US: CNN and ABC News Mull Merger

26 September 2002

Cable news giant CNN and Disney-owned ABC News are in renewed talks about merging their operations.

The two sides have been in on-off negotiations for well over a year, mostly about pooling newsgathering activities. However, according to the ever-anonymous ‘people close to the situation’, those talks have intensified and are now focusing on a full-blown merger.

Rising newsgathering costs and the continued ad slump have prompted new interest in a combined operation, which would produce estimated savings of $100 million (€102m; £64m). The matter was even brought up at last week’s board meeting of CNN’s parent, AOL Time Warner – a sign that it is being given serious consideration.

Under the latest proposals, CNN would take a majority stake in the venture, as its annual profits of over $200m dwarf the $60m generated by ABC News.

As well as saving money, the combination has pluses for both sides. ABC News would gain a 24-hour service and have access to CNN’s network of news bureaux, while CNN would strengthen its offering with the addition of its broadcast partner’s star anchors.

However, some large obstacles stand in the way, such as how to split ad revenues and what to do about CNN’s news footage supply deals with other broadcasters, not to mention potential hostility from federal regulators.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff