No imminent merger likely between ABC News and CNN

November 12, 2002

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No imminent merger likely between ABC News and CNN

NEW YORK – Talk of an early merger between ABC News and CNN to create a single television news operation looks increasingly unlikely, as it emerges there have been no serious talks between the two sides.

News of a potential merger first emerged in September, but yesterday Walter Isaacson, chairman and chief executive of CNN News Group, said that the two news operations had not "sat around the table and hammered out any of these issues in the past couple of months".

News of a possible deal emerged in September. Talk of its imminence was fuelled last month by comments made by Disney CEO Michael Eisner, who said that "I think I can say I'd like it to happen".

The deal would give ABC access to CNN's global audience, while CNN would break into millions more American homes. Eisner said that a deal was also favoured by AOL Time Warner CEO Richard Parsons.

The deal would see AOL Time Warner control two thirds of the new venture, which would have revenues of more than $1.6bn (£1bn), with $600m accounted for by ABC News.

AOL Time Warner has been shopping around for a partner for some time. It was first in talks with Viacom-owned CBS, but these talks stalled on CBS's reluctance to give up control of its news operation.

Speaking to Reuters, Isaacson said that an ABC-CNN merger would be beneficial but was not necessary for CNN. Despite that, he added that a merger would help ABC and CNN cover global news at a lower cost.

"At some point in the next few months we are going to get closer to a concept of a deal or are going to decide that we aren't going to do it," he said.

It is unclear what the internal structure of the new operation would be like, but it comes at a time when CNN is facing ever-increasing competition in the cable news market, with the Fox News Channel and MSNBC providing strong competition.

The pressure to do a deal has been increased by the advertising downturn and the drain on AOL Time Warner caused by its troubled internet division America Online. ABC has suffered poor ratings and its news operation, although respected, has high overheads and expensive anchor stars such as Peter Jennings, Barbara Walters and Diane Sawyer.

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