'Potential problems' lead to disintegration of deal
NEW YORK — Prenup jitters have led to the end of the CNN-ABC News engagement.
AOL Time Warner entertainment and network group chair Jeff Bewkes pronounced the proposed merger dead when asked about it at a meeting of AOL TW honchos late Thursday.
“After careful review,” read a follow-up AOL TW statement, “it was determined that although there are great merits and possibilities to a merger of ABC and CNN news, for us, the potential problems associated with the completion of such a transaction and the integration of these two distinct and great cultures was more than we wanted to pursue at this time.”
One person close to the situation said that Disney prexy Bob Iger, who was involved in negotiations for the Mouse House, was notified of the decision today.
“Our side decided before theirs,” an AOL TW source said. “It was an internal decision. We decided that it wasn’t the right time to do it.” Michael Eisner was known to be a proponent of the merger.
While the deal is dead, AOL TW didn’t rule out cobbling together another merger proposal with Disney, possibly involving other units.
At the same time, major investors have suggested in recent weeks that CNN is not a strategic asset for the conglom and could be on the block if CEO Richard Parsons isn’t able to bring the company’s debt down.
Ted Turner’s diminished role at the conglom has fueled speculation that it will be easier for current management to unload some of his pet assets.
The CNN founder stepped down as AOL TW vice chairman in late January. It’s not clear whether he’ll remain on the board of directors.
The merger of the No. 2 cable news net and its ABC counterpart was meant to bring $100 million in cost savings to each org, a figure cast as extremely optimistic by industry insiders.
A load of hard-nosed questions followed, such as who would take charge of the joint venture, which would have financially been under the control of CNN. Ostensibly, the two would have shared editorial control. But few thought that 50/50 arrangement would last.
There were also doubts about the extent to which anchors from the broadcast net would toil for cable. Complicated union issues arose, as did logistical questions.
CNN is based in Atlanta, whereas ABC News is rooted in New York.
Still, ABC News and parent Disney were still enthusiastic about the deal.
But CNN’s parent seemed to be putting on the brakes at several turns.
In December, CEO Dick Parsons said his company had “hit the pause button” on the possibility.
A month later, Turner Broadcasting CEO Jamie Kellner said the company would make a final decision about the deal by the end of the first quarter.