Financial Networks Run for the Money : FNN: Investing Future in a New Prime-Time Lineup

Financial News Network, it’s the best of times and the worst of times. Good news first: After almost 10 years, FNN (now in 35 million households) has silenced the media brokers who didn’t forecast a future-or much of an audience-in economic news. What’s more, FNN loosened its tie last year and successfully expanded into prime-time with lifestyles programming.

Now the bad news: Infotechnology Inc., the company that has controlling interest in FNN, recently ran into a cash shortage and has put the cable network up for sale to pay off its debts. Stock in FNN has plummeted, and shareholders have filed suit against FNN claiming the cable company wrongfully withheld details about its investments.

When asked how the sale of FNN will affect its programming, president Michael Wheeler said: “It won’t. Nothing that the viewers see on television is affected by it. What’s on air now is not affected. Nothing at all.”

Most analysts seem to agree that despite the dark cloud looming over its parent company, FNN remains a financial gem. In fact, likely buyers for FNN reportedly include its biggest competitors-Turner Broadcasting System Inc., which owns Cable News Network, and General Electric Co., owner of Consumer News and Business Channel.

Wheeler explained FNN’s value: “Before the stock market crash of 1987, we had been in a very strong bull market. It was pretty easy. Just send money to your stockbroker and it went up every month, or buy a house and it increased in value every month. Now we’re heading into a recession. Managing your business investments requires much more study and information.”

From its start in 1981, FNN set itself apart as a service for serious investors. Each day, FNN’s stock ticker from Wall Street dashes across the bottom of the TV screen. FNN reports on domestic and foreign markets, analyzing the day’s trading and business news, with shows such as “Marketwatch A.M.” anchored by Ron Insana and Randall Whipple.

“We’re wired for cable and we have FNN on in the office all the time, along with CNN,” said Mark Riely, financial analyst with the New York investment banking firm of MacDonald Grippo Riely Inc. “We keep FNN on in the background the way teen-agers might use MTV-you tune in and tune out, depending what’s on.”

Some predicted FNN would lose subscribers and fold its tent when the super-slick CNBC, backed by the NBC network, started up 18 months ago.

But FNN was prepared. Two years ago it abandoned an ailing home-shopping service and dropped much-criticized “infomercials,” commercials dressed as investment-advice shows. Last fall, with flashier new sets and a bigger staff, FNN ventured into prime-time with a slate of original lifestyles programs geared for its upscale viewers.

“News you can use,” Wheeler said.

“The American Entrepreneur” with Craig Wirth, a sort of financial Charles Kuralt, travels across America to uncover personal success stories. “Power Profile,” hosted by actor and financial expert Wayne Rogers, is FNN’s “Lifestyles of the Rich and Famous.” Rogers goes behind the scenes with corporate bigwigs. Other shows look at art and automobile collecting, real-estate investment and tips for business travelers.

“This isn’t old programming or reruns,” said Bob Regan, FNN’s vice president of programming and operations. “We don’t buy programming from other people. We produce it. A few years ago we were doing news at night. Now we’re doing high-quality, magazine-style programming.”

Syndicated columnist Jack Anderson, a Pulitzer Prize winner who nightly hosts “The Insiders with Jack Anderson,” said: “When I first went on FNN, the power brokers in Washington thought I did a daytime financial show. Whereas at first they would say it’s a waste of time, now their response is much different. I can get almost anyone to appear on my show. (President Bush) agreed to be on later this season.”

With the new changes, FNN’s ratings increased and the network’s national advertisers tripled. Unlike most cable networks that program for wider audiences, FNN knows who its upscale viewers are and focuses in on them-a demographic luxury it affords by charging higher advertising rates than most of its cable competitors. Simmons market research found last year that FNN, an advertiser’s dream, had a greater concentration of high-level spenders than any other cable network.

Wheeler said 70% of FNN’s viewers are males with college degrees and annual salaries of $30,000 or more. “We don’t do programming that necessarily appeals to a male or female. If a female is investment-oriented she will watch. If not, she won’t,” Wheeler said.

On weekend afternoons FNN switches to sports news, interviews and scores. FNN also broadcasts its financial news to a radio network of 100 stations and offers a service that plugs its stock quotes and business news directly into personal computers.

The changes and other ventures at FNN didn’t come cheaply-the reported price tag was $115 million. If FNN is sold to a major domestic or international media company, as expected, the network will probably grow even larger. In the meantime, with its advertising and subscriber base secure, FNN is sitting tight and waiting to see where its future lies.

CNBC: Competing With a Broad Mix of Programming

If somebody one day writes a book about the Consumer News and Business Channel, it might be called “The Marketing of a Cable Network.”

Backed by the power, resources and reputation of NBC, the No. 1 TV network, CNBC premiered with a promotional bang in 13 million households on April 17, 1989. During an industry-wide channel crunch that kept other aspiring networks waiting in the wings, the upstart CNBC-with a bankroll reported at $65 million-hoped to win viewers with shiny sets and graphics, seasoned hosts such as Dick Cavett and a mix of consumer and business reporting.

But after the launch the Wall Street Journal described it as an “odd mix of serious financial news with softer, consumer-oriented features” and noted that initial reviews from media critics and cable operators were mostly negative. One critic called the channel “the ‘Entertainment Tonight’ of financial news.” “The industry told us after we were on the air for a relatively short period of time that they wanted us to be a bit harder during the day,” CNBC president Al Barber said. “They expected us to be substitutional for FNN.”

With 16.7 million subscribers, CNBC has refined its two-prong approach to consumer and business programming. In a sense, the days have become harder and the nights softer.

During business hours, CNBC mirrors FNN in most respects. With its own ticker racing across the screen, the channel covers breaking financial and market news, with commentary and analysis from a host of experts.

CNBC, willing to pay top dollar to build a strong news team, has lured quality reporters from its competitors. In October, Dan Dorfman, CNN’s 10-year financial veteran, broke ranks and joined CNBC. Consumer guru David Horowitz recently signed with the cable network to do reporting next year (he will maintain his duties at L.A.’s KNBC).

One attraction is that CNBC reporters have a shot at national network exposure on NBC.

Anchor Sue Herera explained her defection from FNN two years ago: “The affiliation with NBC meant a lot. I use NBC’s resources and research department, interact with the NBC news desk and do (reporting) spots on TNBC’s News at Sunrise.’ So it really opened up a whole different level of news for me.”

During the evening, CNBC becomes a grab bag of consumer information and talk shows. On “Smart Money,” with Ken and Daria Dolan, viewers call in for tips on money management. “America’s Vital Signs” doles out health and lifestyle advice, and Emily Quinn explores consumer topics on “Steals and Deals.”

CNBC’s lead nighttime characters, each with his own talk show, are Cavett, Washington pundit John McLaughlin and the irrepressible Morton Downey Jr.-who has left behind “the chair-throwing, skinhead era of his life,” Barber said assuredly.

The cable channel’s sometimes awkward combination of hard-boiled financial news, over-easy consumer reporting and prime-time entertainment continues to draw industry charges that CNBC does not know who its audience is. Critics maintain that FNN adequately serves the financial community, and CNN and the major networks already provide sound consumer reporting.

But Barber simply pointed to CNBC’s competitive ratings with FNN and its growing subscriber base. He also laid out plans for CNBC’s future:

A nationwide hunt is now being held for a radio talk show host to become in February the cornerstone of a nighttime, weekend block of live, call-in programming (when CNBC currently runs repeats of its weeknight shows).

To capitalize on Dorfman’s commentary skills, an afternoon talk show with a panel of business leaders is in early development. And in the next few months, Barber expects to cut deals with hotels and cruise ships to pipe CNBC to an international market.