Where CNN Makes its Money…

TVNewser’s Alex Weprin has a detailed breakdown of where CNN makes its money…

As you can see in the chart, and as we explained earlier this week, the heart of the CNN (and cable) business is subscription fees, which account for around 50% of total revenue. Advertising and ancillary revenue streams account for the other 50%.

CNN’s pitch to investors and the press is that its business is healthy despite declining ratings in primetime. While it is true that CNN U.S. primetime only accounts for about 10% of revenue, it is still responsible for a disproportionate amount of advertising revenue on the flagship network. CNN as a whole can thrive financially even if its primetime stumbles, but it has to work harder to make up for it through the other two channels or its digital division.

Primetime — across all television networks, not just CNN — is still the most valuable real estate for media companies and advertisers, because of its reach and the ease of monetizing it. It is also an important factor in carriage negotiations. If CNN’s carriage agreement with Cablevision is up for renewal, poor performance in primetime would be one of the cable company’s arguments against a higher fee, which SNL Kagan estimates is currently $0.48 cents. Considering that carriage fees are the heart of CNN’s business, it is not a fact to be taken lightly. Cablevision, Comcast or DirecTV are not interested in how well CNN.com is doing, because they are paying for the right to televise the channel and the rights to use CNN content on on-demand platforms, etc.