How CNN can find its way to the auction block

Things may look bleak at CNN with layoffs, pay cuts and a new digital programming model that may or may not work. But On The Money has learned that private equity firms have been crunching the numbers for a potential takeover of the valuations-challenged network.

Don’t exactly hold your breath for anything coming anytime soon, my sources at both CNN and the private equity business tell me. The network’s parent, Warner Bros. Discovery, is not yet buying CNN.

Indeed, no firm has made an offer, my sources tell me: the PE people I spoke to don’t really know how to value it because of its troubled business model.

That said, I know of at least one major PE firm (and likely more) that has crunched the numbers. Analysts believe CNN makes what looks like a good amount of money, about $750 million this year. Sounds good until you realize it’s down from over $1 billion in 2020; Cord cutting is taking its toll as people stop watching cable news, which means lower cable rates. CNN is an international news operation, so it has high overhead.

When people cut the cord, you can’t pay as much for advertising. WBD’s balance sheet says ad revenue fell to $1.5 billion for the third quarter, compared to $1.7 billion for the quarter in 2023.

Another issue: EP leaders also believe that the program still leans too far to the left, where there is a declining consumer market or Kamala Harris would have been elected president.

As one executive at a top PE firm told On The Money: “Yes, a lot of sniffing, but people think it’s a junk asset.”

This is very harsh. Full disclosure: I have friends in the country and respect the work of its leading people and producers. I know WBD chief David Zaslav well, and I honestly believe he wants to make the operation work, reducing what some on the right say is its left-wing political bias. He can keep it if he can stop the bleeding. Zas and his team believe news can make money if they can find the right strategy.

Plus, Mark Thompson, CEO of CNN, is a serious media executive who helped create the New York Times’ successful digital strategy. If Zas and Thompson can make CNN work, attract eyeballs fleeing cable to the emerging digital product, they will have created a news business model for the future. They may not have to look far for buyers.