CNBC on the Future of Network Newsgathering: 'That Ship has Sailed'
It's no longer profitable for networks to have their own news organizations, according to CNBC's David Faber.
In the wake of the news that CBS is in negotiations to outsource its news division to CNN, Faber explained on CNBC's April 8 "Squawk on the Street" CBS's news division is a victim of an evolving business.
"The news that CBS is once again considering a deal under which it would outsource some of its newsgathering operations to CNN - certain to get those critics out there who say, ‘Oh, this is the end of news as we know it on television,'" Faber said.
"Well, if you haven't noticed, news on television ended a long time ago, other than '60 Minutes,' which is by the way a CBS program. I challenge you to come up with actual newsgathering that is taking place on the networks," he said. "That ship has sailed."
Faber interpreted the proposed move by CBS (NYSE:CBS) as a sign the mass media company was under pressure to cut some of its costs. CBS's stock has taken a hit over the last nine months. Since trading at a stock price of $34.73 on July 20, 2007, it has fallen to just above $22 a share.
"If you're [CBS CEO] Les Moonves, you're looking for two things," Faber said. "You're looking for ways to cut costs in the face of what may be very slow growing revenues, if not declining revenues ... and you're looking for how to get growing again."
Another thing hurting CBS is a lack of a cable presence like its competitors NBC Universal (a subsidy of General Electric (NYSE:GE)), ABC (a subsidy of the Walt Disney Corporation (NYSE:DIS)) and News Corp (NYSE:NWS.A)."[Y]ou don't have the exposure to cable, which is - thank you very much - growing relatively well right now," Faber added.