Battle to Buy FNN Reflects Interest In Financial News
NEW YORK — THE bidding war for the financially troubled but viewer-rich Financial News Network (FNN) on cable television underscores a continued growing interest in business news in general. According to the Times-Mirror News Interest Index, produced by the Times Mirror Center for the People and the Press, in Washington, interest in economic news doubled during the last half of 1990, as the United States slipped deeper into recession. In November of 1990, 39 percent of all Americans were interested in economic news, compared with 29 percent in September, and 18 percent in May.
"Circulation is up at the business magazines, newspapers have expanded their financial coverage, there are more people listening to business news on the radio, and there's just a growing demand for business and consumer information," says an official for Consumer News and Business Channel (CNBC), the apparent winner in the competition for FNN.
But growing interest is not linked just to the economic downturn. According to Audit Bureau of Circulation figures, more subscribers have been signing onto business magazines. Thus, circulation is up in the past five years for Forbes, Fortune, and Business Week, to name a few.
CNBC, begun in 1989 and based in Fort Lee, N.J., is a cable news and information channel reaching 18 million households. FNN, launched in 1981 and based in New York, reaches 35 million households.
Sale clouded by antitrust concerns
Last week a US bankruptcy court here approved the sale of FNN to CNBC, owned by NBC, a subsidiary of General Electric Company. In doing so, the court rejected a joint bid for FNN by Dow Jones & Co. and Group W Satellite Communications, a subsidiary of Westinghouse Electric Corporation. FNN, 47 percent-owned by Infotechnology Inc., filed for Chapter 11 bankruptcy protection last month. CNBC's bid for FNN was $115 million. FNN has liabilities of about $145 million.
The bankruptcy decision could still be overturned, since Dow Jones and Group W say they will appeal, based on antitrust considerations. The Federal Trade Commission is also undertaking an investigation of an FNN takeover by CNBC. Were the deal to be consummated, CNBC would lose its only major cable competitor, although there are other general-interest television news channels, such as CNN and Headline News, both ventures of Turner Broadcasting Company. Further, on May 1 the Christian Science Publishing Society will launch The Monitor Channel, a 24-hour cable news and information network.
Cutbacks in television news
Experts note that the battle over FNN comes against a backdrop of tough times for television news in general. Overall advertising dollars are harder to capture, given the recession. Network staffs are being trimmed. A significant number of employees, for example, will be asked to take cuts or will be fired at CBS News, sources have indicated. CBS is expected to post a loss estimated at up to $17 million for the first quarter.
Both ABC and NBC also have been looking for ways to cuts operating costs, including in their news divisions.
"The news side of television is the one area where television executives have the ability to substantially control costs," says Christopher Dixon, an analyst for Kidder, Peabody & Co. With original programming and sports, he says, costs are difficult to contain, given salary demands and other factors. Network executives continue to see news as a vital part of their mix, he says.
"We have the most affluent viewing audience on cable," says FNN spokesman Brian Lewis. He predicts the interest in financial news will continue to grow. In terms of new subscribers, "FNN was the second-fastest-growing channel in cable TV during February," he says. First was a music-video channel.