The transformation of the news business might be taking its first big-name casualty soon.
The April 8 New York Times reported network-giant CBS is in negotiations with CNN to outsource its newsgathering operations. CNBC’s David Faber said the move was long overdue during his “Faber Report” segment on the April 8 “Squawk on the Street.”
“The news that CBS is once again considering a deal under which it would outsource some of its newsgathering operations to CNN – certain to get those critics out there who say, ‘Oh, this is the end of news as we know it on television.’ Well, if you haven’t noticed, news on television ended a long time ago, other than ’60 Minutes,’ which is by the way a CBS program. I challenge you to come up with actual newsgathering that is taking place on the networks. That ship has sailed.”
Faber interpreted the proposed move by CBS (NYSE: CBS) as a sign the mass media company was under pressure to cut some of its costs. CBS’s stock has taken a hit over the last nine months. Since trading at a stock price of $34.73 on July 20, 2007, it has fallen to just above $22 a share.
“If you’re [CBS CEO] Les Moonves, you’re looking for two things,” Faber said. “You’re looking for ways to cut costs in the face of what may be very slow-growing revenues, if not declining revenues … and you’re looking for how to get growing again.”
According to the report, CBS is suffering from problems in its radio division and lackluster local advertising sales by the 29 affiliates it owns, in addition to the costs incurred from its expensive newsgathering operations. “CBS Evening News” is a distant third behind ABC’s “World News with Charles Gibson” and “NBC Nightly News” in the ratings.
Another thing hurting CBS is a lack of a cable presence like its competitors NBC Universal (a subsidy of General Electric (NYSE: GE)), ABC (a subsidy of the Walt Disney Corporation (NYSE: DIS)) and News Corp (NYSE: NWS.A).
“[Y]ou don’t have the exposure to cable, which is – thank you very much – growing relatively well right now,” Faber added.
CBS News’ flagship programs, “Evening News,” has often been criticized by the Business & Media Institute for its one-sided global warming coverage and its continually downbeat economic reporting. The newscast’s business reporter, Anthony Mason, was referred to by “Evening News” anchor Katie Couric as “the grim reaper.”
“Yeah, we all knew news was done for anyway. The real question is what is CBS going to do to grow again?” Faber said.