CNN: The Largest News Company In The World, Essay.

Competitors of CNN in news industry

Discuss about the Estimates Of The Size And Source Of Price Declines.

CNN (Cable News Network) considered among the world’s largest leader in online news and information delivery. The company is a private and independent company and registered under the law. The company is available 24hours and seven days a week. CNN headquartered are located in Atlanta, Georgia and in bureaus worldwide. The company has globally a staff of 4000 news professional who is reporting the latest news to the company. CNN.com features the latest media technologies from live video streaming to audio packages to searchable archives of news features and background information. This site is available throughout the day to provide the updated news. CNN was the first news television channel in the United States (CNN, 2016).

The top competitors of CNN Company found to be the New York Times, Fox News, News Corp, Vox Media. The company earned the highest revenues of $3.2 billion and it found highest among all its competitors (Owler, 2018). Currently, the company has acquired the Beme. Inc. is a mobile application platform that allows the users to share the short video or clips with an amount of $25M in 2016 (CNN Press Room, 2016). The company is playing in the oligopoly market in which few sellers are available in the market which make the entry of new entrants difficult by applying barriers in the form of investment. 

The global environment in which the business operates affects the structure of the company. There are many internal and external forces, which makes the operations of the business difficult. The company is surviving in the monopolistic market, where there are large numbers of buyers and sellers are present and providing the close substitutes to their clients. The entire news channels are providing almost the same news, which is happening in the environment, so the company have to face large competition from the market.  The company’s conduct and performance will also depend on its rivalry function. Then also, the company is recording the highest profits among all its competitors due to its uniqueness and premium services given to their clients (University of Cambridge, 2016).

CNN International Accounts for 20% of the revenues globally. Around half of the revenues in CNN come from fee from cable and satellite distributors (Atlantic, 2018).  The CNN success lies when the business gets globalization as almost 265 million households across more than 200 countries are watching and preferring the CNN and this is the reason to get the high revenues for the company. The CEO of Time Warner, CNN’s parent company shared that the company has $600 million shareholders in its international success (TV Newser, 2017).

Revenue earned by CNN and its international success

CNN assess the market through the competition whether the company is competing in price or non-price competition. The price rivalry in the case of CNN is finding intense among the competitors, as there are many sellers present in the market. All the news channels are selling the same or homogeneous services in the market and consumer can easily switch to other rivals due to less switching cost (CNN, 2016).

In the market for providing the news, there are many substitutes available in the market. Some industries are related or some are unrelated to the specific stream. For example, some companies provide the news about the business details whereas some channels are giving the details related to the world, politics etc. in this price elasticity is finding to be high in the industry demand. This will drive away the consumer (CNN Money, 2018a).

The suppliers look more powerful and can extract the high amount of profits from the market. The supplier is powerful due to the concentration in the market. The customers fixed in their criterion to choose the specified investment. The suppliers of CNN are not confined or related to the input. They focused on the output and focus on producing the substance competitively (CNN Money, 2018b).

The buyers also have the same power as suppliers. The buyers have the capability to erode the profits from the by negotiating the prices from the competitive market. The buyers show their power by demanding the specific design in service receiving or the specific news from the channel and company. In this type of market, both the supplier and the buyer have the same features to dominate the market and company too (Nagle & Müller, 2017). 

In this type of market, profits attract the entry, which erodes profits. This will steals the incumbent from the market and increases the internal rivalry in the market. The entry in this market is affected by the consumer attitudes towards the co many and its brand. The brand loyalty of the customer judged. CNN uses the concept of the economies of scale in the business to get the advantage of the low cost. As CNN is a reputed brand in the market and has the large customer base, which will make its existence more strong in the market (Markusen, 2017).

CNN is facing the non-price competition in which the company is focused on giving the quality services to its clients. Non-price competition is a marketing used by the company in which they try to distinguish its services from competitors based on the attributes like design and uniqueness. The difference made by the CNN is that they are providing the extensive service to its customers; focus on the customer needs and requirements or any sustainable competitive advantage other than the price. This strategy used by CNN to have large span in market.  Initially, company has faced the low sales but gradually when the market span increases the sales and revenues both get increased (Jena, & Sarmah, 2014).

Market structure and competition in news industry

While competing in the non-price competition, CNN is doing the advertising, selling staff, locations convenience, sales promotions, special gifts, and other services. The main source of revenue in CNN comes from the two sources, which includes advertising and subscriber/ licensing fee. According to the analysis, total revenues across Fox News, CNN, and MSNBC projected to increase by 19.5% in 2016, to a total of nearly $5 billion. This figure-estimated to get an increase in the near future and focus on getting the 25% growth by 2020. CNN is continuously upgrading its services and earning the higher revenues every year. The demand for these services does not shift even if their prices increases as the customers found brand loyal, they will not switch to other competitors. This is the reason that CNN is enjoying the non-price competition in the market and it will be for the long period (TV Newser, 2018).

CNN got publicity in the market by covering the news related to the gulf war and other crisis in the year 1990. Before the arrival of CNN, events reported in two cycles only that is for morning and evening newspaper and newscasts. However, CNN improved in it by providing the services 24*7 to update about the events. The company is the first to enter in this market and enjoys the monopoly until 1996. In 1996, CNN received its first major competitors with the launch of MSNBC. Then also, CNN remained at its first position. The company is playing alone in the market. In the initial years, CNN put their prices low in the market to have the customer ns try to provide the services at a reasonable cost. At that time, the market found to confined and rigid in which customer does not want to switch to other companies. CNN keeps its prices low to keep the potential entrants away to remain the single provider in the market (Anenberg, & Kung, 2014).

In the initial years, CNN enjoys the monopoly in the market but after the arrival of MSNBC, the monopoly ends. The market now the company is dealing in oligopoly market where there are few sellers in the market. These sellers have the power to restrict firms or a new company to enter in the market. The profitability of the firms should maintain in the oligopoly structure. The decision in the oligopoly depends on the rivals as the demand curve is indeterminate in which demand cannot be forecasted accurately by the firm. All the decision will depend on the rivals (Gallego & Wang, 2014).

Supplier and buyer power

The competitors present in the market try to erode the profitability of the CMN but fails to do so due to the brand loyalty between the CNN customer and CNN differentiated services. This will make CNN different from its competitors. Service provided by the CNN has the capability to erode the profits from the market. For this CNN use the marketing strategy and research methodology to analyze the need and requirements of the consumer that which event to cover so that the maximum TRP can be earned by the channel (Piercy, 2014). The revenue earned by CNN in 2016 is $29,318 million, which is more than the revenues 2015 that is $28,118 million.

The CNN Company provides the various services, which include CNN mobile services and E-Mail Newsletter. CNN mobile services offered the news on the mobile phone using the app. From this, the viewer can read up to the minute news stories with color photos, watch live, streaming video or the latest video on demand clips and receive the CNN breaking news text alerts. Events happening in the global environment, all covered by the CNN. Another service that found unique in CNN was getting the updates on mails. Receiving the news alerts, latest news on politics, technology, health or the topics that consumer interest the most. Another additional service provided by the CNN is of the lawyer locator, technology products reviews etc. all this activity done by the CNN will increase the profits of the company (Time Warner, 2016).

CNN has 36 editorial operations around the world and reaches around 91 million households in the U.S and 373 million households globally. It considered being as the number one online news destination, routinely registering nearly 2000 million unique visitors globally each month. The branding of networks and services done by the company is more than 2 billion people in more than 200 countries and territories. From all this information, it can analyzed that the company has the potential to have the command and power in the market, which make the company charge any price from its customer. As CNN is the first company in this industry, the prices are first them only, so CNN prices work as the benchmark for other company in deciding the prices. Competitors of CNN set their prices according to the price charged by the CNN as if they charge high price no one will accept their service in the market and vice versa (The Atlantic, 2012).

Profitability and entry in the news industry

However, in the near future, the market share of the CNN goes on declining due to the rise in competitors and its strategies. CNN uses the competitive strategy in the market while offering the offers and discounts. The company is offering the discounts rates on fiber and satellite services. Its sponsorship deals and advertising brings the good revenues. The company has maintained a competitive pricing policy for this channel and has fixed the rates based on prices of its competitors.  Its competitors are following the same service with additional offers to attract the customer most. The reviews for CNN have come in the wrong direction from Donald Trump and he said that the CNN provides the fake News and are not authentic in nature. This news in the market decreases the image of the company in the eyes of its viewers (Independent, 2017).

The company like CNN are enjoying the cost advantage in the market due to the existence from the initial years of this industry. This advantage makes the production of services in the market at very low cost, which will ultimately beneficial for the buyer and seller. This advantage will only be enjoyed only by the two or three firms in the broadcasting the news as they have the large customer base in the market. CNN finds the sources from which they can exploit the entire possible situation as if there is happening done in the market CNN is the first to telecast it in the market, which makes them, have the advantage in the market (Alipranti, Milliou & Petrakis, 2014).

In this strategy, CNN is markedly different from other news channel based on the uniqueness and how fast the latest updates given by the company to its viewers. All the up and downs in the market are first highlighted by the CNN in the new channel. This will make them differentiate from the others and its buyers or viewers valued this. For providing this service, CNN also charges the premium prices from their customers (Dai, Liu, & Serfes, 2014).

This strategy focuses on the two aspects, which includes the cost aspect and differentiation focus. The CNN is focusing on both the strategy in which they are providing the unique services to their clients by charging the high price for their premium services. The company is providing the services art large so they get the benefit of low cost and uses the economies of scale. Cost focus exploits the differences in the cost behavior in some segments of the market while differentiation focus exploits the special needs of the viewers in certain segments (Anselmsson, Vestman Bondesson & Johansson, 2014).

CNN's monopoly in the market and its differentiation

The service provided by CNN is finding to be valuable by their buyers as they are ready to pay the high prices to get the channel in their television. The value of the CNN channel can identify by frequently updating their viewers the happening in their surroundings (Independent, 2017). For the convenience of their clients

The company in their starting years, found with the rareness as they are first to provide this information in the market about a recent event happening in the market and globally. The resources provide by the company are rare as they are the only provider of news in the market. The resources of CNN is valuable but not that much rare, the company is facing the issue of competitive conformity. That means the company is not bad in facing the competition.

CNN is having the temporary competitive advantage in the market. From the graph, it can be analyzed that CNN is losing the market due to its rising competitors. This temporary advantage may become an unused competitive advantage in future if the company does not any strong step in maintaining its competitiveness (Boland, 2014). 

The CNN considered arranging in its resources but if the organization is not giving any rare or uniqueness in its services then its resources not utilized in the way, it should do. This will make the competitiveness of the firm removed or vanished from the market (Elmes & Barry, 2017).

Conclusion

From the above discussion, it can conclude that CNN is the first company to start the business of telecasting the news and events, which are happening in the environment. CNN has enjoyed the monopoly in the market, as it was the only company in the year 1990. After 1996, its competitors MSNBC came in the market and start capturing the market. After the arrival of competitors in the market, CNN has lost the share in the market. CNN is using the, marketing strategy to attract and retain the customer. The customers of CNN are finding to be brand loyal and do not easily switch to other channels. The revenues are also showing the increasing trends from the past year, which will be a sign of profitability, erode by CNN. Nevertheless, the company nowadays faces the threat in the market from its competitors that are taking the profitability from CNN. With the arrival of new entrants in the network business, the threats will faced by the CNN. CNN is trying to control this by using strategies and competitive policies in the market. Previously company enjoys the power to make the price of the services and is the price maker but after the arrival of the competitors, CNN has the somewhat control over the price. To remain competitive in the global market, various strategies used by CNN. These strategies include the analysis of generic forces to know the internal and external forces operated in the environment. This will analyse the potential of CNN to operate in the market.

References

Alipranti, M., Milliou, C., & Petrakis, E. (2014). Price vs. quantity competition in a vertically related market. Economics Letters, 124(1), 122-126.

Anenberg, E., & Kung, E. (2014). Estimates of the size and source of price declines due to nearby foreclosures. American Economic Review, 104(8), 2527-51.

Anselmsson, J., Vestman Bondesson, N., & Johansson, U. (2014). Brand image and customers' willingness to pay a price premium for food brands. Journal of Product & Brand Management, 23(2), 90-102.

Boland, L. A. (2014). Methodology for a New Microeconomics (Routledge Revivals): The Critical Foundations. Oxon: Routledge.

CNN Money. (2018a). Markets. Retrieved from: https://money.cnn.com/data/markets/

CNN Money. (2018b). Business News. Retrieved from: https://money.cnn.com/news/

CNN Press Room. (2016). CNN Worldwide Fact Sheet. Retrieved from: https://cnnpressroom.blogs.cnn.com/cnn-fact-sheet/

CNN. (2016). about cnn.com. Retrieved from: https://edition.cnn.com/2014/01/17/cnn-info/about/index.html

Dai, M., Liu, Q., & Serfes, K. (2014). Is the effect of competition on price dispersion nonmonotonic? Evidence from the US airline industry. Review of Economics and Statistics, 96(1), 161-170.

Elmes, M., & Barry, D. (2017). Strategy retold: Toward a narrative view of strategic discourse. In The Aesthetic Turn in Management (pp. 39-62). Oxon: Routledge.

Gallego, G., & Wang, R. (2014). Multiproduct price optimization and competition under the nested logit model with product-differentiated price sensitivities. Operations Research, 62(2), 450-461.

Independent.  (2017). Trump's attacks on CNN helped their revenues far more than his praise helped Fox News, new figures suggest. Retrieved from: https://www.independent.co.uk/news/world/americas/us-politics/donald-trump-cnn-fox-news-advertising-revenues-fake-figures-media-tweets-us-president-failing-new-a8080856.html

Jena, S. K., & Sarmah, S. P. (2014). Price competition and co-operation in a duopoly closed-loop supply chain. International Journal of Production Economics, 156, 346-360.

Markusen, A. (2017). Sticky places in slippery space: a typology of industrial districts. In Economy (pp. 177-197). Oxon: Routledge.

Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing more profitably. Oxon: Routledge.

Owler. (2018). Cable News Network's Competitors, Revenue, Number of Employees, Funding and Acquisitions. Retrieved from: https://www.owler.com/company/cnn

Piercy, N. (2014). Export Strategy: Markets and Competition (RLE Marketing). Oxon: Routledge.

Statista. (2018). Leading cable news networks in the United States in April 2018, by number of primetime viewers (in 1,000s). Retrieved from: https://www.statista.com/statistics/373814/cable-news-network-viewership-usa/

The Atlantic. (2012). Awful Ratings, Record Profits: What's CNN's Secret?. Retrieved from:  https://www.theatlantic.com/business/archive/2012/06/awful-ratings-record-profits-whats-cnns-secret/258477/

Time Warner. (2016). Annual Report. Retrieved from: file:///C:/Users/%2304074/Downloads/2435580_1778516775_TWX2016AnnualReport.pdf

TV Newser. (2017). Revenue at Fox News, CNN and MSNBC Up Nearly 20 Percent. Retrieved from: https://www.adweek.com/tvnewser/revenue-at-fox-news-cnn-and-msnbc-up-nearly-20-percent/331043

TV Newser. (2018). Here’s How Much Ad Revenue the Cable Networks Bring in From Their Biggest Advertisers. Retrieved from: https://www.adweek.com/tvnewser/heres-how-much-ad-revenue-the-cable-networks-bring-in-from-their-biggest-advertisers/361164

University of Cambridge. (2016). Porter's Generic Competitive Strategies. Retrieved from: https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-strategies/