Posted on 02/13/2003 5:56:03 PM PST by GeneD
LOS ANGELES (Reuters) - AOL Time Warner Inc. on Thursday ruled out any further consideration of merging its CNN cable news network with ABC News, saying a combination proved too problematic to pursue.
The decision, announced on the air by CNN's "Moneyline" host Lou Dobbs and followed by a brief corporate statement, came months after word first surfaced of merger talks between CNN and ABC, a unit of Walt Disney Co.
The two sides had said a potential merger could help the two companies save money and leverage their combined resources in the face of increasingly heated competition among television news outlets. In the end, however, AOL said the task of combining CNN and ABC News proved too daunting.
"After careful review, it was determined that although there are great merits and possibilities to a merger ... 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," AOL Time Warner said in the statement.
The merger talks have been on and off for some time, as CNN faces stiff competition from News Corp. Ltd.'s Fox News Channel for ratings and higher news-gathering costs while ABC contends with poor prime-time ratings.
A merged news operation would also have helped cut costs at a time when both networks' parents have been tightening their belts. AOL Time Warner is contending with slowing growth at its online unit and Disney's ABC has been struggling with weak broadcast ratings and advertising revenue. Disney has declined to recently forecast when ABC would return to break-even.
Last year, Fox News surpassed CNN as the top-rated cable network.
CNN founder Ted Turner, who resigned as AOL Time Warner's vice chairman last month, had said that he was opposed to an ABC-CNN merger. He told "60 Minutes II" in a recent interview that any deal would carry pitfalls that would outweigh the benefits.
(Additional reporting by Peter Henderson and Reshma Kapadia)
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