This past week saw a bit of a palace coup at the kingpin of business television, General Electric's (NYSE: GE ) CNBC. The network's Nielsen ratings have plummeted over the past four years, having lost more than 60% of its viewership, down to 134,000 households. CNBC's prime-time lineup can best be described as a "cost center," given that the shows tend to attract fewer viewers than does the average small-town mountain oyster festival. Even CNBC's flagship show, Squawk Box, seems to be flailing: It averaged only 94,000 viewers in January, down more than 40% from the previous year.
Yes, yes, there are some problems with the way Nielsen tabulates ratings, since it measures households only, not trading floors, bars, clubs, and other places that tend to show CNBC in higher numbers. And according to GE, CNBC still remains dazzlingly profitable, accounting for around $250 million in annual profits -- and that stands as testament to its viewer profile tending toward individuals with an extremely high net worth.
But how long can numbers like that last? Seriously, even if CNBC execs claim that the Nielsen numbers are skewed away from their network, how long can they say to ad buyers -- and get away with it -- "Who you going to believe, me or your lyin' eyes?" In 2000, CNBC was on everywhere. But now, I don't need Nielsen to tell me that fewer people are watching. Back in 1999, CNBC beat out Time Warner's (NYSE: TWX ) CNN in daytime ratings as the most-watched cable news channel. Now it trails CNN's HeadlineNews. Not good. It's not on everywhere anymore. It just isn't. One reason, and I'm just speaking extemporaneously here, is that the channel insists on putting Suze Orman on the air. Her "chipmunk on nitrous" routine has to have induced more than its share of asthma attacks, epileptic seizures, and premature labors among annoyed viewers.
Oh, is that just me? OK, never mind.
If CNN was the zeitgeist of the late 1980s and the early 1990s with its real-time coverage of the collapse of the Soviet Empire and the Gulf War Part Un, then CNBC grabbed the mantle in the latter part of the decade, as Americans by the truckload took hold of their investment portfolios and sought out people they could trust. CNBC took some of the mystery out of the stock market, giving the average person some real-time information that previously had been available only to big money-management firms.
Roll together a Nasdaq rising tenfold in the decade, heightened interest, and the occasional lottery jackpot in the form of a Yahoo! (Nasdaq: YHOO ) IPO, and you had something as interesting as watching sports with money riding on the dog covering the spread.
Then the music stopped in 2000, and CNBC has faltered ever since. The Nasdaq fell nearly 80% from peak to trough, and people finally looked away. In 2002, the network kicked then-chief Bruno Cohen upstairs to bring in someone with fresh ideas. And now it's replacing those fresh ideas with more fresh ideas, as Pamela Thomas-Graham cedes the role of network president to Mark Hoffman, who was a CNBC producer in the 1990s.
Along with the apparent vulnerability at CNBC comes a new challenge. Late this year, News Corp.'s (NYSE: NWS ) Fox networks intend to launch their own financial network. NBC Universal's Chief Executive Bob Wright recently said that having Fox (NYSE: FOX ) as a potential competitor meant that CNBC has to "pick up the pace."
I'm not sure what Wright means by "pick up the pace," but I sure as heck hope he doesn't think that CNBC's salvation will come by making it more exciting. If there's anything that CNBC doesn't need, it's more excitement. Actually, I'll go further than that: The excitement that CNBC engendered in the stock market during the late '90s contained the seeds of its continuing irrelevance today. Think about it: The past two years have been pretty positive for the markets. If CNBC's ratings were tightly correlated with market direction, one would think that the ratings would have rebounded in sympathy, rather than continue to tank.
CNBC was perfectly constructed to be the voice of record while the bull market raced ever higher. Many people compared CNBC with Disney's (NYSE: DIS ) sports broadcasting juggernaut, ESPN. But viewing sports and viewing stocks aren't even comparable: The cost of rooting for the wrong "team" on CNBC is far, far higher.
What CNBC was not constructed to do was offer up much in the way of useful, contrary information. It's as if the network's programming manager goes daily up onto the roof, checks the prevailing winds, and constructs the program to respond. The problem, of course, is that following the prevailing winds doesn't help the viewers who come to the station to hear something useful.
That's overstating it. But the executive shuffle and the comments among NBC brass, along with the decline in viewership, however it is properly defined, are fairly conclusive pieces of data showing that CNBC in its present form is struggling.
So for Mr. Hoffman I have a bit of advice: If you wish for CNBC to regain the market share it has lost, to beat back Fox, to become something that viewers count on for useful information, here's what you should do.
Yes, that's it. CNBC needs to matter. The network has the same talking heads on now that it did in the late 1990s. In the '90s, they hyped dot-coms, in 2000 optical networking, and so on to today, when commodity and energy companies can do no wrong. The result is that CNBC viewers, if they count on you for information, are doing nothing but chasing the thing that has just happened. That's exhausting, it's counterproductive, and in the long run, it's expensive. I've said this for years: Who cares what analyst on Wall Street raised or lowered guidance? Forever, CNBC had Maria Bartiromo flapping her maw while standing on the New York Stock Exchange floor about stocks on the move without ever once analyzing whether the gross share price was justified or not. Whether or not analysts raised their guidance on Juniper (Nasdaq: JNPR ) in late 2000, when it traded at four- and five-digit multiples, didn't turn out to be helpful. That the analysts might have been completely off their rocker in thinking that any company could justify such optimism would certainly have been. You want to be relevant? Get people in house who can do that.
You see, CNBC has so much promise, but management has to recognize that while a rising market provides a pretty good tailwind for viewership, having a network that serves as a spirit squad for Wall Street isn't horribly useful, and, given Wall Street's tendency to burn individual investors every few years or so (or, more truthfully, constantly) tends to burn out people who are sick of being lied to or used. There's a reason CNBC is known as "BubbleVision," and believe it or not, this isn't a compliment.
Where CNBC can really regain relevance is by recognizing that the markets will always rise and fall. If your business model is so tied to benefiting from the rise, you are of no use whatsoever during the falls. CNBC is at its best when it's an honest broker. When Mark Haines calls a company's business plan "cockamamie," that's useful. When a guest analyst mentions a stock for viewers and summarily gets grilled by the hosts about why it's a good company, and isn't allowed to get away with poorly reasoned answers, that's useful. When Kudlow and Cramer give high-fives because the market went up on a given day, it is not.
Good luck to you, the folks who run CNBC. The more you get into the information business, and the more you move out of the entertainment business, the more relevant and successful you will be. The latter may bring people in to watch, but the former will keep them with you through thick and thin.
The Motley Fool has a long (and sometimes really funny) history of commentary on CNBC. See:
- That's So Five Minutes Ago
- CNBC's Draconian Move
- CNBC: A Day of Missing Information
- A CNBC Makeover
- Consider the Source