ABC News And CNN Talk Marriage

logos: CNN, ABC, AOL, DIsney CBS/AP

Executives have been discussing a merger of the CNN and ABC news operations, a deal that could help cut costs for troubled parent companies AOL Time Warner Inc. and Walt Disney Co.

Brad Turell, an executive at CNN, confirmed the talks, which were reported Tuesday in the Los Angeles Times, but said no deal was imminent.

CNN, owned by AOL Time Warner, has held merger discussions with both ABC and CBS that bogged down over questions about control of the news divisions.

CNN Chairman Walter Isaacson, in a statement sent to the network's staff, said CNN's newsgathering operation and international distribution complement a strong broadcast news unit.

"Models already exist that combine broadcast and cable news networks," Isaacson said. "So the idea is intriguing and we expect that these talks will pick up again from time to time. At this time, CNN is not close to making a deal, but we will always explore scenarios that can make our journalism and our business even stronger."

There was no immediate comment from Disney or ABC.

One scenario now being discussed would be to spin off ABC and CNN's news operations into a separate company. AOL Time Warner would own a majority stake, from two-thirds to three-quarters, with ABC's parent Disney owning the rest, according to the Times.

The two divisions would have a combined revenue of more than $1.6 billion, with more than $1 billion coming from CNN, the report said.

Relations between ABC News and Disney have been tense because of the company's unsuccessful pursuit of David Letterman to take a late-night slot, upending ABC News' "Nightline." Some at ABC News felt undermined by those discussions.

ABC News shares with CBS and NBC the prestige of being one of the three main broadcast news operations. But in an era of cutbacks for the networks, CNN has built the larger international news operation.

AOL Time Warner board members are under pressure to cut costs. The company's stock dipped below $10 per share this summer after trading above $50 a year ago.

Disney's operations have been dragged down by the ABC network's poor performance over the past year, although ABC News has managed to keep its ratings relatively strong.

ABC News President David Westin addressed the story at a regularly scheduled editorial meeting Tuesday with news division executives.

"Because of all your efforts, ABC News is stronger than it was a year ago," Westin told the executives. "That means we have the luxury of doing nothing at all and continuing to grow our business. It also gives us the luxury of doing a deal, if any is done, from a position of strength."
  • Dan Collins

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