Both Time Warner and News Corp. held their quarterly earnings calls yesterday, and the two signature news channels they own (CNN and Fox News Channel) were received in decidedly different ways.
Time Warner barely mentioned CNN during its call, though some comments from CFO John Martin may help explain why.
When discussing organic ad revenue growth, Martin said:
“domestic entertainment networks [TBS, TNT], together with kids and young adults [Cartoon Network, Adult Swim], grew advertising strong double digits in the quarter, and that was offset by mid-single-digit declines at domestic news [CNN].”
In other words, advertising is growing at a strong pace for Turner’s entertainment portfolio, but declining slightly at CNN.
Compare that to News Corp., which heaped praise upon Fox News during its call.
News Corp. CEO Rupert Murdoch and COO Chase Carey noted that FNC, along with FX, Fox Sports Net and the other cable networks accounted for 60% of news Corp.’s operating income. As in previous calls, Carey said that FNC is expected to see higher carriage fees than it currently receives.
To be fair, CNN had its most profitable year ever last year, but even then, its profits were likely far lower than what the entertainment channels generated.
In many respects that is what makes Fox News so unusual from a business standpoint. Not only is it profitable, but it is a profit driver for News Corp.
It used to be that news was a money-loser. In the world of cable news, all of the major players are turning a profit, but the ratings leader is also clearly the profit-leader.