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| October 28, 2004 1:30 p.m. (ET)
OPERATOR: Hello, and welcome to the CNN conference call. All lines will remain in a listen-only mode until the question and answer session, and at that time, if you would like to ask a question, you may press star one on your telephone touch pad. And at this time, I would like to turn the conference over to the president of CNN, Mr. Jim Walton. MATT FURMAN: Hi. This is Matt Furman. Thanks for joining us this afternoon. Jim Walton, who is the president of CNN, will be available to take your questions. He's going to begin with short opening remarks - Jim. JIM WALTON, PRESIDENT, CNN NEWS GROUP: Yes. Hello, everyone, and thank you for joining us. By now you've seen the news and you know why we're on the call. And before I get to the question and answer I thought I'd tell you a little bit about what our thinking is here and how we came to this decision, and how we feel about the news group going forward. We're very pleased with what Ken Jautz who's been running CNNfn, and his management team and all of the employees that work there have been able to accomplish. They have turned a network, a very nice network with terrific content, and Ken and his team were actually able to make it profitable last year. However, as we look at the marketplace, and where the industry is going, and new technologies, and how they impact us, we came to the conclusion that we would have more potential for growth in going some different ways. And we looked at strategically what assets were in front of us. And we saw that we had two fully distributed networks in CNN and Headline News. And we looked how we could better use those networks going forward to get all of our content and grow it, including the business content. Additionally, in the digital distribution of linear networks, the growth has not come at the rate many of us had anticipated. And in looking at how we might grow the overall News Group faster, we've come to the conclusion that we'll take some of the programming from CNNfn and distribute them on our fully distributed networks, and also look to get into some of the emerging technologies very aggressively in some of the VOD and broadband opportunities before us. So, I'm very, very sad personally for the people who are impacted, but this is also a good time for us as we position ourself to continue to grow. We met with most of the Wall Street analysts in June, and we talked about our business. And I'm sure that's available for all of you. Those were public reports. But the newsgroup is positioned to grow at the top end of Turner Broadcasting. And we are positioned, in our most recent forecast, to have our greatest earnings growth year-over-year in our history. So, things are good here as we build. And it's just an unfortunate situation for many individuals. And for them, I'm disappointed and sorry for them personally. But, for the newsgroup itself, and even for the business content and programming going forward, we look at this as an opportunity for growth. I'm happy to answer anyone's questions now. OPERATOR: Thank you. Once again, if you would like to ask a question, please press star one on your telephone touch pad. And our first question comes from Jonathon Burr of Bloomberg News. JONATHON BURR BLOOMBERG NEWS: Hi. I appreciate your time. First off, can you talk about the potential for layoffs? And also, did you say that your - the CNNfn was profitable - was it this year or last year that it became profitable? WALTON: Yes. Hi, Jonathon. How are you doing? BURR: I'm good. WALTON: 110 full-time employees at CNNfn, and we're guessing that approximately 60 of those are going to be impacted. However, that said, I did talk about some growth in the opening statement. We have posted over 100 positions here across the newsgroup - today. And it is our hope that most of, if not all of, the impacted employees at CNNfn will have a skill set that matches up, and they will apply for these jobs and we'll be able to position them across the news groups. BURR: Oh, I understand you … WALTON: But in many ways, this is about transferring our resources to different areas where we can sustain achievable growth which will benefit all the remaining employees. And yes, fn turned its first profit in 2003. BURR: OK. So, just to be clear again, the 60 positions - you anticipate 60 positions are going to be cut. Is that correct? WALTON: Yes. BURR: OK. How much of this is a ratings issue? I mean, you've got - it's no secret that CNNfn has kind of lagged the ratings for a long time with other channels. WALTON: We don't get ratings for CNNfn. It didn't have the required distribution for and we've never had ratings. BURR: OK. Thank you. I'll let someone else answer a question then. OPERATOR: Thank you. Our next question is from Joe Flint of Wall Street Journal. Click Here For Part Two |
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