MSNBC’s View From Down Below

Pakistani President Gen. Pervez Musharraf made a crucial visit to Washington last week and CNN and Fox News Channel carried his many appearances throughout the day live.

MSNBC? It was airing the women’s biathlon competition from the Winter Olympics in Salt Lake City.

That hardly sounds like the way for the third-place cable news network to build viewer loyalty, but MSNBC, as a key component in NBC’s strategy to amortize its $545-million Olympics rights fee, had little choice.

When the January cable news ratings were released, the buzz was all about Fox News Channel, which passed CNN for the first time in average total viewers. At NBC, however, it was a wake-up call.

MSNBC, which launched at the same time as Fox in 1996, now ranks a distant third in the cable news wars. Even though January figures showed the average number of total viewers watching the channel was up 23% year to year, Fox and CNN were up more. In 2002 to date, MSNBC is garnering a mere 18% of prime-time news audience for those three networks in its key sales demographic of 25- to 54-year-olds.

While NBC executives have long maintained that they are happy with MSNBC’s viewers--who tend to be younger and more affluent than those watching Fox and CNN--the January ratings provoked a round of internal debate about just what’s gone wrong and how to fix it.

With its corporate parents, General Electric-owned NBC and Microsoft Corp., MSNBC was given better odds to succeed than Fox. It had the money, promotional clout and NBC News prestige. Instead, media industry observers have scratched their heads over the years as MSNBC has struggled and its programming strategy has flip-flopped.

NBC didn’t even really mind being third, executives there say, because MSNBC is a success financially, allowing millions of dollars in NBC News costs to be amortized even when the joint venture isn’t making money, as is the current case. But now that the advertising market is starting to pick up, MSNBC isn’t in a strong position to cash in because it has let its news business slide.

“MSNBC isn’t a must-buy network in the news arena,” said Stacey Lynn Koerner, senior vice president and director of broadcast research at Initiative Media North America.

As it turned out, the advantage of having well-known parents has turned out to carry some disadvantages too. Instead of creating a channel that strives to be the best it can be, executives at MSNBC must consider decisions in light of their effect on other NBC properties.

So when CNN hired Paula Zahn in September to anchor a new morning program (Fox already had one), MSNBC also thought about jumping into the battle in response to heightened interest in news, industry sources say. Yet in the end, executives decided to stick with a simulcast of Don Imus’ radio program to avoid stealing viewers from NBC’s top-rated “Today” show. Both the Fox and CNN morning time periods are up sharply in the ratings.

Just as serious, MSNBC has failed to develop so-called appointment shows that can be seen only at a specific time. Both “Hardball With Chris Matthews” and “The News With Brian Williams” can also be found on NBC-owned CNBC, with Matthews airing four times a day and Williams five times. Though NBC makes money because one show fills five hours, “It does not always lead to individual high ratings,” said MSNBC President Erik Sorenson.

There’s no reason, Sorenson said, why Matthews “cannot be in the same league as [CNN’s] Larry King or [Fox News’] Bill O’Reilly, but we have cannibalized his audience over the years. If you miss him at 7 you can catch him at 9. I’m not even sure day to day when he’s on.”

MSNBC fares well during periods of breaking news, as it draws on NBC’s correspondent corps. In prime time, however, an initial strategy of repackaging NBC News material from “Dateline” and “Today” into taped shows such as “Headliners & Legends” worked for the bottom line but didn’t make sense when viewers wanted to know about big stories.

With CNN grabbing the straight news audience by dint of its longevity and Fox having successfully snagged opinion viewers, MSNBC finds itself playing catch-up on both strategies--airing Williams’ serious newscast early in the evening, following with media darling Ashleigh Banfield, then switching gears to talk from conservative former presidential candidate Alan Keyes. “It’s neither fish nor fowl,” said one industry executive.

Over the years, NBC has rarely used its promotional muscle to funnel viewers toward MSNBC. Nor has money been forthcoming to advertise the channel on cable and in newspapers, as Fox News Channel does aggressively. Even CNN, which shunned advertising for most of its two decades, recently began running ads for Zahn and Aaron Brown.

“We’ve not spent the tens of millions our competitors have,” Sorenson said, putting MSNBC’s spending on advertising around $1 million in the last three years.

For all the problems, MSNBC still pulls in about the same amount of ad revenue as Fox, around $100 million annually, according to industry estimates, partly because it is sold in a package with NBC News. The cable channel also helped propel MSNBC.com to become the No. 1 Internet news site as of January 1999, according to Media Metrix figures, though that changed in September, with CNN surging ahead after the terrorist attacks and holding the lead through the end of the year.

“CNN is a huge breaking-news brand,” said Steve White, MSNBC.com’s chief technology officer, noting that MSNBC.com moved back into first place in January as coverage of the terrorism story subsided.

Moreover, MSNBC provides intangible benefits for NBC News, serving as an outlet for Williams to hone his skills as the replacement-in-waiting for “Nightly News” anchor Tom Brokaw and giving more exposure to such network stars as correspondent Dan Abrams. But so far, MSNBC hasn’t really served as a talent farm team, although John Seigenthaler did jump from MSNBC to the network.

Sorenson said the lack of spending for high-priced talent and promotion has been “a conscious decision by our company” against “spending wildly in an ad recession.”

With the ad market showing signs of life, however, Sorenson added, “It has me concerned, and I think my bosses concerned, that we need to start getting more aggressive about spending on this channel.”

A round of advertising for the channel is planned, though Sorenson declined to say how much or when. More important, debate is underway about making Williams’ and Matthews’ shows exclusive to either MSNBC or CNBC.

“The idea of sharing, everyone agrees, has become outmoded,” Sorenson said. Still, there is no guarantee that MSNBC will get both shows, as CNBC is in the midst of its own ratings slump and arguably more important to NBC because it is fully owned by the company.

MSNBC “is still in the hunt,” Sorenson said. “I think advertisers understand that we have the best audience out there.” NBC executives also note that the Olympics deal allowed MSNBC to sign up more cable operators to carry it and hope that the increased number of viewers watching the Games will come back for news.

MSNBC is unlikely to return for now to taped programming in prime time. The Fox model, Sorenson said, “is more attractive and sustains longer viewing levels for their fans than ours does,” meaning the month-old hiring of Keyes, which so far has not been a ratings success, signals the direction that MSNBC intends to go.

“The program is evolving,” Sorenson said. “We’re going to stick with it.”