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CNN: The Coming Cost Cataclysm

I found myself in Atlanta, stranded because of modern air travel. What to do with a few spare hours? The Atlanta Dot Net Web site had one suggestion. Tour CNN Headquarters. I navigated to this link and read here:

Ever wondered what the inside of a news studio looks like? Take the Inside CNN Studio Tour in Atlanta and view for yourself. Guests can take a 50-minute CNN studio tour featuring the Control Room Theater, Special Effects studio and Interactive News Desk section.

As a senior, I qualified for a $12 admission. My impressions:

1. The CNN studios in Atlanta occupied a building that once housed an amusement park. The cavernous atrium was a reminder of wasted money. The area sucked energy, heat in the winter and A/C in the summer. I tried to calculate the cost per square foot but I got a headache and the tour guide did not know how to respond to my question, “What is the total cubic feet of this atrium?” He smiled a lot and pointed out that CNN was the first 24 hour video news outlet.
2. There were a lot of people in the usable space in the gargantuan structure. There were security guards at every stairwell. There were security guards at the metal detector which I set off thus triggering a pat down. I had no contraband, and I did enjoy the frisk, quite up close and personal.
3. The guide pointed out that 20 percent of the staff were engaged in information technology. He pointed out cameras that were run from a control room, obviating the need for a human to keep the red eye in front of the talent. There were dozens of people performing work flow functions like research, writing, editing, and directing. The talent read stories that floated in front of their eyes so “eye contact was intimate”.

Stepping back after the tour, I reflected on my impressions and the three observations I summarized in the dot points above. I thought about the Google Wave technology. At some point in the future, I envisioned moving the CNN news process to the Wave system. I also thought about the one person television network that Leo LaPorte has built in Petaluma, California. I thought about the number of people on the tour who took pictures and made videos with mobile phones. I thought about the billboard ad I saw whilst riding Atlanta’s truncated mass transit system for high speed wireless networks. I through about the young man on the tour who sent SMS messages to his pals who were apparently interested in what he had to say about the inner sanctum of CNN.

Bottom-line: CNN is on track for a cost cataclysm. In my opinion, software can reduce the friction in the CNN process. By pushing news down to those with mobile devices and out to the fringes of civilization, a software based company can offer good enough video news without the punishing cost burden CNN as well as Bloomberg and Thomson Reuters must bear.

CNN sits on a San Andreas fault of costs. The earthquake can come at any time.

If this analysis sounds familiar, it is the same theme that has been running through some of the business commentaries about the problems traditional newspapers face. Upstarts using technology have sucked ad revenue and content from the custodial embrace of traditional publishing companies. The result has been a divorce of information methods and revenue. The traditional approach finds itself bleeding from many tiny wounds which sap its ability to leapfrog from where the organizations are today and where they have to be tomorrow.

The young people whom I know (few in number and quite strange to me) love video info. In fact, I note with some horror the dependence Google has upon videos to explain complex processes. I think the trend is locked in because when one writes, there is a formalism imposed. Even an addled goose like me has to plan what’s up. With a video, the rhetoric is that of the demo, a conversation, or a YouTube.com “insider” video. If the message is garbled, just do another video. Easy and without boundaries. The approach is just right for those decades younger than I.

How does this create trouble for a “too big too fail” television news operation?

First, youngsters have abandoned uninteresting media such as newspapers to a certain extent. I think traditional linear TV news is in for the same treatment. TV is there, but it is not where the action is. TV is a background activity for some folks. The loss of attentive eyeballs means a lost of advertiser magnetism. When advertisers decide where to spend, the decision is often based on demographics, although shooting commercials in Hawaii is a big factor in certain situations.

Second, the technology in mobile devices and online services means that the five minute delay for a breaking story on CNN is too long for some people. With now information possible, 300 seconds is the equivalent of the Bronze Age. CNN can do news faster, but it will have to make some major changes in how the work flow is set up and how the work itself is designed. My hunch is that change at CNN will be as tough as change at the US Government Printing Office.

Third, the money CNN spends retains the present business method and model. If that money is applied to smart software, CNN might have a chance at controlling costs going forward. Based on what my fast talking guide said, CNN’s tech department is applying technology to status quo methods, not using technology to enable new methods and business models. Even the CNN social Web site for user submitted videos IReport here is a laggard in the online video footrace in my opinion.

Without reengineering how CNN and similar news operations do their work processes, these outfits will be crushed under their operating costs. Technology could reduce some costs and these steps must go well beyond moving a robotic camera around from a control desk. Software has to permit headcount reduction. A human talking head could be replaced with a computer generated head which does not need a make up artist to put errant hair back in place or bring a Diet Coke to a parched but time pressed “anchor”.

Let’s assume that CNN and the other companies in its space chug along with Teflon tech. “Teflon tech” is the use of systems to smooth existing work flows. Teflon tech doesn’t change the actual work processes because humans are still the featured actors on the news stage.

This means that a clever team could automate video news and pump it out to interested parties. The reengineering of news will not be as slick as the beehive of workers at CNN produces. But the automated system would in theory be capable of real time outputs (no humans) and cheaper (lots fewer humans). As long as the product was good enough, then the future for the traditional TV news operation is simply going to be either a gradual decline or a wake up call delivered by investors.

One person in my lecture last week at the Gilbane Conference chided me for being negative about the future of traditional media. I am not if the traditional media use technology to do more than add blinking LEDs to the taxi cab’s rear view mirror. More fundamental understanding of work processes and what technology permits leapfrog innovations is needed. Without that type of thinking, CNN will face a cost cataclysm in my opinion. Disagree? Bring a sharp wit and facts to the comment section of this Web log. I am hopeful to get more information about CNN cost control measures at the upcoming analyst presentation. Information about this event is here.

Stephen Arnold, June 8, 2009

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