How CNN could find its way onto the auction block

Things could look bleak at CNN with layoffs, pay cuts and a new digital programming model that may or may not work. But On The Money has learned that private equity firms are crunching numbers on a possible acquisition of the ratings-troubled network.

Don’t really hold your breath waiting for something to happen soon, my sources both at CNN and in the private equity industry tell me. The network’s parent company, Warner Bros. Discovery, is not yet purchasing CNN.

In fact, no company has made an offer, my sources tell me: the EP people I spoke with don’t really know how to really value the thing due to its problematic business model.

That said, I know of at least one large private equity firm (and probably more) that has crunched the numbers. Analysts estimate that CNN makes what appears to be a decent amount of money, around $750 million this year. That sounds good until you realize that’s down from over $1 billion in 2020; Cord cutting is taking its toll as people stop watching cable news, which means lower cable rates. CNN is an international news channel and therefore has high overhead costs.

When people cut the cord, you can’t charge as much for ads. WBD’s balance sheet shows advertising revenue is down to $1.5 billion for the third quarter, compared to $1.7 billion for the 2023 quarter.

Another problem: PE leaders also believe that the programming still veers too far to the left, where the consumer market is in decline, otherwise Kamala Harris would have been elected president.

As one executive at a large private equity firm told On The Money: “Yes, lots of sniffles, but people think it’s a waste of assets. »

It’s too hard. Full disclosure: I have friends there and respect the work of its top collaborators and producers. I know WBD leader David Zaslav well and honestly believe he wants the operation to work, mitigating what some on the right see as his left-wing political bias. He might keep it if he can stem the bleeding. Zas and his team believe that information can make money if they just find the right strategy.

Additionally, Mark Thompson, CEO of CNN, is a serious media executive who helped shape the successful digital strategy of The New York Times. If Zas and Thompson can make CNN work, attract those eyes fleeing cable to the evolving digital product, they will have created a news business model for the future. They may not have to look far to find buyers.