• 35 minutes about campaigns and elections
• 36 minutes about the debate over U.S. foreign policy
• 26 minutes or more of crime
• 12 minutes of accidents and disasters
• 10 minutes of celebrity and entertainment

On the other hand, one would have seen:

• 1 minute and 25 seconds about the environment
• 1 minute and 22 seconds about education
• 1 minute about science and technology
• 3 minutes and 34 seconds about the economy
• 3 minutes and 46 seconds about health and health care

Topics on Cable News vs. Other Outlets
Percent of Newshole

Totals may not equal 100 due to rounding.
Note: *Other Domestic Affairs includes such things as development, transportation, education, religion, abortion, gun control, welfare, poverty, social security, labor, aging, court/legal system, race and gender issues, etc.

Top 10 Stories of the Year

When it came to specific stories, cable news showed a tendency to take the biggest stories of the year and make them bigger, particularly stories that lent themselves to argument, predictions and political divide. Hence the campaign, a long-running story or conversation, filled 50% more time on cable news than evening network news or than in the newshole for media over all. So did the debate over what U.S. policy on Iraq should be. But events on the ground in Iraq, a story that required people in place engaged in reporting, filled less than half the percentage on the cable programs studied than on network nightly news or the media studied over all, and third of the space readers would have seen on cable’s newest rival, online.

Top 10 Stories in Cable

2007, Channels combined

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

Thus while the list of the top five big stories is similar on cable with other media sectors, the nature of the way cable is structured — around talk rather than reporting (see format below) -- alters the nature of the content one sees.

Top Stories: Cable News vs. Other Media
Percent of Newshole

The News Agenda - Daytime vs. Nighttime

Time of day also influenced the news agenda a viewer was likely to see in 2007. The range of stories and topics one saw in the daytime was different than at night, when cable’s well-known talk hosts and personalities fill prime time. During the day, younger hosts, their names not built into the program titles, their experience less clear, sit in the anchor chairs. This is a group of usually physically attractive and often young, on-air “talent.” At night, cable’s better known hosts and personalities fill the time, focusing on topics they particularly care about or fit the formula of their show.

This changes the content. The No. 1 topic in daytime hours studied was crime, the only sector studied where that was true in PEJ’s content studies, where it filled fully 20% of the time studied, nearly double the number at night. Accidents and disasters similarly filled 11% of time studied, again more than double prime time. Celebrity entertainment was larger in daytime than at night by nearly half (7% vs. 4%). Politics and the campaign for president, in contrast, was a smaller story (8% vs. 20% at night).

Government, which does much of its business during the day and may even try to time events to get on live cable TV, was also smaller percentage of time during day period studied than it was at night (filling less than 5% of time versus just under 8% at night).

Topics on Daytime Cable vs. Nighttime Cable
Percent of Newshole

Totals may not equal 100 due to rounding.

Differences among Cable Channels

One distinguishing factor of cable is how different the definition of news is on each of the three major channels. This is the only medium studied where we see such contrasts.

Top 5 Stories in Cable

2007, by Channel

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

By illustration, the No. 1 topic on each of the three channels was different, the only sector where we found this disparity among rival outlets. On MSNBC it was the politics. On Fox, it was crime. On CNN, it was U.S. foreign policy.

Top 5 Topics in Cable

2007, by Channel

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

In simplest terms, MSNBC focused itself around Washington, the campaign and political scandal, often with an eye sharply critical of the Bush administration, to good ratings effect.

Fox was more oriented to crime, celebrity and the media than its rivals.

CNN tended by degrees to devote somewhat more time across a range of topics, and to rely more on taped edited packages to tell stories, although not nearly to the degree found on network nightly news.

MSNBC, which bills itself as the Place the Politics, in 2007 devoted 25% more of the airtime studied to Washington and political topics than did CNN and 46% more than Fox. Those topics filled fully 63% of the time studied on MSNBC (versus 50% on CNN and 43% on Fox).¹

On Fox, the four topics of crime, celebrity, disasters and media topics alone filled 34% of the airtimes studied. That is 46% more than on CNN and MSNBC. Yet political topics, particularly those involving the Bush administration, were aired far less.

The war in Iraq, by example, filled 10% of the airtime studied on Fox in 2007, compared with 16% on CNN and 18% on MSNBC.

Iraq War Coverage by Channel

2007

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

Similarly, the four top political scandals during the year — the firings of the U.S. Attorneys, the CIA leak prosecution of I. Lewis (Scooter) Libby Jr., the sexual-advance case against Idaho Senator Larry Craig, and the acknowledgment by Senator David Vitter of Louisiana that he had been involved with an escort service under police investigation for prostitution in the District of Columbia -- filled 3% of the airtime studied on Fox. They filled 4% on CNN and 8% on MSNBC.

The cable channels do have some similarities in format. All lean now in prime time toward marquee names as hosts. And with talk as their primary form of news delivery, they tend toward topics that lend themselves to argument along with an emphasis on breaking news of a visual nature.

But the subjects being discussed or propagated by these hosts and their guests — in other words the news agenda — differs more on cable among the three channels than in any other medium we have studied.

Topics on Cable News by Channel
Percent of Newshole

Totals may not equal 100 due to rounding.

The Differences Among Different Programs

Consider the differences among what some regard as the evening newscasts on the three channels. Identifying a signature newscast on cable is not a simple matter. Fox offers two — Shepard Smith’s and Brit Hume’s. MSNBC features Keith Olbermann. In 2007, CNN moved a second airing of Wolf Blitzer’s Situation Room into something more akin to this spot by pushing it into the evening.

On Olbermann’s program, the No. 1 topic was U.S. foreign policy (26% of time studied), followed by the activities of the government (23%), with a particular focus on the war, totaling half his airtime.

On Smith’s program, the No. 1 topic is crime (24%) followed by accidents and disasters (12%). Government and foreign policy made up 13%.

On CNN’s newscast, the war in Iraq and foreign policy (30%) and the campaign and politics (21%) came in No. 1 and 2.

So what is the news agenda of cable news? The answer is it depends on the channel, and to some extent on the host of the program.

One other feature of cable news now is that even on programs that bill themselves as general interest news programs, the news agenda varies significantly by program, even on the same network.

Shepard Smith vs. Brit Hume

On Fox, compare the two shows that come closest to being general evening newscasts: Fox Report with Shepard Smith and Special Report with Brit Hume.

They differ as markedly in their rundown of the day’s news as any programs on cable.

Smith’s newscast is a mix of crime, disasters, accidents, with a marked dose of celebrity and entertainment. The war, the rest of the world, the campaign and the government are a smaller portion of the news than in the media over all.

Hume’s program, in contrast, is as focused on politics and government.

“Welcome to Washington. I’m Brit Hume. The federal deficit is down, down more than predictions, down to its lowest level in half a decade. And while his critics continue to find a cloud around that silver lining, President Bush says the best is yet to come,” Hume began his program on October 11.

On Smith’s program, the lead story that night was about the arrest of a 14-year-old in Pennsylvania who allegedly was thinking about shooting up a high school.

Consider the numbers. On Smith’s program, the No. 1 topic is crime (24% of time studied, the highest of any show studied), followed by disasters (12%); and a miscellany of oddball, weather, traffic and accident stories (9%). Celebrity/entertainment is the No. 6 topic (6%).Together these four subjects alone make up 52% of the time studied.

On Hume’s show, in contrast, these are minor topics — 9% of time studied.

Hume’s program is more focused on Washington, in a way that resembles the news one might have seen on the CBS newscasts when Walter Cronkite was the anchorman from 1962 to 1981. The No. 1 topic for Hume in 2007 was U.S. foreign policy (32%), followed by politics (20%), government (10%), and then non-U.S.- involved foreign affairs (8%). Together, these four topics made up 70% of the time studied.

Add the next five topics, all of which intersect with politics — immigration, domestic terrorism, economics, health and medicine, and the environment — and to total rises to 81% of the airtime.

O’Reilly vs. Hannity & Colmes

Fox’s two leading talk programs in the evening also have different news agendas from one another, and are distinctly different from Fox’s news programs.

Those programs, run by Bill O’Reilly and Sean Hannity & Alan Colmes, spend a good deal of time talking about the media, for instance, small topics on the news shows. They also spend more time on celebrity entertainment than even Shepard Smith. Government is also a topic that gets less attention from the talkers than from the newscasts.

The differences between the two talk shows may be more subtle, but they are still evident. O’Reilly’s news agenda suggests his interests are in some ways more cultural, while Hannity & Colmes’ are more traditionally political.

For O’Reilly, for instance, crime is the No. 1 topic (16% of the time studied vs. 8% on Hannity & Colmes). Immigration, a subject that crosses culture and politics, is also a bigger issue (11% of the programs studied), more than twice as big as for Hannity & Colmes (4%).

Hannity, by contrast, spent more time on politics, by far his No. 1 topic by a factor of three over any other subject (36% vs. 12% on the O’Reilly Factor).

After the politics, domestic and foreign, Hannity and Colmes were somewhat interested in more emotional stories that, while not dominant, cumulatively change the character between the two programs. They spent substantially more time on celebrity entertainment than O’Reilly (11% vs. 8%), and more than twice as much on accidents and disasters (5% vs. 2%). And in the hours studied, the program did no coverage of economics and business.

So is there a Fox formula to the news? Not strictly. There are clearly differences in Fox’s news agenda as opposed to its rivals, which to a significant degree appear to reflect the interests of Fox’s more conservative audience demographics (see Audience).

But there are differences, too, by host, and the programs in Fox’s now steady (and to some extent perhaps aging lineup) that offer viewers some variety.

Those subtle differences now also exist in degrees on the other news channels as well.

CNN Shows

CNN’s prime time lineup in 2007 shifted slightly with the departure of Paula Zahn in August but three general news programs were a foundation of its lineup for the year. (The study does not include Larry King’s interview program, which usually has a single subject each night and tilts toward celebrity interviews.)

Those three news programs, which vary from one another distinctly, are Anderson Cooper 360, Lou Dobbs Tonight and the Situation Room with former Washington beat reporter Wolf Blitzer.

Cooper’s program is more cultural, while Blitzer’s, and even more so Dobbs’, are more political.

Consider the numbers: Five topics on Dobbs’ program — U.S. foreign policy, immigration, politics, government and the military situation at home — make up 70% of the hours studied. (They filled 40% on Cooper’s.)

Dobbs’ No. 1 story of the year far beyond any other was immigration, accounting for nearly a quarter of all the airtime studied (22%).

And if anyone thought Dobbs separates his commentary from his reporting, the video offers a different impression.

“Tonight crushing defeat for President Bush and the Senate’s Democratic leadership on amnesty, a glorious victory for the American people,” Dobbs began June 28, the night the immigration bill failed.

Cooper’s program spends more time on stories with a strong emotional or cultural appeal — crime (his No. 1 topic), accidents and disasters, celebrity entertainment, health and lifestyle fill 37% of the programs studied. Those subjects, by contrast, make up just 15% of the Situation Room and 13% on Dobbs.

Often, Cooper is on the scene of these stories, getting involved:

On February 2, news broke about tornadoes that hit Florida and caused a lot of destruction. Cooper was there.

“You were talking about strength and courage, well, the people here are exhibiting a lot of that, strength and courage, tonight,” he opened his show, speaking to Larry King, something Cooper does to try to keep more of King’s audience. “Nothing really prepares you for this, Larry, not to see it, certainly not to live it. They get hurricanes in this part of the country, of course. Yet, even houses built to take a Category 3 or 4 storm could not stand up to what happened here overnight.”

His No. 1 story of the year was the campaign in total (13%), but in any given week, if one wanted to hear about O. J. Simpson, the aftermath of Katrina, Don Imus, or the trapped miners on CNN, Cooper was the most likely place to find them.

MSNBC Shows

On MSNBC, even as it tries to position itself around the topic of politics, there are unmistakable gradations.

In prime time, Tucker Carlson and Chris Matthews were so particularly focused on the game of politics that no other programs studied came close. But MSNBC’s top-rated show, Keith Olbermann, is actually more focused on governing and the activities of the Bush administration.

Olbermann spent nearly a quarter of the time studied on government (23%), nearly triple the time on Carlson (8%) and double Matthews (12%). (In March 2008, MSNBC removed Carlson from its lineup and replaced him with David Gregory, an NBC News reporter. Gregory began a new show called Race for the White House.)

Much of Olbermann’s emphasis on government has to do with Bush’s conduct of the war in Iraq. Nearly four in ten of 125 Olbermann programs studied over the year led with the war, more than triple the next most popular lead story, the firing of the U.S. attorneys.

On two-thirds of the nights studied, Olbermann opened with a story that offered the opportunity for him to look askance at the Bush administration over its antiterrorism tactics or other disputed issues.

“Good evening,” he began on May 15. “The etymology is unclear, but the phrase is politically apt, especially tonight. We’re checking for tire treads on the just-resigned deputy attorney general, Paul McNulty, after he got rolled under the wheels by his erstwhile boss, Alberto Gonzales,” and then without starting a new sentence he turned to another White House controversy involving the World Bank, saying, “the White House today indicating it might be willing to give Paul Wolfowitz a glimpse of pavement and the oncoming vehicle.”

In contrast, Tucker Carlson and Chris Matthews were focused on the race for president and politics rather than the conduct of Bush Administration. Carlson spent 47% of time studied on politics and the election and Matthews 44%. (Olbermann spent 16%.)

The Carlson and Matthews shows stood out in cable for the similarity of their focus. Both opened their programs nearly four nights out of ten studied about the presidential campaign and two nights with the Iraq war debate.

But the character of their shows differed from the personalities of the two hosts. Carlson offered what he called a libertarian critique while Matthews is a former Democratic staffer on Capitol Hill. But the more striking differences were stylistic. Matthews is famous for asking questions and then interrupting his guests to offer his own answers. Picking one night at random, November 26, the transcripts show that while Carlson interrupted his guests three times, Matthews did it 13.

If there was a consistent strain on MSNBC, it was the war and U.S. foreign policy, something about which their liberal and conservative critics tended to express objections to. When he was still on in the evening, Joe Scarborough, a Republican, spent 31% of his time on the subject, Olbermann 26%, but other shows were not far behind (Hardball spent 20% of the time on the subject and Carlson 19%).

Live Reporting Lives On

Much of the character of cable, and of each channel, is derived from how the time is structured, that is, the format of the programs.

In general, cable news continues to be dominated by the culture of live, extemporaneous journalism, but that differs substantially by network.

How Cable Does its Reporting

Story Format, by Channel and Overall

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

Overall, of the 885 hours studied, 496 (56% of the time) were unedited and unrehearsed, with in interviews (usually by anchors) or live stand-ups by correspondents. That is even higher than we identified in past years. The medium, as we have noted in earlier years, “has all but abandoned what was once the primary element of television news, the written and edited story.”

About half as much time, 30%, on the cable programs studied was made up of correspondent packages. Compare that to network nightly newscasts, in which 82% of time is taken up by such packages, or even morning news, where half of the time studied made up of edited packages.

But the notion that cable takes you live to watch events for yourself is in many ways overstated. In all, only 3% of the time covered live events such as press conferences. (About 1% was spent on banter between anchors, weather and other chat.) This compares with 6% in live events the last time we examined the structure of cable news, in 2004.

Story Format on Cable News vs. Network News
Percent of Newshole

The emphasis on live thus cannot be explained by the desire to go continually for substantial periods of time to show viewers live events. Rather, the nature of time on cable news appears to be more on creating the impression that things are being reported as they happen. Producing programs in a live, unedited and essentially extemporaneous model is also cheaper.

And it means that a central figure in cable news, particularly during the daytime, is the “booker,” the often-young staffer who finds guests who can go on air for interviews or panels.

Despite the emphasis on live, the amount of updating, our earlier studies have found, is minimal, and the emphasis on live cable news has resulted in walking away from the capacity to review, verify, edit, choose words carefully and match those words to pictures.

Audiences are even less likely to find verified, edited journalism at certain times of the day. Daytime cable is more than half as likely to have edited packages. Just 14% of the daytime programming studied was made up of such produced packages. Instead, fully 70% was made up of live, extemporaneous programming.

In the evening, roughly a third (34%) of the time is spent on packaged pieces. This is down from what we found in 2004 when 42% of time was made up of stories that had been edited and taped.

Differences in Format by News Channel

Yet the some of most substantial differences in the structure of cable news exist in the distinctions among the three channels.

MSNBC, perhaps because it has fewer staffers and correspondents of its own and instead “rents” them from NBC (see News Investment), relies substantially more on unscripted, live unedited news delivery. Fully 80% of the time on MSNBC is “live” and unscripted, by far the highest of the three cable channels. It is 44% on CNN, and 59% on Fox.

Most of that time studied on MSNBC involved people doing interviews (70%). Compare that number to 28% on CNN and 45% on Fox.

CNN and Fox, on the other hand, are the near reverse of each other when it comes to interviews versus packaged reports.

CNN, the first all-news cable channel in the country, sticks more to the network news style of packaged pieces. Close to half (45%) of its time is spent on packaged pieces. While this is still about half the number found on the traditional broadcast network evening news programs, it is by far the highest among the cable channels. And those packages on CNN tend also to be longer (an average of 2.9 minutes on the programs studied, versus 2.4 on its rivals).

There are differences between the daytime and evening programming here. Packages were fewer during daytime than at night (24% vs. 50%) and live reporter stand-ups were heavier (31% vs. 10%).

Anderson Cooper’s program is particularly inclined to packages, on a wide range of topics, from visiting the Congo, to Nicaragua, to the lives of Marines in Iraq, to an autistic woman who posts video on YouTube.

On Fox, slightly more than a quarter of time studied was made up of edited packages (28%). And again there were more packages at night (31%) than during the day (15%) and more stand-ups in daytime (21% vs. 8%).

On MSNBC, at least on the general interest news programs studied, the edited news story has all but disappeared, making up slightly less than 10% of the time. Here, too, there were differences in daytime vs. night. In daytime, MSNBC relies more on reporters to do live stand-ups (18% vs. 2% in the evening) and even less on packages (3% vs. 12%). But in both parts of the day, live delivery still fills up 80% of the time.

(At 10 p.m. Eastern, MSNBC does air taped reported programming, a variety of documentaries under different names, including MSNBC Investigates and MSNBC Reports. These documentaries are often produced through the Dateline unit at NBC and are both original and previously aired segments.)

Story Format on Cable News Channels
Percent of Newshole

Footnotes

1. This includes elections/politics, U.S. foreign affairs, government, military, immigration, and domestic terrorism.

Audience

By the Project for Excellence in Journalism

In 2007, three trends stand out when it comes to the audience for cable news.

• Average audience at the three channels grew – better news than the losses the year before.
  
• Fox News remained the audience leader but saw more monthly fluctuations, while MSNBC saw slow but steady growth. CNN, meanwhile, appears to have stopped its losses, while its sister channel, Headline News, saw notable growth.
  
• More evidence suggests a change is occurring in the appeal of cable news going forward.

What is that change? For the second year running, none of the cable channels saw the kind of audience spikes from major news events they had become accustomed to.

Instead, the evidence suggests programming built around a cast of hosts, often but not always the edgiest of cable personalities, contributed in large part to the growth.

Cable Audiences

After losing viewers in 2006, cable news had audience growth again in 2007, during both the day and evening.

And as in previous years, prime time saw more growth than daytime on the three cable news channels – Fox News, CNN and MSNBC.¹

Over all, the median audience for cable news in prime time grew by 9%. (This report analyzes median audience first because statisticians have advised us that it offers a truer sense of base audience. See the sidebar on audience measures.) Using the industry-preferred metric — the mean or simple average — the prime-time audience grew 7%. By either measure, nearly 2.7 million viewers watched cable news on an average night during 2007, compared with 2.5 million in 2006.

Cable News Prime Time Audience

1998-2007, Channels Combined

Design Your Own Chart

Source: PEJ Analysis of Nielsen Media Research, used under license Note: Audience shown is the sum of Fox News, MSNBC and CNN’s mean and median audience respectively

During daytime the median cable news audience rose just 1% in 2007. About 1.57 million viewers on average tuned in to the three channels during the year, up from the 1.55 million in 2006 . The mean audience grew 3% – 1.58 million viewers on average in 2007, compared with the 1.54 million in 2006.

Cable News Daytime Audience

1998-2007, Channels Combined

Design Your Own Chart

Source: PEJ Analysis of Nielsen Media Research, used under license Note: Audience shown is the sum of Fox News, MSNBC and CNN’s mean and median audience respectively

The Big Stories of 2007

A year ago, when the cable news audience dropped, analysts wondered whether the medium might be suffering from structural erosion in its base appeal. Through its history, cable has benefited as the first destination for breaking news events, and the medium tended to see huge spikes in its audience during those moments. But that was not the case in 2006. That raised the question of whether the Internet, with its e-mail alerts and mobility, had matured to the point that it has become a serious rival as a source for news as it was occurring. We suggested one year was not enough to offer a clear indication, but that the question deserved observation.²

What happened with cable audiences during major breaking news events in 2007?

The year was characterized by a series of major stories, both sensational and tragic – from the death of the celebrity-model Anna Nicole Smith in February to the mass killings at a Virginia college in April – as well as continuous momentum provided by the coverage of the 2008 presidential candidates and the developments in the war in Iraq. Cable news took an active role in the political debates, which turned out to be big audience draws. (For a fuller discussion on how cable news covered politics, and gained from it, see News Investment.) But, for the second year that we have tracked them, numbers suggest the spikes in viewership during breaking news events were less dramatic and less consistent than in past years.

The year began with a media flurry over the death of Smith in February, and cable news led all media sectors in continuous coverage, from daytime to prime time.³ Looking at the average figure for the month, however, this frenzy did not translate into an audience spike. During the day, the audience was up just 3% from the month before, and in prime time there was a loss of 3%.

In April, Cho Seung Hui , a disturbed college student, shot to death 32 students and faculty members (and himself) on Virginia Tech’s campus in Blacksburg, Va. Of all media, cable news again invested the most time, offering intensive coverage for two weeks.⁴ Here, viewers did respond. Daytime viewership rose 9% over the previous month and prime time rose 6%.

In June and August, audiences spiked to smaller degrees when twin car bombs were found in London and, in the U.S., a bridge collapsed in Minnesota, workers died in a Utah mine and the presidential election campaign got under way. (The period saw three televised presidential debates and the Iowa straw poll). But when wildfires spread across California in October and took up half the cable news time during one week, that, too, failed to produce an audience spike over the previous month.

So, while on average the number of viewers in 2007 increased over the previous year, there were no significant audience spikes during the year’s breaking news events, at least not the kind that cable news used to see. The biggest audience draw on cable news over the past decade was the start of the Iraq war in 2003, followed by Hurricane Katrina coverage in September 2005.

It is possible that 2007 was simply a modest year for breaking news. It is also possible, as we began tracking in 2006, that cable news now must compete with the Internet as a source for immediate breaking news, and that these more modest spikes will become the norm. The campaign year of 2008 may not be an ideal test of that. It could be influenced how much coverage the networks offer and by higher interest in the 2008 race than in 2004. But this long-term question deserves more scrutiny.

Cable News Prime Time Audience during Big Events

1998-2007, Channels Combined

Design Your Own Chart

Source: Nielsen Media Research, used under license Note: Average viewers in the respective month on Fox News, MSNBC and CNN combined

If breaking news is losing appeal, however, what explains the slight rise in cable audiences? The shows growing fastest in cable news tend to be personality driven. The fastest-growing shows in prime time are Nancy Grace (up 23%) on Headline News, Keith Olbermann on MSNBC (up 15%) and Bill O’Reilly on Fox News (up 11%), still by far the No. 1-rated program on cable news. These shows are also the most heavily promoted on respective channels.

Some analysts believe that cable channels, as they reach saturation point in terms of new audiences, are creating these confrontational shows or personalities to draw viewers in – in effect, more entertainment-like programming.

If we look at the prime-time lineup from 7 to 10 p.m. on cable news, each network differs in its mix of talk and news. MSNBC’s first three programs are all personality-driven – Chris Matthews, Keith Olbermann and Dan Abrams, all of whom mix top stories with opinion and talk. They then close out the prime-time with a non-news program, MSNBC documentaries.

Fox News bookends its two opinion shows, the O’Reilly Factor and Hannity & Colmes, with Shepard Smith’s Fox Report on one end, a traditional newscast with a lead anchor, and the more crime-news-oriented On the Record with Greta Van Susteran on the other. It also airs another newscast, Special Report with Brit Hume, before Smith.

CNN alternates talk and news. It begins prime time with a news-and-commentary combination, Lou Dobbs Tonight, then moves to news (Out in the Open), followed by the talk show Larry King Live, whose one-on-interview format with newsmakers and celebrities continues to attract the largest audiences on CNN, as it has historically, and then goes back to news with Anderson Cooper 360. On Headline News, CNN seems to counter-program by only airing opinion programming with Glenn Beck and Nancy Grace. (See more about the distinction between the cable shows in Cable TV Content Analysis.)

Cable News Shows at Prime Time
November 2007

Source: Nielsen Media Research on Media Bistro.com
Note: Numbers in parentheses are November 2007 average viewership, persons 2+

Fewer spikes could also be a result of more people going online to get breaking news, perhaps making the Internet the real beneficiary of audience spikes. (See more about the growth of news online in our Online chapter.)

2007: Channel by Channel

Which news channels were growing? For much of the last decade, only Fox News grew steadily, much of that coming at the expense of CNN. MSNBC struggled to get traction of any kind.

In 2006, that changed. Fox News began to decline, and the perennial third-place channel, MSNBC, began to grow. What happened in 2007?

The growth at MSNBC continued steadily. Fox News, still by far the dominant cable channel in audience, grew over the previous year, but only slightly.CNN showed some strength of its own for a second year, and its sibling, Headline News, also saw some notable growth. Indeed, in 2007 if we were to add Headline News’s median prime-time viewers to CNN’s audience, the total (about 1 million) gives some competition to, but still does not top, Fox News’s median audience of 1.4 million.⁵

Cable News Prime Time Audience in 2007

Channel by Channel, Median Audience

Design Your Own Chart

Source: PEJ Analysis of Nielsen Media Research, used under license

MSNBC

While it continues to lag behind its competition, MSNBC had reason to cheer as, by any measure, it increased its audience substantially in 2007.

The channel’s median daytime audience grew 10% to 270,000 viewers, up from 247,000 a year earlier. (Using mean, audience grew 14% – from 244,000 the year before to 278,000 viewers in 2007.)

MSNBC’s numbers during prime time were even more remarkable. The median audience grew 36%, to nearly 490,000 viewers a night in 2007, up from a median of 361,000 during in 2006. Using mean, there was similar double-digit growth, of 32%.

MSNBC also managed to score the steadiest growth – in the double-digits at prime time in every month in 2007 except December. Even at daytime, only the last three months of the year broke this trend.

MSNBC at Prime Time

Median Audience, 2007 vs. 2006

Design Your Own Chart

Source: PEJ Analysis of Nielsen Media Research, used under license

MSNBC at Daytime

Median Audience, 2007 vs. 2006

Design Your Own Chart

Source: PEJ Analysis of Nielsen Media Research, used under license

MSNBC was keen to attribute that steady growth to a number of factors, from its focus on political news to the rising popularity of its loquacious evening talk-show host, Keith Olbermann.

In Countdown with Keith Olbermann, the host picks five top stories, each accompanied by his strong opinion. Olbermann’s continuing criticism of the Bush administration has coincided with a ratings increase; the show had the top ratings on the channel throughout the year.

MSNBC’s other big-name anchors also brought in substantial viewers (Also see News Investment.) Chris Matthews and Dan Abrams, who returned as anchor in late 2007, led in audience numbers on the channel, as did Tucker Carlson in daytime (his show was canceled in March 2008) and Joe Scarborough in early morning.

MSNBC’s success, however, must be kept in context – when compared to the year before, none of these time slots saw growth. The time slot now filled by Abrams (formerly by Scarborough) fell 16% from November 2006 to November 2007. Carlson dropped about 10% and Matthews dipped 8.5%.

Top Shows on MSNBC
November 2006 vs. November 2007

Source: Nielsen Media Research on Media Bistro.com
Note: *Tucker was replaced by Race for the White House in March, 2008; all numbers are average viewership, persons 2+; shows ranked by November 2007 viewership

And compared to competition, its total audience figures still lag behind both CNN and Fox News. Its prime-time audience, together, is about one-third of Fox News’ and about a quarter million viewers behind CNN’s.⁶ And even its top-rated show (Olbermann) trails its competition at 8 p.m., the O’Reilly Factor, by more than 150,000 viewers.

The Fox News Channel

The Fox News channel remained comfortably ahead in terms of viewers, just as it has the past decade. But there are more signals that perhaps the network has reached a ceiling.

In 2007, the cable news leader continued to have the largest viewership among the three channels, but showed little or no growth over the previous year. At prime time, the median audience grew just 2% to 1.41 million viewers, up from 1.37 million the year before.

The picture looked similar when measured as simple mean – a 4% growth, from an average of 1.38 million viewers to 1.43 million in 2007.

During daytime, the median audience grew 3% to 814,000 on average. The mean audience fell by 1% to 817,000, down from 824,000 the year before.

Even with growth flat, however, Fox News’ median prime-time audience of 1.41 million is nearly triple MSNBC’s (489,000) and nearly double CNN’s (736,000).

Seen another way, that meant that more than half (53%) of all viewers watching prime-time cable news in 2007 were tuned into the Fox News Channel. And according to trade magazines, the third quarter of 2007 marked the 23rd consecutive quarter that Fox News had topped CNN and MSNBC.⁷

That dominance carried over to daytime, when 51% of all viewers tuned to Fox News, again about double CNN and more than triple MSNBC. Fox News averaged 817,000 viewers, compared with 485,000 for CNN and 278,000 for MSNBC.

It also was home to eight of the top 10 shows, according to Nielsen rankings. The prime-time talk show conducted by Bill O’Reilly, O’Reilly Factor, remained the most-watched show on cable news, averaging about 2 million viewers a night, for the sixth year in a row.

CNN

At CNN, the channel stopped the losses and even began to grow a little. But the news channel is still lodged firmly in second place, with MSNBC gaining ground.

In prime time, CNN attracted a median audience of 736,000 in 2007, an increase of 4% over the previous year’s 710,000. That was somewhat better than its growth during the day, with a 2% growth in median audience – 482,000 compared with 474,000 in 2006.

Using mean, the growth was similar – just 2% at prime time, as average viewership went up to 753,000, compared with 739,000 in 2006. And during the day, viewers increased by 3% -- 485,000 viewers vs. 472,000 the year before.

As in previous years, individual shows continued to pull in big ratings but, apart from the veteran host Larry King, none of the CNN personalities or shows broke into the top-10 list of cable news shows.

The other top performers for the channel were Lou Dobbs – like Olbermann and O’Reilly, a mix of strident opinion and news – and newsman Anderson Cooper. These prime time shows contributed in part to the growth CNN has seen overall – in 2007, its prime-time audience growth beat out daytime growth.

In CNN’s decade-long struggle against Fox News, one measurement by which it has consistently surpassed its rival is in “Cume,” short for cumulative audience. This calculation refers to the number of individual (or “unique”) viewers who watch a channel over a fixed period of time.⁸ Ratings, by contrast, measures how many people are watching at any given moment. If more people watch CNN over time, though fewer at any given moment, CNN can claim that it has a wider reach. And indeed, historically CNN has used this metric to sell itself to advertisers despite Fox’s advantage in ratings.

In the third quarter of 2007, CNN released figures showing it maintained that lead.

Cable News - Cumulative Audience
Number of Unique Viewers (in thousands)

Source: Nielsen Media Research on Media Bistro.com, retrieved on October 3, 2007
Note:Select months, depending on data available; Channels ranked by Q3 2007 Viewership

CNN Headline News

CNN’s sister channel, Headline News, has in the past two years broken away from its typical 24-hour headlines-only format to include distinct morning and evening news programming, and the changes seem to have worked in its favor.

In 2007, CNN Headline News had an 18% increase in prime-time median audience (353,000 viewers) and 8% (235,000) during the day. That rate of growth is better than both CNN and Fox News, and resembles that of MSNBC.

CNN Headline News
Median Audience

Source: Nielsen Media Research used under license

If we look at individual shows on the channel, CNN Headline News’ top shows – essentially opinion or entertainment news—continued to attract a substantial number of viewers. Glenn Beck and Nancy Grace, prominent in any analysis of CNN Headline News in 2006 as it ramped up efforts to carve out a niche for itself, continued to be two of the channel’s three highest-rated shows.

The Nancy Grace Show was Headline News’ top performer, with an average of 489,000 viewers in November 2007. When compared to the competition, though, the show lagged behind. Grace occupied the personality-dominated 8 p.m. slot, where her audience figures were no match for Fox News’ O’Reilly Factor and came in at half of those for MSNBC’s Countdown With Keith Olbermann. Headline News’ entertainment news show, Showbiz Tonight, was its second-most-watched show, with 381,000 viewers.

The Glenn Beck show, which airs an hour earlier, at 7 p.m., had 367,000 viewers in November 2007. It competes with its sister channel CNN’s Lou Dobbs Tonight, MSNBC’s Hardball With Chris Matthews and the only hard-news show in that slot, Shepard Smith’s Studio B on Fox News.

Top Shows on CNN Headline News
November 2006 vs. November 2007, by Viewership

Source: Nielsen Media Research on Media Bistro.com
Note: Numbers are average viewership, persons 2+; Shows ranked by November 2007 Viewership

Who Is Watching

Survey data have shown that there are some clear partisan differences among those tuning into the three cable news channels.

According to data from the Pew Research Center for the People and Press, CNN and MSNBC had more Democrats tuning in, while Fox News’ audience leaned Republican.

Looking at party affiliation, CNN and MSNBC had nearly identical viewer demographics. Almost half of both of their audience members were Democrats – 48% for MSNBC and 45% for CNN. Independents made up about a quarter (26%) of viewers, while Republicans took up the smallest share – 22% for CNN, and only 19% for MSNBC.

On Fox News, the trend was somewhat reversed. The largest share of its audience – 38% -- were Republicans, followed by Democrats (31%) and independents (22%)^.9

Measuring the Audience

Audience trends in television can be measured using one of two calculations -- median or mean (simple average).

This report offers the numbers in both forms.

The cable channels prefer to calculate their year-to-year ratings by converting the Nielsen ratings data into annual “averages” using the mean. Academic advisers to the Project have persuaded us, however, that the median is a better indicator of core audience.

Here is why.

Mean is calculated by taking each month’s ratings, adding them together and dividing by the number of months. By that accounting, wild fluctuations in the audience due to occasional events can heavily influence the numbers.

Median examines all the monthly numbers in a year and identifies which one is most typical, or falls in the middle (the middle value).

Esther Thorson, acting dean of the University of Missouri’s School of Journalism, explains the choice of median rather than mean this way: The median is a better indicator of central tendency when there are extremely high or extremely low observations in the distribution. Those greatly influence the mean, but have little effect on the median. In other words, the median is the closest on the average to all of the scores in the distribution. Very high levels of cable viewing during a big event pull the mean too far away from realistic viewing scores. For that reason, the median is the better indicator of typical viewing levels.

For instance, in 2003, when the war in Iraq began, mean viewership numbers showed the cable news business booming — up 34% for daytime and 32% for prime time from the year before. But using the median, the middle value of the 12 months of that year, the picture that emerged was that cable viewership was basically stable. It showed no growth during the day and a gain of just 3% in prime time. How can that be? The reason is that cable news did not retain the audience that it gained during those first weeks of the war. Median was a better reflection of a year in which viewership spiked only for two months and then fell back down again.

In 2006, the median numbers actually meant better news for cable channels. Taking the average viewership for 2006 and comparing it to 2005 shows a significant decline in the cable news audience — down 11% for daytime and 12% for prime time. But using the median, there was a decline of just 4% during the day and 8% in prime time. Thus in times of major breaking news, mean can help the numbers. But in years when there are fewer major events, the mean will suffer. The spikes, when using mean, can cut both ways.

In short, our research team and the staff at the Pew Research Center believe the median is the fairest way to try to understand the core audience for cable, given the volatility of ratings spikes. The mean, or simple average, tends to be disproportionately inflated by the spikes and, consequently, also exaggerates any declines in cable audiences when those spikes do not occur. In contrast, median offers a truer sense of the core or base audience, those people who are watching day in and day out, without ignoring the cumulative effect of the size of the audience that gathers momentarily if extraordinary things happen.

Footnotes

1. We define daytime as 6 a.m. to 7 p.m., and prime time as 7 p.m. to 11 p.m. The project began collecting yearly data on CNN Headline News in 2007 (see more in respective section.)

2. Hurricane Katrina represented something of a milestone in where people turn for breaking news coverage. For the first time, the Internet rivaled cable TV as the place people turned for to learn about the latest developments, browse through archived footage, and even contribute to the story themselves – witnessing a huge growth in citizen journalism (see Online Audience in our 2006 report.) In a September 2005 survey during the aftermath of Hurricane Katrina, 21% reported going to the Internet for news about Katrina. By comparison, 31% tuned into CNN, while 22% went to Fox News and only 9% to MSNBC. Nearly a year later, in August 2006, the numbers were even more telling. People going for news on the Internet, at 21%, were almost at par with CNN (24%) and Fox News (20%) and much ahead of MSNBC (6%). In 2007, the Virginia Tech shooting mirrored this trend – indeed, its media coverage provided something of a case study of how a news event could be parceled out in a multi-platform world (see more in Digital). Survey results from Pew Research Center for the People & the Press, “Internet News Audience Highly Critical of News Organizations,” Pew Research Center, August 9, 2007.

3. According to PEJ’s news coverage index, cable news devoted 30% of its newshole on the Anna Nicole Smith case at the height of the event, and over all it was the third-biggest story on cable in the first quarter of 2007. See more online at: http://www.journalism.org/node/5716

4. PEJ News Coverage Index, “Campus Rampage is 2007’s biggest story by far,” April 15-20, 2007, Online at: http://www.journalism.org/node/5197

5. CNN’s median prime time audience in 2007 was 736,000 and CNN Headline News’ was 353,000. They total 1089,000. Fox News channel’s median primetime audience was 1405,000 in 2007.

6. In 2007, Nielsen Media Research data indicates that median prime time audience of MSNBC was 489,000. CNN had 736,000 viewers and Fox News, 1,405,000.

7. Steve Donahue, “Fox News Dominates News Ratings,” MultiChannel News, October 2, 2007

8. Viewers are counted as part of a TV channel’s Cume measurement if they tune in for six minutes or longer (they are typically calculated over the course of a month). Like average audience, Cume is measured by Nielsen Media Research.

9. All numbers from the Pew Research Center’s biennial media consumption survey conducted from April 27 to May 22, 2006. Pew Research Center for the People & the Press, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006

Economics

By the Project for Excellence in Journalism

Financially, cable news continued to be a robustly growing business in 2007. Fox News grew most. MSNBC inched its way into healthier economic territory. CNN and CNN Headline News remained steady.

But when we look at the expectations from Wall Street, the story becomes more nuanced. In examining how the news channels did compared with the revenue and profit estimates from analysts for 2006, MSNBC actually exceeded expectations, CNN (including Headline News) hit the mark, and Fox News fell short.¹

Profits

Starting with the bottom line, the cable news industry continued to increase profits at a substantial rate in 2007.

According to estimates by SNL Kagan, a leading financial research firm,² the three cable news channels were projected to earn a combined $791 million in pre-tax profits in 2007, a 20% growth over the $657 million the year before.

Fox News again was projected to have the biggest growth in profits. Kagan expected it to earn $347 million in profits in 2007, a jump of 30% over the $266 million the year before.³

Analysts, as they have the past two years, again overreached in projecting that Fox News would overtake CNN in profits. Every year, however, Fox News chips away at the gap, and its rate of growth continues to be much higher than CNN’s.

If it does match projections, Fox News would earn about $10 million more than CNN ($347 million to CNN’s $337). In 2006, however, it fell $60 million short of projections and ended up lagging behind CNN.

CNN, whose numbers include CNN Headline News,⁴ was projected to see a more modest 10% growth in profits. In 2007, it was expected to earn $337 million, up from $307 million in 2006. Its revised figures for 2006 were pretty much what analysts had projected (just short of estimates by about $3 million).

Cable News - Profits
2007 vs. 2006, in Millions

Source: SNL Kagan, a division of SNL Financial LLC
Note: Numbers are estimates

Considering that it first earned profits in 2004, MSNBC has had a good run the past two years. It was expecting to earn $108 million in profits in 2007, a noteworthy 28% jump over $84 million the year before. That figure of $84 million was much better than what analysts had expected it to be in 2006, and $20 million more than projections the year before.

Cable News Profitability

1997-2007, by Channel

Design Your Own Chart

Source: SNL Kagan, a division of SNL Financial LLC Note: CNN figures include CNN Headline News

Revenues

Profits are the difference between the revenues channels bring in and the expenses they pay out (see discussion on their expenses in News Investment). In 2007, all three channels are expected to see steady revenue growth.

Let’s look at each channel individually.

Having spent its first decade establishing a formidable audience base, Fox News is reaping the financial benefits. Both advertisers and cable operators – the two main sources of revenue for a cable channel – now recognize the channel’s reach, and are paying accordingly.

In 2007, Fox News was projected to bring in revenue of $834 million, a 21% increase over the previous year’s $688 million — more than triple CNN’s growth rate and double that of MSNBC in 2007. Whether it will have reached those figures is not clear. As with profits, analysts tended to overreach in their expectations about how much Fox News would make in revenues in 2006. Fox News’ actual revenues in 2006 ($688 million) were roughly 10% lower than the expected $754 million.

CNN (these figures include only its two U.S. cable news channels, CNN and CNN Headline News), in contrast, has seen smaller growth, in the single digits, the past four years, but it has managed to keep a lead over Fox News in sheer dollars. It is projected to make $1.024 billion in 2007, growing about 7% over $961 million the year before. Its revised figures in 2006 show that it did not grow as expected, falling $24 million short of expectations.

MSNBC was projected to take in $299 million in total net revenue in 2007, a 10% improvement over its previous year's figure of $270 million. It should also be noted that, unlike its two competitors, MSNBC met projections for profits for 2006 ($269 million).

Cable News - Revenue
2007 vs. 2006, in Millions

Source: SNL Kagan, a division of SNL Financial LLC
Note: Numbers are estimates

Revenue Streams

Behind these earnings are cable’s two equally important sources of revenue – subscriber fees and advertisements.

CNN dominates when it comes to the contractual subscriber revenue, but Fox News now is thought to make more money from advertisers.

Cable News Revenue Streams

2007

Design Your Own Chart

Source: SNL Kagan, a division of SNL Financial LLC Note: CNN figures include CNN Headline News

These components are the bulk of a channel’s total’s revenue.⁵ We look at subscriber revenue and net ad revenue individually.

License Fee (Subscriber) Revenues

The less obvious revenue stream in cable, license fees, is the money paid by the cable systems to carry the channel. These are decided in the form of long-term deals negotiated in advance on a per-subscriber basis irrespective of how many subscribers actually end up watching the channel during the life of the deal. If a cable company enlarges its audience, it can renegotiate those license fees upward when contracts come up for renewal. Also, they tend to be multi-year contracts that have an escalating fee structure, so that every year sees a slight increase in the license fees and the agreed-upon rate is reached over the life of the contract.

CNN, the oldest 24-hour news network, has had the highest fees among the channels. In 2007, it still led, but Fox News greatly narrowed the gap.

For the past decade (since 1996,) CNN has earned more than 30 cents per subscriber. In 2007, it was expected to earn 46 cents. Sports and general entertainment channels handily beat out news channels in attracting higher fees. The highest fee paid to any cable channel is the $2.96 commanded by ESPN.

Cable News Monthly Revenue per Subscriber

1997-2007

Design Your Own Chart

Source: SNL Kagan, a division of SNL Financial LLC Note: CNN figures include CNN Headline News

When MSNBC started in 1996, its fee per subscriber was 13 cents per month and that has barely budged. Its 2007 projection, 15 cents, is the same as the past three years, and is the lowest fee per subscriber among the three rivals. That reflects the limited audience growth of the channel since its launch.

Fox News, on the other hand, has seen its fee increase over time and, in 2007, projections held that it would earn 33 cents per subscriber. From 2008 onward, these projections most likely will escalate even more rapidly as new multi-year contracts that Fox News has signed with cable operators start kicking in.

The channel began renewing its 10-year contracts in late 2006 and, according to media reports (nothing was declared officially), managed to triple its license fees. Using its high audience numbers and News Corp.’s stature as leverage, the channel was reported to have signed new contracts with all the major cable operators. Predictions of tough competition were, in the end, overrated as no cable operator wanted to lose the highly rated Fox News or tangle with News Corp. over other cable holdings.

The escalating fee structure of the contracts means that the Fox News channel will earn 75 cents and more per subscriber over the lifetime of the contract.⁶ These new rates make Fox News not only the highest paid news channel, but also put it among the top earners among all cable channels for subscription fees.

This distribution of license fee rates among the three rivals also mirrored the subscriber revenues that each channel makes.

CNN was projected to make the largest amount – taking in $512 million. This would be a small increase (6%) over the previous year’s $484 million. MSNBC was expected to see the same rate of 6% growth, $160 million in 2007 from $151 million the year before.

Fox News grew its subscriber revenue by more than a quarter, the biggest jump. In 2007, it was projected to make $359 million, a 26% increase over the $284 million in 2006. In actual dollars, though, this was still less than CNN.

Advertising Revenues

The other big revenue stream for cable channels is advertising. While cable news channels do not earn as much from advertisers as the broadcast networks or other, more popular, niche cable channels (like sports or entertainment programming), they do draw a comparatively affluent and loyal audience. This attracts advertising despite their relatively smaller audience base.

Advertising Costs on Television
2006, Select Networks

Source: SNL Kagan, a division of SNL Financial LLC
Note: The dollar amount represents the average cost an advertiser pays per every 1,000 people who view the ad (termed CPM or Cost per Thousand in the advertising industry). For example, if Nielsen estimates that 1 million people see Fox News each day, an ad would cost $3.43 times a thousand (or $3,430 per ad).

And, of the two revenue streams, many see advertising as having greater potential for long-term growth. The prospect of signing new cable subscribers, or getting existing ones to pay substantially more each month for the cable bill, is more constrained.

In 2007, all three cable news channels were projected to increase their revenues from advertising. The biggest growth is expected to come from Fox News.

Cable News - Net Ad Revenue
2000-2007, in Millions

Source: SNL Kagan, a division of SNL Financial LLC
Note: Net Ad Revenue refers to revenue generated after discounting the commission that goes to advertising agencies.

MSNBC, which has the smallest share, actually did better than expected in 2006. And analysts project that ad revenues will grow by 16% to $135 million in 2007, up from the $117 million the year before.

CNN made higher ad revenues than Fox News in 2006, but not by that much. As for 2007, revenues were projected to grow 7% to $428 million up from $399 million.

Even though Fox News has not been able to overtake CNN the past few years, despite predictions, analysts again project that it might in 2007, with $459 million, a growth of 18% over the $389 million in 2006.

If the trend for Both CNN and Fox News of failing to meet projections for ad revenues continues, CNN could still emerge as the highest grosser. But it is losing ground fast.

Still, as industry analyst Andrew Tyndall sees it, so far anyway, CNN and Headline News have been able to buck the trend of advertisers following the most eyeballs (see Audience). After years of lagging behind in viewers, ad revenues for CNN and Headline news continue to be comparable to Fox News. This suggests, according to Tyndall, that their audiences continue to be more valuable to advertisers.

Footnotes

1. Because the news channels are smaller entities of larger media conglomerates (see ownership/top media owners list), their financials are typically not released to the public. As a result, media research firms – like SNL Kagan and Veronis Suhler Stevenson, which we use for this report – use a number of network and industry data, including figures from advertisers, industry associations and firms specializing in media audience, to arrive at estimates each year for the channels. As more information is made available every year, estimates are revised. We have used data from the same sources in every successive annual report to maintain consistency.

2. Various market analyst groups offer roughly similar projections for cable revenue and profits. For the sake of clarity here, we will rely on one them, SNL Kagan, formerly known as Kagan Research. It is one of the most experienced media and communications analysis and research firms in the U.S., widely cited in the general press and in trade publications. Kagan provides us with economic profiles for the individual cable news channels.

3. Releasing figures for the fourth quarter of its fiscal year -- April to June 2007 – News Corp., the parent company of Fox News, said that its cable networks, which include the news channel along with other sports and regional channels, saw operating income (profits) rise 46%. Seth Sutel, “Cable Networks Boost News Corp. Earnings,” Associated Press, August 8, 2007

4. SNL Kagan’s projections for CNN include only CNN TV (aired in the U.S.) and CNN Headline News because they are sold as a package to advertisers and distributors. They do not include CNN’s other operations.

5. SNL Kagan’s calculation of total net revenue is the sum of subscriber revenue, net ad revenue and other revenue, which is insignificant compared to the other two.

6. Mike Reynolds, “Fox News and Time Warner Do Business,” Multichannel News, January 8, 2007.

Ownership

By the Project for Excellence in Journalism

There were no significant ripples when it came to cable news ownership.

MSNBC moved in with its more established corporate sibling, NBC News, to make the organization more efficient and share resources.

News Corp., the parent company of Fox News, kept analysts busy in 2007 as it finally launched its long-anticipated business channel and turned even more heads by acquiring the Dow Jones & Company, a move that offers possibilities to both the new Fox Business channel as well as for Fox News, its online presence and more.

MSNBC

At MSNBC, 2007 was marked by consolidating operations with NBC in New York as part of parent company General Electric’s cost-cutting program that it marketed as NBC 2.0,¹ the branding of programming around politics, and the positioning of its programming, not so explicitly marketed, as a liberal alternative to Fox News. In October 2007, nearly 600 MSNBC employees left what had been the channel’s home base for 10 years in Secaucus, N.J., and moved across the Hudson River into the Rockefeller Center offices of NBC News in Manhattan. The new collective, operating under the NBC News banner, includes NBC News, MSNBC, New York local station WNBC-TV, Spanish-language network Telemundo and the online news site MSNBC.com.

GE’s other 24-hour cable channel, CNBC, which focuses on business news, continued to be housed in Englewood Cliffs, N.J. (see more about the channel in our discussion on Business News).

The new offices include state-of-the-art studios and other infrastructure investments. The on-air layout includes varied sets for anchors to use as news unfolds. In all, the two studios — NBC News and MSNBC — produce 12.5 hours of live television per day.²

One of the costs of NBC2.0 materialized in December 2007, when NBC Universal made good on plans to reduce staff. NBC’s president, Jeff Zucker. reported plans to cut 1% of the workforce at NBC News, which translated into 15 to 20 jobs spread across MSNBC and NBC News (which together have about 2,000 employees).³

In terms of programming strategy, MSNBC stuck to the same path it started down during the mid-term elections in 2006, focusing itself around politics (see more in our analysis of Politics and Cable News.)

There were few changes in management as dust settled from the refocusing of 2006 (see 2007 report.) Dan Abrams, formerly general manager, went back to the anchor chair of a legal affairs/true crime program. NBC’s senior vice president, Phil Griffin, took over general manager duties and daily operations of the channel, while a new hire, Shannon High-Bassalik, became managing editor of MSNBC in October 2007.

CNN

Time Warner, the world’s largest media company and owner of CNN, readied itself in 2007 for what may be the transition to its next era. The year ended with the departure of its CEO, Richard P