Was Newsworld International "suicided"?

[Lydia Leftcoast]

On some of the other threads about Current, certain posters have stated repeatedly that NWI more or less deserved to die because it lost money and had low ratings.

The assertions about losing money and low ratings are true, but the story is more complicated than that.

NWI was begun by the CBC and sold to Vivendi Universal, an originally French company which, if I'm following the Internet accounts correctly, sold its television and movie division, Vivendi Universal Entertainment, to NBC, which is ultimately owned by General Electric.

Vivendi also owns Trio, Bravo, USA, the Sci-Fi channel, and a bunch of other cable stations.

There's a great deal of cross-promotion of material on stations owned by a single corporation. Look, for example, at the way BBCAmerica has had promotions for The Office and Footballers' Wives all over its sister stations in the Discovery group.

Yet did you ever see Newsworld International promoted ANYWHERE? By "anywhere," I mean on other Vivendi channels, in newspapers, or even in left-leaning magazines.

I found it by accident when it happened to be running a particularly compelling story as I was channel surfing. Other people have learned of it by word of mouth.

How can you blame a station for having low ratings if no one ever hears of it?

I wonder if NBC decided to slowly strangle a potential rival to CNBC and MSNBC.

Did anyone ever see any promotions for NWI?

[NYCGirl]

1. No one ever said it "deserved to die." Networks perish if they can't make

money. That's the bottom line.

And I've never heard of a major company who deliberately set out to LOSE money.

[Lydia Leftcoast]

3. They sometimes try to lose even more money on an unprofitable branch so

that they can write it off as a tax loss.

Back in the 1960s, oil companies used to deliberately overbuild gas stations so that they could close the superfluous ones and write them off against their taxes. When you're a multibillion dollar corporation, moves that might seem counter-intuitive for an individual sometimes make a perverse sort of sense if your only goal is to maximize returns to your shareholders.

They may also have ideological reasons for wanting to deprive U.S. viewers of Canadian news, aside from a desire to kill off the potential competition for CNBC and MSNBC that came within the package of stations that they acquired when they merged with Vivendi.

[SeanQuinn]

2. I did see promotions for NWI.

But only on NWI. NWI was promoting itself in the commercials, which it had to do because there was no other promotion, anywhere.

[papau]

4. I thought joint venture company owned 80% by GE

2003 Vivendi combined US film studios, theme parks and cable tv channels with NBC as NBC Universal (80% owned by GE)

NWI was CBC to the end - promoted by them -and quite good.

Now I am looking for a new CBC outlet!

[Lydia Leftcoast]

5. The CBC started NWI and provided most of the content, but

Vivendi was the actual owner of the station starting about 5 years ago.

[AlGore-08.com]

6. The CBC sold NWI in 2000, and Universal bought it for the bandwidth

I don't know if "suidiced" is the best term to use.

The reality of cable and satellite TV is that channels like NWI exist just because they cost little to nothing for the content (the news content was created for the CBC, not NWI) and brought in a very small amount of revenue. In a business model, it's expense and revenue make it about as cost effective as the "Home and Garden Network" or "Classic Sports".

These kinds of stations are usually advertised in niche market publications and channels, because they have little possibility of gaining more audience members by buying ads that reach a mass market - - you'll get more people watching "The Home and Garden Network" if you advertise on "Oxygen" than you will if you advertise on "Law And Order: CSI".

But if you wanted to use NWI's bandwidth for something else, make a new channel with new content - - non-news content - - it suddenly stops being profitable. You would have to spend somewhere around $100 million dollars minimum. To turn NWI into a news channel with original content would take considerably more than that, maybe even a billion (if you're talking about putting traditional news departments in major cities around the world). But that is unlikely, since traditional news organizations loose money (it's just too expensive to keep a bureau open in places like Australia, investigating and reporting on stuff that doesn't make it to air 99% of the time).

Given that NWI only reaches 20 million homes, you would end up spending hundreds of millions of dollars with no way to recoup the costs through ad revenue. You couldn't pre-sell it to cable carriers unless it was a major studio effort - - "Disney News" or something like that, so there's no way you could increase your ad base prior to launch. Not to mention that investors would look at the subscriber numbers and laugh in your face if you told them you were trying to raise that kind of money. Especially if you were trying to raise to create a traditional news gathering channel - - traditional news organizations always lose money.

The other option would be to turn it into a non-traditional (i.e. Faux or MSNBC) news organization (really an OpEd channel), which would be less expensive. It would still be hugely expensive, because you still have rent or buy studios to create the new content and you have to have a certain percentage of celebrity talking heads in order to make the format work. It would depend on who you contracted, but I would guess again we're talking somewhere around $500 million minimum to launch. And again, the subscriber base wouldn't justify that kind of investment. Even if you created the best OpEd channel in the universe, you still couldn't do anything but lose money and drive yourself out of business.

Air America was able to build a network because radio is inherently different than cable. The production costs are microscopic compared to TV, and you contract with individual stations, rather than having to buy an entire channel with a pre-determined subscriber base. Even so, Air America almost went under when it first launched - - they lost their station in LA, etc.