CNBC REPORTER: AOL Time Warner announcing they're going to lay off about 2,000 workers. This is on top of those 400 workers they're laying off at CNN. All the same, their company is beginning to see some synergies come together.
TERENCE SMITH: The first casualties of that synergy came last week, most visibly at one of AOL Time Warner's marquee holdings, the Cable News Network.
JAMES EARL JONES: Bringing you the world for 20 years, this is CNN.
TERENCE SMITH: The layoffs cut across all divisions of the now 20-year-old, 24-hour news network, with nearly one-third of the layoffs, 130 staffers, dropped from CNN's interactive operation. CNN's financial news network was particularly hard hit with four shows marked for cancellation.
The network's look will change: Some of the most familiar faces will be missing from CNN. Bernard Shaw, anchor of "Inside Politics," is retiring next month. Carl Rochelle, at CNN since 1984 on a variety of Washington beats, was let go with no advance notice. Others, like veteran Capitol Hill reporter Bob Franken, have accepted reassignments; he's headed to Los Angeles. Left largely untouched was CNN's vaunted and very profitable international operation, which is available to nearly one billion people worldwide. Media economics analysts like Nancy Maynard say these cuts are a product of a maturing cable news marketplace.
NANCY MAYNARD: When they started 20 years ago to scorn in the industry, generally, they were the cheap guys, you know-- no quality-- but they became a very important force. But they're not the only guy playing now.
TERENCE SMITH: Indeed, they are not. Facing dwindling ratings and stiff competition from MSNBC, Fox News Channel, and CNBC, CNN has set upon an extensive restructuring of both its staffing and programming.
WOLF BLITZER: Good evening. I'm Wolf Blitzer, reporting tonight from Capitol Hill…
TERENCE SMITH: The focus of CNN's retooling will be its primetime lineup. Former White House correspondent Wolf Blitzer anchors his own broadcast, followed by legal specialist Greta Van Susteren on "The Point." Ratings-winner Larry King will remain. Senior analyst Jeff Greenfield is slated to anchor his own program. The result of these changes: A personality-driven talk format at the expense of straight news reporting. Will this pull in viewers? CNN executives and their corporate overseers at AOL Time Warner, principally chief operating officer Robert Pittman, are banking that it will.
TERENCE SMITH: For more on CNN's changes and how it may affect the cable news business, we turn to Eason Jordan, president of newsgathering and news executive at CNN news group; to Reese Schonfeld, a co-founder of CNN with Ted Turner, whose new book is entitled "Me and Ted Against the World"; to Carl Rochelle, the former CNN aviation and Pentagon correspondent mentioned in the videotape; and to Tom Wolzien, the senior media analyst at Sanford C. Bernstein and Company. Welcome to you all.
Eason Jordan, what are the problems at CNN and how are these layoffs part of the solution?
EASON JORDAN, CNN news executive: Well, first of all, I wouldn't say there are big problems at CNN. We have a very healthy, robust business that is very, very successful-- successful journalistically, successful financially, successful operationally. We're a news organization now with 34 services across TV, radio, and Web platforms in 12 languages. We reach more people in more places in more languages than ever before.
TERENCE SMITH: Then why cut 400 folks?
EASON JORDAN: Because we believe that CNN can be more efficient. And we have more than 4,000 people at CNN, or we did up until these most recent changes. We now have 3,950 people at CNN, most of them journalists, more than 150 correspondents, and we are absolutely determined to be the very best in the news business across TV, radio, and the Web.
TERENCE SMITH: So efficiency was your principal goal?
EASON JORDAN: Well, what we decided to do after 20 years at CNN was step back and really look at the organization. We've grown organically over 20 years. When we started, we were in 1.7 million households with just one service in the United States -- today available on TV in more than 250 million households around the world and, of course, a very impressive Web service that's available to the entire world. But there was redundancy, we found in the system -- as we've grown organically over 20 years, we found that there was some duplication in the system and we also saw that the interactive area, which we expected to grow hugely, has grown at a more limited pace. It's still in a growth role and we are continuing to grow our services and CNN will continue to grow over time.
TERENCE SMITH: Okay. Carl Rochelle, how will this change the CNN that you were part of until last week?
CARL ROCHELLE, former CNN correspondent: Well, the CNN that I was part until last week had sort of been drifting away from the hard news coverage that I grew up with, that I learned, that we covered since the time I went with CNN. At one point, you could turn on your television and always be guaranteed of knowing exactly what was going on in the world. You're not going to see that anymore, but you haven't seen it for a while. You see a situation where the anchor at 11:00 in the morning is... has dogs on the show. You see a field report with Leon Harris and Lou Waters on a houseboat at the Atlanta Boat Show. That's not the CNN news that I had grown up working with and loving, and was proud to be a part of and would still be if I had a job there. You know, I would think that I would still be able to make a contribution, Terry.
TERENCE SMITH: Tom Wolzien, how do you read this as an analyst? And what do you think is the significance for cable news generally?
TOM WOLZIEN, Wall St. analyst: Well, Terence, there are really four things here involved: The competition, there's a slowdown in the economy and so the revenues are probably not coming in quite as fast as previously expected, it's the end of the political year. And every time there's a political year over, every four years, there are cutbacks in TV news organizations, just not quite as dramatic as this. And finally, as Eason said, the organization has been around for a long time so there's probably general tightening. It really is much more competition with Fox and with MSNBC. So they're trying to redesign and bring the revenues and costs into alignment here.
TERENCE SMITH: Reese Schonfeld, you were there. You were present at the creation. Do you... Does this make sense to you, these cuts and these changes?
REESE SCHONFELD, CNN co-founder: Only from one point of view. If AOL Time Warner promised Wall Street that they were going to save a billion dollars, somebody had to make a lot of cuts somewhere. And I have a feeling that these cuts may have nothing to do with CNN. It may be AOL Time Warner trying to meet its goal, what it promised Wall Street.
TERENCE SMITH: Eason Jordan, is that right? Is it basically about money?
EASON JORDAN: No, it's not. I don't have feelings about it. I know the realities of the situation. And I can absolutely tell you while clearly our reorganization was done in light of the merger, we were certainly mindful of that and there was some instruction for us to go back and look at CNN and make sure we were the best we could be, but it was not done with a mandate to go out and cut costs or cut jobs. It was done with a mandate to make sure that CNN is positioned as well as it should be, to go into its third decade of existence.
TERENCE SMITH: Carl Rochelle, you... go ahead.
CARL ROCHELLE: I'd raise a question there. In my particular area-- I'm only one of the people who were cut loose on this; there are a number of very good reporters-- but what about an aviation specialty? You can't cover aviation with someone who happens to be a private pilot and possibly report it. This is something I've been working at for close to 25 years. The other three networks-- NBC, CBS, and ABC-- all have full- time aviation reporters. In fact, three months ago, CNN was working trying to find a full-time aviation producer for me so that we could expand in this area. What do you do in a situation like a Kennedy crash, Egyptair, Alaska Air? Who do you go to who has the sources and the background? If that's redundancy, then, boy, I don't understand it.
TERENCE SMITH: Eason Jordan, what happens to that depth and experience?
EASON JORDAN: Well, first of all, Carl Rochelle is a very good correspondent and I am a big fan of his and we'll miss him at this network. At the same time we're left with 16 correspondents in Washington with a number of beats, including an aviation beat. We've created new reporting beats for education and religion. We're opening new bureaus. We're very much a growing news organization. Sure, we have work to do in certain areas. We're not as good as we think we could be. That's why we're undergoing a process of change.
CARL ROCHELLE: But what happens when the big story comes, the major story that requires 24 hours a day at the Pentagon, requires a half dozen reporters? Where do you go to, where do you get them from?
EASON JORDAN: Well, first of all, CNN has more journalists than ABC, CBS, NBC, Fox, and PBS put together. We have 150 full-fledged TV correspondents. We have more crews than any other television network in this country, so I feel like we have robust, very healthy news-gathering resources, and I’d take them up against anybody anytime.
TERENCE SMITH: Okay, Tom Wolzien, how much of this do you feel is driven by the competition that you alluded to from MSNBC and from Fox?
TOM WOLZIEN: I think most of it is probably competition driven. They probably wouldn't have taken a look had they not been looking at the ratings and seeing that there was some slippage going on. We all have, as viewers, much more choice than we ever did before. And that has major effects on an organization like this.
TERENCE SMITH: Reese Schonfeld you did a survey after the election about those ratings and about that competition between the three cable news networks. What did you learn?
REESE SCHONFELD: Well, in the homes where all three networks were available, Fox was first, CNN was second, MSNBC third. But the worst thing for CNN was the trend. CNN started out in that five-week period number one. In the second and third weeks, they were number two. In the fourth week they were tied for MSNBC for second, and in the last week MSNBC and Fox were both ahead of them and CNN was back down in the cellar.
But I'd like to go back to something that Eason Jordan said a minute ago about having all these numbers. I remember when we started CNN, everyone told us that we didn't have enough crews, we didn't have enough people, and the networks did just what Eason is doing: They said how many people they have, how many crews, how many bureaus and CNN has never had ratings as good as we had in those first two years. CNN's ratings are now down 70% from 1982. So it isn't the number of people and it isn't the number of crews. It's the quality of what you put on the air and the strength of your reporters that really brings you viewers.
TERENCE SMITH: Eason Jordan, how about those ratings and how much of a concern are they?
EASON JORDAN: First of all, I should say, I'm not trying to sell books. I'm trying to make CNN the best it can be.
REESE SCHONFELD: I resent that, Eason. You're trying to save your damn job!
EASON JORDAN: Now, come on. Come on, look, I mean CNN, you want to talk about CNN being out there where the news is. We just watched a very good segment on India. Let's talk about India. CNN is the only U.S. television network with a bureau in India. CNN is the only television network with four correspondents … reporting from India.
REESE SCHONFELD: BBC has a bureau in India.
EASON JORDAN: That's fine. But BBC to this moment has yet to do a live TV report from the quake zone in India where CNN has been doing it four days in a row.
TERENCE SMITH: Mr. Jordan, let me ask you this. What does it say about the patterns here, and how much of this is the direct competition that you do have now and you didn't have twenty years ago or ten years ago in this field? How much is that relevant to what's happening right now to CNN, and to what you see in the future of the cable news business?
EASON JORDAN: Well, clearly we're mindful of the competitive environment, but the competition is not just cable TV news in the United States. The competition is the Web with 20 million page views a day. CNN has a very successful Web service. Of course, we have Headline News, which Reese Schonfeld launched on our behalf. We have many TV networks, a dozen television networks, and we reach every country on the planet. And I think it would be a mistake to focus exclusively on one CNN network when we talk about the news marketplace. The reality is we have more services serving more people than ever before.
TERENCE SMITH: Tom Wolzien, what does the pattern say to you and fundamentally, is there room for three all-news cable channels on 24 hours a day?
TOM WOLZIEN: Sure there's probably room for them as long as the economics work. But what we're failing to realize here is that the new corporate owner of CNN provides a rather phenomenal additional distribution platform that neither MSNBC nor Fox has. You can right now, with a high-speed modem, double click on CNN for headline news, and in five seconds be rolling headline news and watching it streaming down into your computer. Nobody else has got that capability, and that will probably only expand CNN's distribution going forward.
TERENCE SMITH: Reese Schonfeld, what's the answer? What's the future and the right course of action for a CNN at this stage?
REESE SCHONFELD: I think CNN's got to find a way to differentiate itself from both Fox and MSNBC, and I don't think they found that way. I think they should be spending their time looking for it. Nobody's ever increased his ratings by firing people. What CNN has done now is essentially just getting ready, and we'll have to see what they do next. Can they bring in editorial people who will find an approach that will appeal to more viewers than Fox and MSNBC have?
TERENCE SMITH: Eason Jordan, in your memo to the staff, you described a future in which a single individual might go out and shoot a story, edit it, write it, narrate it, put it on the air. Is that the future and does that sustain the quality that you want to have?
EASON JORDAN: First of all, I wouldn't say that that would be the norm, but I would say that it can happen and it does happen. In fact, I’ve done it myself. I've been to North Korea as the first western journalist to go there to report on the drought and the famine there. And I went alone. I went for a week. I did not only TV videotape reports, I did live reports with a small hand-held camera, baggage that I just carried on the plane. So there are exceptional situations where it can certainly happen. And I think with increasing frequency-- not necessarily with one person, but smaller teams of two or three rather than four or five-- you'll see us operating far more efficiently and putting more people into the field as a result.
TERENCE SMITH: Carl Rochelle, does that sound realistic to you?
CARL ROCHELLE: Well, you can certainly do it. I, through my career particularly when I was working local years ago, I did shoot, did write, did edit, did put everything together and then put it on the air. And I don't think the product was nearly as good as when you had a professional cameraman – I’m sure Eason would agree with that – a professional cameraman and a professional editor. It's not about the ability to make pictures or to put edits together; it's more about the eye of the person who is doing it. And they're trained professionals in their end of the field, whereas I’m a trained professional as a reporter, not that I don't have the knowledge base. And yes, I could do it. Would it be as good as the stuff that I was doing with a professional crew? No. If you have two or three people on the team, maybe one writer -- maybe one reporter/writer, maybe you’ve got one shooter and maybe you have got one editor, that's a three-person team. That would work. It's a way to cut business -- cut prices, and it’s a way to get things on the air.
TERENCE SMITH: A new approach to the news business. Thank you all four very much.