Strategic Advice to the CEO of CNN - Research Proposal Example

Strategic advice to the CEO of CNN EXECUTIVE SUMMARY This report focuses on the strategy side of one of the world's leading news channels, CNN. It starts with discussing the media industry and its major sectors, out of which CNN belongs to the electronic news media industry. In USA, a lot of spending is being done on various forms of media, and especially television, to captivate the audiences in the advertisements on the product. This is a major source of revenue for any news channel. Next discussed is the SWOT analysis of CNN, in which the major strengths that emerge are that CNN has a global presence, that it has established its authenticity over time, and that it has diversified into many media forms. The threats are that attrition snatches away important human resource from CNN, and that the lifecycle of news is very short, and thus the pressure to always present fresh news is always there. The opportunities are that the investment in the industry is rising, worldwide benchmarks can be made in the news industry and that barriers to entry are high. The threat is that the clutter on TV, in terms of the number of news channels propping up is increasing, and getting out of hand. Moreover, the news industry is sensitive in the sense that it can hurt the sentiments of any political or religious group if news is not handled carefully. The report then discusses the strategic options available. Firstly, CNN could start broadcasting a whole channel or preferably segments in other languages. Then it can expand to other countries and compete locally. And lastly, it should never opt to diversify in any other aspect of television entertainment, since that will corrupt the brand name CNN. MEDIA INDUSTRY AND ITS MAJOR SECTORS Mass Media, according to the Merriam-Webster Dictionary, is ‘a medium of communication (as newspapers, radio, and television) that is designed to reach the mass of the people – usually used in a plural’. Therefore, mass media includes any and every medium that is used by the people to communicate to masses. With the passage of time, many branches have sprouted out. The impact of globalization is tremendous; every day, a new advancement takes place that makes communicating to the masses easier. Mass Media, according to the nature of the medium, can be divided into two major parts; print and electronic. Both the parts are equally important and popular among their respective target markets. In US, print media enjoys a larger audience as its distribution doesn’t require much investment both on the part of the audience and the supplier. However, the electronic media is restricted to entertain only those people, who have the facility of a radio, a television set or a computer- above all, the availability of electricity. Due to these predicaments, electronic media had been neglected in the past, however, it is now gaining importance and recognition and even the remote areas have access to this kind of media one way or the other. Source: www.plunkettresearch.com As can be seen from the above table, that the amount of media spend is increasing with each year, and that the television still remains one of the most popular types of media sources, both for the audiences and for the advertisers. ABOUT CNN CNN (Cable News Network) is one of the most popular news channels of the world, with its origins lying in the United States of America. (Stewart, 1997)It was initiated in 1980 by Ted Turner, thus its parent company is Time Warner. It was the first news channel to broadcast news 24 hours a day, right after its launch. It has a global presence, and is available in 212 countries, and it is the CNN International branch of CNN which serves its global audiences. It is the number two news network in the United States, with BBC ruling the product ladder of news channels. Since it has launched, it has extended the CNN brand into various other satellite and cable television networks, as well as a radio channel of its own. In addition to that, it has many web sites where it has made its reach. (Miller, 2009) CHARACTERISTICS OF THE ELECTRONIC NEWS INDUSTRY The media industry is an industry which has seen its emergence in the last decade or so and is flourishing at an amazing rate. To belong to the media industry, let us study some of the characteristics of the industry itself and of the people that belong to it: DYNAMIC: The industry is dynamic and fast paced. If a news channel organization is ever visited, it can be seen that nobody is sitting idle and there is a certain aura of urgency in the atmosphere. Everybody is on their toes and ready for action. This characteristic is highly applicable when there is breaking news and the news channel has to react to the situation in an effective manner despite personal concerns and make the news reach out to the audience somehow. (Phelps, 2005) TIME-SPECIFIC: The industry is highly bound by time. If there is a piece of information which is there, if it is not conveyed to the audience in half an hour, its value and importance is lost and now the piece of news is useless for the audience. It is highly time-specific and time restricts the freshness of news and also triggers the dynamic characteristic of the news industry. RISKY VENTURE: All those people who are working in a news channel organization have this knowledge within themselves that this is a risky venture. This is because the number of programs that are broadcasted on the news channel analyse news according to their own viewpoints for example The Joy Behar Show. If any political party's sentiments are hurt in any way or the social sentiments of any particular group of people is hurt, it can then become a danger for the organizations. (Robinson, 2002) Moreover, if the post anyone holds at news organization is that of a reporter, especially an on-ground reporter then his life is at risk totally. If he is covering the venue of a suicide bomb blast and while his veering the venue, another bomb blast takes place, it is his life that he is putting into risk by entering this industry. NO GEOGRAPHICAL BOUNDARIES: The news organization is not bound to broadcast, shoot, transmit their information from any one place in particular. A US news channel can even start its transmission sitting in UK.. The industry is free to evolve and show itself wherever it can. UNBIASED: Any person who belongs to the news industry has to be unbiased or he cannot work in an organization where there is high value for providing unbiased free of prejudice information to the viewers. If a news item comes which is somehow showing the negative side of any particular political party, and if the newscaster is inclined towards that political party, it is not possible that he or she refuses to narrate that news on TV. (Bahador, 2007) It's his job and belonging to the news industry means that a person has no inclinations and if he or she has, then they better be kept outside his job. SWOT ANALYSIS OF CNN Strengths CNN has branded news, despite the fact that news is just news. It is about how it is presented. And nothing else. There is no as such place for creativity in it. When we talk about the entertainment channel industry, it can be said that each channel has to work day in and day out to make sure that whatever it produces in the form of dramas or talk shows, it has to be different because likeness of a drama or any particular entertainment show is highly subjective but this is not the case when it comes to news. News is just news. Its presentation can be different, but its packaging is not that important as it is in the entertainment channel industry. CNN has presented the news so well, and with time has established the CNN brand for authentic news. (Hart, 2009) CNN is global because news is not culturally limited. When it comes to an entertainment channel industry, it gets highly culturally limited because one has to be extremely careful of one's culture when making a soap. They have to make sure that they do not dress up the actresses or actors in a manner or in any clothing which defies the culture of the country. But when it comes to a news channel industry, it can be said that there is no cultural limitation and it is just about presenting news in the best possible manner and format. CNN is doing tremendously well when it comes to the human resources since news is nothing hi-fi that only qualified labour is needed. The ratio of skilled to unskilled labour is almost 60% to 40% in this industry. (Bahador, 2007)Anyone who has a passion for creativity and a charisma for being part of all the dynamics of the news channel industry can come and join in. the workforce that is seen here is really diverse, people of all classes, all cultures, all religions, and all ages are seen here. This makes the input worth many different perspectives and view points and therefore, the output is also good then. CNN also encourages a lot of fresh entrants. Many fresh graduates are hired in the company. Therefore, it can be said that the industry is a young industry with the average age of 31 years. This even further sparks the creativity, as the minds are young and energetic. (Strickland, 2004) CNN has diversified itself into a number of channels, as well as websites. Even a radio channel is now owned by CNN, all presenting news. The brand CNN is now established for the audience who wants to watch the news and what's happening around the world. Weaknesses The biggest weakness for CNN is the matter of attrition. Newscasters, analysts, copywriters, creative directors – all are floating from one channel to another because of better compensation package being offered by the other news channel. When a particular news channel uses all its efforts, resources and training skills to train its human resources, especially the news casters who are representing the channel to the whole world by presenting its news, it’s a really sad factor when the same employee leaves the news channel to join some other just because of better salary packages and benefits there. At times CNN would not get the broadcasting rights for any event. There are many events or situations in which the broadcasting rights are provided exclusively to the state-owned channels which are operating at the state level in South Carolina etc. (Stewart, 1997) Whenever any important political event is taking place, like a session in the Parliament, only the state owned channel can shoot the event and other news channels have to take "feed" from it, that is, buy the shoot from that channel and then show it on their own channel with the name of the state-owned channel. This is hindering the growth of the news channel industry as competition between private news channels on this element has been eliminated. The third and the last weakness is that the life of the product that the industry is catering to is very short. CNN has to make sure that it competes against time and gives its audiences the best news within the time frame which is appropriate and within which, the news would remain fresh. Every second, a million new things are happening around the globe. This has to be addressed accordingly and timely, else news gets stale fast. (Miller, 2009) Opportunities One of the biggest opportunities in a news channel industry is that it can be benchmarked. CNN is the market leader when it comes to the news industry, and it is known globally. If an entertainment channel industry is considered, a single entertainment channel cannot be compared with an international one. For example, CNN cannot be compared with Star World because of the vast difference there is between the type of programming that is being shown or the culture that is being depicted. But when it comes to a news channel industry, Star News can be compared to CNN because the matter both are presenting is the same. (Phelps, 2005) Therefore, a news channel industry can come in the race of competition when it comes to the international scenario. The investments in the media industry in general are rising. The powerful groups, which are already present in the industry, the top 3 networks that is NBC, CBS and ABC are increasing their hold and grip on the industry by owning the whole of the supply chain. (Robinson, 2002) Despite that, CNN holds a prominent top-of-the-mind position in the minds of the consumer when it comes to news channels. CNN can capitalize on this opportunity. The education level in the industry is rising. The level of qualified human resource that will be available to this industry in the coming years is growing rapidly. This is because industries are recognizing the importance of the industry and incorporating courses or degrees to make sure that people are taught to specialize in this very industry. Courses like Media Sciences and Mass Communication are some of the examples. Mass Communication has now become a science, rather than an art. This is a great opportunity for CNN since the inflow of human resources will be of better quality. There is still ample room for improvement in CNN in terms of news gathering, news presentation or technology or any other aspect for this matter. This is because CNN is not that old (got started in 1980s) and it is yet to reach its maturity stage. CNN was one of the pioneers in terms of the first news channel in USA and therefore, it has set high standards for any new entrants. The barriers to entry for new entrants are so high that it is difficult to surpass them. (Miller, 2009) A lot of human resources and other capital and creative resources are required to start a news channel now, as opposed to decades earlier. Threats The biggest threat to the CNN is the prevalence and popularity of the in-house channel advertisements. The only thing from which news channel generates revenue is that of advertisements. Other factors like programs or newscasters are all bought by the news channel. Therefore, in-house channel advertisements which are very cost-effective for the companies are now a major competitor for the news channels in taking away a very big portion of their revenue. In house channel advertisements are also popular because they are played in between popular soaps, which the majority of the nation watches with interest and the advertisement of the company get major viewer ship if they are played in between of them. There is now a lot of clutter in the news channel industry. So many news channels have opened, narrating the same piece of news, from Fox News to CNN, from BBC to Channel 14 news. Where should the viewer go? The viewer is constantly switching, due to which brand loyalty has become impossible. (Strickland, 2004) The industry is highly vulnerable. If social or political sentiments of any group are hurt, the channel can be in danger as people of US can get really revengeful and throw stones. High care has to be taken of the fact that news is presented in an unbiased manner at all times. LONG TERM STRATEGIC OPTION FOR CNN – RECOMMENDATIONS CNN should try to diverse into presenting news in different languages. Chinese is one of the languages whose popularity is growing in the whole world. CNN should embrace this fact and start broadcasting in languages in which it has never broadcasted. Other languages can be French, Dutch or even Hindi and Urdu to facilitate the Asian continent. Such expansion would help CNN cater to niches, and appeal to a specific segment of the market. Since CNN has been in the industry from time immemorial, establishing a new channel or a segment which presents news in a different language will not take much time in proving its authenticity, since the parent company would be CNN. (Hart, 2009) Moreover, CNN should also start expanding to other countries, for instance by starting a local CNN channel for each country, and to compete with the local news channels. For instance, CNN could go to Pakistan, set up their offices there and start CNN Pakistan. This would stimulate competition, and give impetus to CNN to improve. (Montgomery, 1996) Since CNN is a global venture, it would benefit them to set up their operations separately in many countries, since it would contribute to a diverse cultural workforce, which would enhance the creativity mind set and the ideas available to CNN. One strategic option that CNN should never think of is to expand into anything apart from news. Brand positioning of CNN is so rigidly fixed for news presenting that if CNN expands to any other arena of media, for instance soaps, or sports then it's going to be nothing but a brand failure. CONCLUSION CNN is the number two news channel in the US. Its global presence and recognition as well as its long legacy are two of its major strengths on which it should capitalize. The CNN brand name has been around for quite some while, and people expect it to stay and give them the authentic news that they need. CNN should consider growing further, since stagnancy will dilute the interest of the viewers. But growth should be controlled to ensure that it does not violate the principles of strategy, that is, diversify into something which is relevant to the current business, if success is wanted. REFERENCES Books 1. Stewart, R. (1997) CNN: making news in the global market. University of Luton Press. 2. Miller, F. (2009) CNN: History of CNN. Alphascript Publishing. 3. Phelps, J. (2005) CNN: the innovation that changed television news forever. 4. Robinson, P. (2002) The CNN effect: the myth of news, foreign policy, and intervention. Routledge. 5. Bahador, B. (2007) The CNN effect in action. Palgrave Macmillan. 6. Montgomery, C. (1996) Strategy: seeking and securing competitive advantage. Harvard Business Press. 7. Hart, L. (2009) Strategy. BN Publishing. 8. Strickland, A. (2004) Strategy: winning the marketplace. Read More