News Still Counts at CNN. So Do Stars.

At 9:50 a.m. on a recent Thursday, the New York control room for CNN’s “American Morning With Paula Zahn” was in a minor tizzy, and it wasn’t about the promotional campaign snafu that called Zahn “sexy.”

This debate was more prosaic. The news network had switched to live coverage of closing arguments in the “hockey dad trial,” and the lawyers wouldn’t stop speaking before Zahn was supposed to sign off. Would viewers be confused if Zahn wasn’t there when CNN switched back to the studio? Would they even notice or care? Everyone in the room had an opinion.

At the old CNN, where everyone and everything was interchangeable, no one would have thought twice about shuffling in a new anchor. The new CNN, by contrast, cares deeply--and decided to put run a graphic informing viewers that Zahn’s show was ending, inviting them back the next morning.

In announcing the hiring of Connie Chung from ABC News last month, CNN says its strategy is now clear: well-defined programs and straight news from the likes of stars such as Zahn, Chung and Aaron Brown; conversational talking heads that actually talk, not shout.

But not everyone is buying it. Some longtime staffers, schooled in CNN’s old “news is the star” philosophy, are chafing at the emphasis on personalities. And although CNN News Group Chairman Walter Isaacson insists that his competition includes NBC’s “Friends” and other channels of all genres, the media world has fixated on the battle between CNN and the Fox News Channel, which surpassed CNN in January to become the most-watched cable news network for the first time on a month-long basis.

Rejecting Fox’s model of straight news laced with renegade reporters such as Geraldo Rivera and an evening lineup of opinionated talk, Isaacson envisions a CNN where a viewer can turn on the channel at any time and find objective journalists “who are not just reading teleprompters at you anymore, who are not just shouting at you ... normal people you’d want to sit next to and have conversations with.”

That’s the “thread that pulls it all together,” he says, the “core mission” that will help CNN survive in a universe of 300 channels.

But is that really enough? And can CNN resolve its internal tug of war without losing substantial ground to the competitive forces any established entity faces in an increasingly crowded media world?

It has clearly been a year of deep lows and exhilarating highs for CNN. In January 2001, about 400 people, or 10% of its staff, were laid off amid yet another management shakeup and stern pronouncements that correspondents had better get used to a stripped-down future: lugging their own gear, shooting their own video, and filing reports for radio and the network’s Web site in their spare time. Competition was closing in, and the future seemed bleak.

By the end of 2001, however, CNN was basking in its highest ratings in five years, the surge a result of the Sept. 11 attacks and subsequent war on terrorism. If the story didn’t again put CNN front and center as fully as the Gulf War had a decade ago, the overseas component nonetheless played to CNN’s strength--its vast worldwide ties, with 30 foreign bureaus--allowing the channel to score some journalistic coups. CNN’s had a leg up this past week, for example, because it has a bureau in Lagos, Nigeria, where an explosion was estimated to have killed thousands.

CNN executives have been heartened by the positive response to Zahn and Brown--an ABC News alumnus--and were slapping high-fives with the recent announcement that Chung, a former co-anchor of the “CBS Evening News,” was also leaving ABC for CNN.

Still, the dizzying changes during the year have not been without setbacks. Employees felt buffeted as top management changed repeatedly. In March, WB Network Chairman Jamie Kellner was appointed to oversee CNN, along with other basic cable networks owned by AOL Time Warner. Chairman Tom Johnson left, then President Phil Kent, with Isaacson arriving from Time Inc. in July.

Even as it was smartly tackling some of its most persistent problems, CNN continually made missteps. A much-needed overhaul of CNN Headline News, for example, was overshadowed last summer by the hiring of former “NYPD Blue” actress Andrea Thompson, whose limited news credentials--combined with the nude photos of her circulated on the Internet--raised questions about exalting style over substance.

While CNN garnered praise when the U.S.-led war on Afghanistan got underway, the network also appeared to overplay its hand--trying to claim pictures of the bombing as an exclusive and drawing howls of protest from other networks. More recently, CNN’s top-rated personality, Larry King, renewed his contract--as everyone expected despite hints he would go elsewhere--but the network was embarrassed when King or someone close to him leaked highly inflated salary figures.

There has also been a wholesale house-cleaning--some voluntary, some not--of much of the on-air talent that embodied CNN for two decades, from lead anchor Bernard Shaw to entertainment reporter Bill Tush and style maven Elsa Klensch. More than a dozen longtime CNN names have left, including Bobbie Battista, Lou Waters, Natalie Allen, Joie Chen and Frank Sesno.

In a perceived coup for the network, Lou Dobbs returned and revitalized CNN’s business programming franchise, and several old-timers remain, among them Wolf Blitzer, Bill Hemmer and Judy Woodruff. Still, many find themselves playing a supporting role to a flurry of new hires from ABC, CBS, NBC, Fox, even MTV.

With all the promotion for new faces such as Zahn and Brown, insiders speak of an internal rift between the old and new guards. To underscore the point, CNN’s internal computer bulletin board recently filled with bitter postings complaining about the low-key Brown and his staff, referring to “Bore-man” (a play on the name of executive producer David Bohrman) and grousing that the newcomers should have more respect for the veterans. Before Greta Van Susteren recently bolted for Fox News, her husband (who doubles as her lawyer) wrote a widely circulated memo griping that Van Susteren wasn’t getting enough attention, with executives not going to bat to secure her a White House Christmas party invitation, among other things.

An emphasis on presentation, not just the news, has some both inside and outside of CNN worrying that there’s too much fluff, that entertainment values are taking over. Given the millions spent luring talent from other networks--with Chung, Zahn and Brown all said to be earning low-seven-figure salaries--critics not surprisingly seized on the quickly pulled ad for Zahn describing her as sexy. Even if top executives didn’t know about the promotion, some suggested, it still came from an employee who thought that kind of approach was the mandate.

Because it’s impossible to please everyone, there are also those within CNN at the other end of the spectrum, wondering if the network is doing enough to address the head-on challenge from Fox, whose “We report, you decide” slogan is a not-so-subtle appeal to those conservatives who accuse CNN of harboring a liberal bias. Specifically, it’s unclear whether there is enough of an audience during news lulls to sustain the network without adopting a Fox-like strategy that draws more freely on talk and opinion, playing to the talk-radio audience.

While CNN’s ratings spiked far ahead of Fox in September and October, Fox has come roaring back as the war news has died down. In just-released January ratings, Fox, which in the last year dramatically increased the number of cable systems on which it is available, passed CNN to become the most-watched news network, averaging 656,000 viewers on a 24-hour basis, versus 596,000 viewers for CNN.

“Fox’s momentum is accelerating and CNN’s is decelerating,” says Erik Sorenson, president of MSNBC, which runs third among the all-news channels in the ratings race.

A sure-fire way to enrage CNN executives these days, in fact, is to compare the network with Fox. Isaacson went out of his way at the Chung news conference to avoid criticizing Fox by name, but the message was clear.

“It’s easy to be entertaining,” one CNN executive, speaking on condition of anonymity, said recently about Fox. “It’s a lot harder to compete with 20 years of trust and credibility. The niche we hold is almost impossible for them to compete in.”

Unfortunately for CNN, that hasn’t stopped Fox from muddling CNN’s attempts to distance itself from the news channel wars.

While Zahn and her team are doing interviews or discussing the day’s headlines in a segment called “The Buzz,” for example, the crew at “Fox and Friends” has been known to discuss ... Zahn. One of the show’s regulars, a radio deejay who goes by the name Mancow, recently criticized Zahn at length, calling her a phony for changing her opinions, then announcing, “I just want to punch her in the face.”

Fox, says Sorenson, is “doing something historically unprecedented, talking about the competition on the air all the time.” It’s not necessarily wrong, he says, “just startling.... You don’t hear Tom Brokaw talking about Dan Rather. It’s a new level of competitiveness.”

When CNN approached Zahn about joining CNN once her contract expired in 2002, Fox promptly fired her and sued her agents. CNN executives had been conflicted about Van Susteren for months, but when her show blossomed into CNN’s second-highest-rated of the evening, Fox promptly snatched her away, as it did reporter Steve Harrigan when CNN dallied on giving him a new contract.

Fox has been equally aggressive in the war of words. “Part and parcel of CNN’s problem is they don’t know what they want to be or who they want to compete with,” says Kevin Magee, vice president of programming at Fox News. “Jamie Kellner is the Hollywood guy and Walter Isaacson is the journalism guy, and the troops over there are not sure who’s the general. That’s why you see them in fits and starts lurching after us.”

As for the CNN strategy toward straight journalism, he points out that two recent CNN hires “were the MTV woman [Serena Altschul] and the game show host [ABC News’ Anderson Cooper, who most recently was host of ‘The Mole’], so don’t say, ‘We are capital-J Journalists.’”

Isaacson has repeatedly told his staff that he doesn’t care if Fox passes CNN in the ratings because the two are pursuing different strategies. CNN executives note that despite the fact that Fox beat CNN in January, interest in the war on terrorism increased the total cable news channel viewer pie by more than 50%, and CNN’s total-day average viewership jumped 51% compared with the same stretch a year earlier.

“I care more about the quality of our journalism, and about keeping our eye on our own mission,” Isaacson says, downplaying talk of internal tensions.

Moreover, CNN remains profitable, with ad sales executives saying the U.S. channel brings in more than $250 million in revenue annually--more than double that of either Fox News or MSNBC--with another $100 million generated by CNN Headline News, which is almost always packaged with CNN when selling time to advertisers. Fox is hoping to cut into CNN’s revenue, however, thanks to its ratings gains.

To his credit, in the eyes of many, Isaacson has focused intensely on upgrading CNN’s journalism. Morning rundown meetings used to be dry affairs, when each bureau would list the day’s planned stories so managers could throw them into a lineup. Isaacson, to the discomfort of some old-timers, actually stops people and challenges them, asking what their approach is, why are they covering that story, is there a different way to do it? His questions are about ways to tell a story, not just get the pictures on the air, insiders say.

“Now that the programs are in place, we can all ask questions about what’s the smart way to approach a story, where is the story going to go, what makes it interesting,” Isaacson says. “I like sitting in those meetings more than doing the managerial duties.”

There are still trouble spots. On CNN’s weekday “TalkBack Live” during the last few weeks, it seemed as if the Sept. 11 attacks never happened. Gone was the high-minded tone of serious news that CNN claimed as its mission. In its place has been panel after panel of partisan talk-radio hosts, screaming over each other.

Although CNN says it is pursuing a serious news model, attempts in the past year to forge a cooperative arrangement with either CBS News or ABC News--gaining access to the prestige and promotional power of one of those operations while sharing news-gathering resources and thus mitigating cost pressures--have so far come to naught. CNN and the other networks have differed on who wanted a strategic agreement more, but ABC and CBS executives so far aren’t buying CNN’s attempts to control any such joint venture, despite the financial benefits to both sides. CNN is good at getting live pictures from far-away places, they privately say, but its journalism lacks depth.

So CNN, it seems, will go it alone for the moment. “Under certain conditions we would be willing to share infrastructures” with a broadcaster, says AOL Time Warner’s chief operating officer, Bob Pittman, but “it’s not an urgent priority for us.” Research has shown that in the minds of the public, he adds, “we’re the ones in the lead. We have the credibility and trust people look for in news.”

Will all these changes be enough to provide CNN the necessary lift? Pittman seems to think so, saying that other than doing more to promote the channel, CNN has likely seen all the major restructuring it will need, while calling the network “one of the year’s success stories at AOL Time Warner. They are beyond where I thought they would be.”

Fox’s Magee disagrees. “The advertising dollar turns slowly, but it will turn,” he says, “because [the ratings are] quantifiable.... I’d much rather be in the position I’m in than the position they’re in.”

Isaacson, however, expresses confidence that CNN’s strategy will work in the long run. “A strong, classy, good journalistic environment, based on solid reporting more than opinions, produces a quality network that viewers and advertisers will value,” he says, whether it gets the highest ratings or not.

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Elizabeth Jensen is a Times staff writer.