How Would ABC Univision Merge Hurt CNN?

Reprinted from Politico by Dylan Byers

The talks between Disney and Univision have set media tongues wagging in anticipation of a new 24-hour news network that would compete with CNN, MSNBC, and Fox News, and would likely have major ramifications for the cable news industry and for the national political discourse.

At the political level, an ABC News-Univision venture would mark the first 24-hour news network marketed toward English-speaking Hispanics, giving that rapidly growing demographic greater influence in the national discussion.

At the industry level, the new channel would upset the current cable news order, threatening to steal ratings and revenue from CNN, MSNBC, and Fox News.

No channel is likely to feel the pinch so much as Time Warner's CNN, which has struggled to keep abreast of MSNBC in the ratings race.

“This would go head-to-head with CNN,” a person with knowledge of the talks told the New York Times yesterday.

Should the two companies reach a deal, it may even force CNN to renew its own talks with CBS on a deal to combine news resources. Those talks, which had been going on sporadically for over a decade, resurfaced in May 2010.

"While such conversations have occurred over the last decade, the current news-business climate, plummeting CNN ratings, ever-shrinking evening-news audiences, and major layoffs at ABC make a deal more logical than ever before," New York magazine's Gabe Sherman reported at the time.

But the talks stalled (once again) and later that year CBS president and CEO Les Moonves acknowledged that the deal "doesn't look good."

"We tried ten years ago and we tried last year, it's just been a difficult thing," Moonves said. "It's hard to make a joint venture with a division of the company."

The Disney-Univision talks could stall as well, but there is reason to believe that this deal is far more promising.

Whereas both CNN and CBS were looking to stop losses, ABC and Univision are looking to capitalize on growth. CBS was eager to get out of the news business and CNN was "desperate to do something that [would] keep supporting its ever-diminishing business prospects," Michael Wolff observed at the time, arguing that both organizations were "ruined artifacts of a former age."

Univision, by contrast, belongs to the future, serving a U.S. Hispanic population that is set to double within the next forty years. And in addition to owning ABC News, Disney owns ESPN, a cash cow that generates roughly half the value of Disney's media holdings, according to industry estimates.

"In one structure under consideration, Disney would be responsible for both advertising sales and distribution," the Wall Street Journal reported, "so it could use the heft from its ESPN franchise to help sell the new channel to cable operators, people familiar with the negotiations said."

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