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ABC-CNN Merger Talk Has Troops Spooked

As the struggling networks negotiate, fears of a culture clash and layoffs rise.

November 11, 2002|Elizabeth Jensen | Times Staff Writer

ATLANTA — On election day, CNN staffers looked up to see their larger-than-life founder, Ted Turner, sweeping through the newsroom on a pep-rally mission of handshakes and waves.

"When Ted walked in the room, it really crystallized for me where I am, what we are, how we changed the business," said anchor Aaron Brown, who left ABC News for the 24-hour cable news network. "These guys had a vision. This is really why we're here, for big nights."

But it might well be Turner's last big night in an independent CNN newsroom. His once-renegade baby is negotiating a merger with the oh-so-establishment ABC News in a new company 70% owned by CNN parent AOL Time Warner Inc. and 30% owned by ABC parent Walt Disney Co.

Turner has been publicly silent on the possible deal (although he is set to appear on Brown's "NewsNight" tonight, where he surely will be asked). People familiar with the situation say he is supportive one day, opposed the next. That apparent ambivalence sums up the feelings of many far down the food chain at both news organizations.

The deal has obvious, major financial benefits, at a time when news gathering costs are soaring and competition for ad dollars is fierce. But there is a rapidly building fear of a serious culture clash between the two sides and the prospect of sizable layoffs, as the two seek to pare $200 million from their combined costs.

On election night, Turner said he had been told not to comment. "I can talk about bison burgers and the weather," he joked. When pressed, he quoted from "Bambi": "As Thumper said, 'My mother always taught me, "If you can't say anything nice, don't say anything at all." ' " Laughing, he turned and said, "And you can write that he walked away humming the tune 'Oh, we ain't got a barrel of mon-ey....' "

In other words, the merger is necessary -- but not necessarily welcome.

With deal points being swapped every couple of weeks, executives are adamant that a pact, if any is to be made, won't come together before the first quarter of 2003 and could take a year to implement. Some tens of millions of dollars in savings on overlapping satellite time would be instant, but larger savings in job cuts and infrastructure would be imposed gradually over three to five years, some insiders say. Others argue that the cuts would have to be made more quickly because dragging out the integration of two corporate cultures only makes it more difficult.

That both AOL Time Warner Chief Executive Richard Parsons and Disney Chairman Michael Eisner want to see a deal happen has propelled the discussions. But the reality is that both companies have more urgent priorities, including ABC's poor prime-time ratings and AOL's struggling online division.

So far, company insiders say, the two sides haven't even agreed to make the talks exclusive, and either one of the companies' boards could ultimately shoot down a merger. Eisner recently said chances of a deal were "50/50," odds echoed by other executives.

"We are exploring an opportunity, but there are benefits and risks that must be considered," said Jamie Kellner, chairman and chief executive of Turner Broadcasting System Inc., which oversees CNN. "I'm committed to continuing to explore this, but at this point there isn't enough information to commit to a deal."

Executives said that while there is no one sticking point, issues of control must still be worked out, including what the head of the new organization can decide unilaterally and what must be cleared collaboratively. There are also decisions to be made about such things as the promotion time each side would commit to and what compensation would be paid if, say, ABC cut back on a newsmagazine hour.

There also is skepticism among some rivals over how the two sides can find $200 million in cuts. Merely closing overlapping bureaus, they say, won't do it -- a fact not lost on CNN and ABC executives who are looking for creative financing models.

At the moment, only one thing seems certain: The troops are growing increasingly unsettled and scared.

Rumors are rampant. The fact that Kellner and Disney President Bob Iger shared a Halloween day lunch set off so much speculation of an imminent deal that their companies had to publicly disavow it. CNN News Group Chairman Walter Isaacson and ABC News President David Westin, whose homes are kitty-corner in Bronxville, N.Y., jokingly accused each other's companies of fueling the talk, as their children went trick-or-treating that night.

Yet another rumor, which recently swept ABC News, was that a list already had been made of staffers targeted for layoffs.

"Search my desk," Isaacson said during an interview, pointing to a relatively clean desktop in his office overlooking CNN's Atlanta headquarters newsroom. "We're not at that stage."

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