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Financially, CNN is a lot less steady.
Although Turner acknowledges he lost an estimated $2 million a month in the early stages, he contends that CNN was nearly in the black within 18 months of startup. But the costs of CNN2 and a big new promotional campaign, everyone agrees, have pushed the project back into the red: losses for CNN averaged $1.1 million a month despite monthly revenues of $3.4 million during the first six months of 1982, and CNN2's monthly losses were about $800,000 more. With the lagging U.S. economy damping down advertising revenues, Turner has abandoned his projection that CNN can make a profit this year. Turner's troubles have led many industry observers to predict that within the next year or two he will have to sell or take in a partner, or else see CNN go bankrupt (the total value of his holdings: $250 million to $300 million, says a top-rank video executive). Turner's financing includes $50 million in loans at steep interest from Citicorp and Manufacturers Hanover Trust. In borrowing from them, he estimated losses of $32 million from CNN's start through the first half of this year; he is $6 million over that total.
Even more worrisome, after two years of savoring competitive victories, Turner faces some hard-driving rivals on his own turf.
Units of ABC and Westinghouse Group W, the country's largest non-network station group, have joined to offer their own 24-hour cable news headline service, Satellite News Channels, which started airing June 21. To date, however, SNC is less varied and ambitious than CNN. It offers three 18-min. newscasts an hour, plus 'quick regional news bulletins. SNC, like CNN2, is intended for brief sampling rather than the extended viewing sought by CNN; the new service is explicitly patterned after similarly repetitive all-news radio stations. SNC's ABC footage is limited to stories that do not feature network correspondents; the network thus provides only 15% to 20% of the total film and tape. Even so, foreign coverage has been generally solid. But for its first six weeks, SNC had on board only ten of the 24 regional TV stations that are supposed to supply U.S. news. That reporting system will not be complete until late December.
SNC's real threat to CNN, however, is financial, not editorial. While Turner charges cable systems at least 150 a subscriber each month for CNN, SNC is offered free. In fact, cable operators who had signed on by the debut date were granted a start-up bonus of 500 a household. The financial incentives helped: SNC has already signed up systems with 3 million subscribers, including 620,000 from Westinghouse Group W's own cable systems. Only about a dozen cable systems, though, have dropped CNN to take SNC.
To substitute SNC for CNN may be risky. Admits George Livergood, who until the end of May was regional vice president of Group W systems in the Southwest: "Once you give something to a subscriber, you never take it away." When Livergood operated Theta Cable in West Los Angeles (now Group W Cable), an engineering snafu deprived 9,000 customers of CNN during coverage of the first space shuttle flight. Says