CBS News was frantically pushing back Thursday evening at a report that the long-suffering news operation is losing $50 million a year. The report – leaked to a closely read media newsletter – is being interpreted on West 57th Street as a smoke signal from CBS’ new owners that brutal cutbacks are coming.
Indeed, the report comes as Skydance Media, the new owner of CBS’ parent company, Paramount, has signaled it is looking to slash $2 billion in costs.
The new report from Puck’s Dylan Byers, cited “two sources familiar with the news division’s finances.” Mr. Byers went on to note that “the cost burden is especially notable given Paramount’s recent decision to cancel ‘The Late Show With Stephen Colbert’ on the grounds that the company was losing $40 million a year on the show.”
Late Thursday, CBS News fired back,. telling the Sun, “A published report that CBS News is losing ‘around $50 million a year’ is inaccurate. In fact, the division is currently profitable.”
Anonymous CBS News sources made their case forcefully to the rival media newsletter, Status, insisting to its author, Oliver Darcy that the news division is profitable.
“Behind the scenes, two additional people familiar with CBS News’ finances reinforced that rebuttal,” Mr. Darcy wrote. “They told me that the reported financials were wildly off the mark. One of the people described the leak as ‘not even PR spin,’ but ‘strategic feeding of false info as a means to an end.’ Indeed, it all but seems that someone inside the newly empowered Skydance leadership seeded the number in the press to justify the deep cuts already expected at CBS News.”
In general, though, Mr. Darcy and Mr. Byers largely agree that accounting within a broadcast television network is extremely complicated. Mr. Darcy quotes a “veteran television executive” telling him that “It’s all about how you want to do the accounting … You can make any of these things look however you want.”
There was similar quarreling, in the wake of Mr. Colbert’s cancellation, about whether or not “The Late Show” was really losing $40 million. Fans and friends of Mr. Colbert, such as a rival late-night host, Jimmy Kimmel, argued that the financial information for Mr. Colbert’s show does not factor in affiliate fees and is only focused on ad revenue.
Typically at a broadcast network news division, the enormous cost of traditional “news gathering” – involving unionized staff employees working around the clock – is enormously expensive, and more than offsets any advertising revenue from programs such as the evening news. The morning shows, however, are still very profitable despite plummeting audiences.. How everything else is accounted for is extremely complicated. This involves how prime time news magazine shows are sold; how affiliate fees factor in; et cetera.
Much entertainment programming at broadcast networks is outsourced to outside producers. Therefore the news divisions can be the largest concentration of staff employees, many of whom have been there for decades, at a network.
CBS News’ unionized workforce is expensive. In April, the network struck a three-year deal with the Writers Guild of America East and Writers Guild of America West to give hundreds of employees, including writers and graphic artists, a three percent annual raise, and first-year employees more vacation time. The deal also includes a 50 percent increase in members’their severance packages if they lose their jobs as a result of AI. And in July, CBS News Digital writers and editors agreed to a contract that included a three percent raise in the first year, a three-and-a-half percent increase in year two, and a three percent increase in year three.
And that’s just writers and artists. CBS News must also contend with other unions – such as NABET, the Director’s Guild, and other unions that represent different personnel such as makeup artists.
So however you calculate profits or losses, the leak to Mr. Byers that CBS News is losing $50 million a year seems to be an attempt to send a message that the current model is not working.
Mr. Byers notes that David. Ellison, the Oracle scion and CEO of Skydance, did not buy Paramount because he wanted CBS News, but rather for its other money-making properties, but that does not mean that he will try to spin it off either. The reported losses will likely prompt executives to closely scrutinize costs to find any fat that can be trimmed. However, it is unclear how executives will pull that off.
For decades, there has been talk of CBS entering into an agreement with CNN to outsource its newsgathering costs but other than CNN sharing stars Anderson Cooper and Christiane Amanpour with “60 Minutes,” nothing firmer ever materialized.
CBS News, once the crown jewel of broadcast news, has been in terminal decline since the mid-1980s, when the Tisch family bought CBS and, over a decade of ruthless cost cutting, wiped out the legacy of William Paley.
CBS’ sports and entertainment properties, in recent decades, have been profitable and commanded, by some measures, the highest ratings in television. But the news division never recovered. For more than 40 years, the news division (other than “60 Minutes”) has been buffeted by brutal cutbacks and lay-offs.
In recent years, CBS News has managed to do what ABC News and NBC News are still struggling to accomplish – rein in anchor salaries that were impossible to justify. With the ouster of Norah O’Donnell from the “CBS Evening News,” Gayle King is now believed to be the only CBS News employee making eight figures, with the remainder of CBS’ talent roster making vastly less.
With talent salaries already slashed and the news division already cut to the bone, CBS will likely need to make drastic, fundamental changes in order to reduce costs further.
Further cuts to newsgathering – which supplies national and international video to local stations and is also tied up in contracts with multiple unions – could be hard to do without upsetting the equilibrium between CBS and its owned and affiliated stations. Ending the longstanding independence of “60 Minutes” and forcing it to consolidate operations with the rest of the news division and spend responsibly may be one of the last remaining options.
The new president of Paramount, Jeff Shell, has signaled that there will be layoffs coming soon, which could appear to be more drastic than previous announcements, as he said he intends for them to be “one and done.”
“We do not want to be a company that has layoffs every quarter,” Mr. Shell said earlier this month. “So, it’s going to be painful. It’s always hard.”
Mr. Ellison has also signaled at there will likely be painful decisions made in the near future as he seeks to revitalize Paramount and its properties.
The reported losses likely mean that CBS News teams will become smaller and have to work on smaller budgets, Mr. Byers notes. And it likely will mean that CBS News will not be getting any major investments.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
