Wolff: What next for CNN?

For almost 20 years, Time Warner has been criticized for its management of CNN. The gummy CNN problem — it makes money, but nobody likes it — is about to be inherited by someone else. Rupert Murdoch's 21st Century Fox, in its bid for CNN's parent, Time Warner, says if it buys the conglomerate, it will sell CNN to avoid any conflict with Fox News. If Murdoch's bid fails, that will probably be because someone else's prevails. If it wasn't before, CNN's future is up for grabs.

With the BBC and The New York Times, CNN is one of the world's ranking quality news brands — whether it deserves that ranking or not. That brand is what's for sale — along with its formidable cash flow. That's another oddity: Despite low ratings and ever-increasing audience dissatisfaction, CNN remains a very rich news organization.

These confusing aspects or fundamental contradictions of the business help explain why estimates of its value vary so widely, from $6 billion to $20 billion. It's a mighty legacy brand, but it might be hopelessly faded. It throws off lots of cash, but can that be sustained when nobody likes the product?

Here are the buyer's conundrums: If your goal is prestige and influence, that's probably going to involve significant investment and complicated restructuring of the network. If you accept the current profits, as Time Warner has long done, you're also buying constant public criticism, plus the reasonable worry that it's hard to sustain an unpopular business. Or you try a middle ground, as Time Warner has recently seemed to be doing, slowly turning CNN into a Discovery Channel at night and a breaking news station during the day — but that risks trading a premium brand for a nebulous one.

The most obvious buyer is CBS. Les Moonves, CBS' chief, is by general acclamation the best network executive of the day, with an old-fashioned golden gut for popular entertainment. Moonves might want CNN not out of any love for news, but, in fact, for the opposite reason.

He has always been rather honest about his lack of interest in news. Why does he have to have it? Only to avoid having "he killed the evening news" on his tombstone. Having CNN could move $100 million or more of news division costs from the network balance sheet — and, to boot, give CBS a highly profitable news subsidiary. Of course, Moonves, with his ambivalence about news, and CBS, with its uncertain news talents, may not be the obvious company to lead CNN back to greatness. That means Moonves is stuck with CNN's inevitable controversies and a peanut gallery of critics constantly raining on his otherwise sunny parade. Does he want that?

An alternative bidder for CNN, and possible a counter bidder to Murdoch for the whole of Time Warner — one that would not have to shed CNN — is Disney. Disney, the owner of ESPN, might aspire with CNN to that same model of category dominance. To be the worldwide leader in news as well as sports is a kind of media heaven. On the other hand, sports is the strongest content category in media, and news among the weakest.

There is, too, an actual quality play. CNN derives a major part of its revenue from cable operators, who see it as a necessary counterbalance to Fox News and MSNBC. Arguably, the more prestige, authority and trustworthiness that accrue to CNN, the more necessary and valuable it is. Commercial broadcasters have, in general, lost the will and the talents to do quality news — after all, it really isn't their business. Why not then a tie-up with a premium news organization, for instance, most obviously, The New York Times? (Curiously, Murdoch might make this same argument about The Wall Street Journal — owned by News Corp., the other, news-focused Murdoch company.)

In that combination, news, increasingly devolving from platform specificity, takes a major leap forward by creating a quality news company widely distributing its product through all outlets. Television can't do quality news, but it has great profits. Print still has high news standards, but ever-dwindling profits — so voila!

Indeed, news quality is largely based on moving the model from ratings to value. (The Times, itself more and more forced into a traffic game, was once distinguished by having a smaller circulation then its mass market competitors.) A must-have news brand for a discerning audience, with a cable channel, as well as other subscription outlets, could be a canny play. If the Times Co. could not finance this fantasy league by itself, it might find Bloomberg — or surely its major investor, Mexican billionaire Carlos Slim — an eager partner.

MICHAEL WOLFF: Man in the shadows key to Murdoch deal

There is, of course, the danger that Murdoch's interest, if he prevails, will not be the health of CNN. He may not be able to own it, but he can, in whom he sells it to, handicap it. Indeed, he is likely to generate the most money by selling it to, say … Al Jazeera.

Perhaps the worst option for CNN is for the Time Warner bidding to falter and for CNN to remain as it is. The argument for continued independence shaping up at Time Warner — the promise it will have to make to stay free — goes something like this: The company has focused its assets over the past few years and is ready to realize new efficiencies that will boost its earnings and hence its share price, preparing itself for an even bigger sale in a few years.

That is, as everyone understands, the language of cost cutting — a slashing and burning everywhere.

And there are no cost cutters in the media business who do not, rapaciously, cut deeply into news.

For CNN, the devil you don't know is probably a lot better than the one you do.