Inside the BBC and C N N

At a time of tectonic shifts in the world of information, communication

and media this is a timely study of the interplay between corporate
culture, strategic processes and the environment. Getting these three in
harmony in a constantly changing world is the challenge facing all
leaders of media organizations today.
Joyce Taylor, Managing Director, Discovery Networks Europe

Inside the BBC and CNN provides a unique insight into two of the world's
best-known media organisations, during a period of great change and new
challenges. The BBC and CNN have very different histories, remits and
identities, but both must now compete to provide news in a media environ-
ment being reshaped by increasing competition, globalisation, digitisation
and convergence.
Drawing on intensive research carried out among senior managers in both
organisations, Lucy Küng-Shankleman's study explores the beliefs and atti-
tudes that shape management priorities and broadcasting policy. More
controversially, it examines how each organisation's distinct cultural beliefs
- about broadcasting's fundamental purpose, about the nature of competition,
and about the relationship between competition and quality - have laid the
foundations for their current and past successes, but could now threaten to
limit their ability to respond to the unprecedented changes underway in the
world's media landscape.

Lucy Küng-Shankleman is Director of the Competence Centre for the

Media and Communications Industries at the mcm institute, University of
St Gallen, Switzerland.
Inside the BBC and C N N
Managing media organisations

Lucy Küng-Shankleman

London and New York

First published 2000
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York NY 10016
Routledge is an imprint of the Taylor & Francis Group
Transferred to Digital Printing 2005
© 2000 Lucy Küng-Shankleman
Typeset in Garamond by Taylor & Francis Books Ltd
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
A catalog record for this title has been requested
ISBN 0 - 4 1 5 - 2 1 3 2 1 - 5 (hb)
ISBN 0 - 4 1 5 - 2 1 3 2 2 - 3 (pb)
Contents

List of illustrations vii

Acknowledgements ix
List of abbreviations X

Introduction 1

1 What is organisation culture? 6

2 'The status quo is not an option':

Broadcasting's changing environmental context 23

3 The mass paradigm fragments: The changing nature of

the broadcasting activity 45

4 'Serving the nation': The BBC and its unique place in the
UK's broadcasting ecology 67

5 The 'Mouth of the South' and his 'Chicken Noodle

Network': Ted Turner and the beginnings of CNN 77

6 Continuous revolution: The BBC as a business 85

7 Reinventing the news: CNN's business model 109

8 'Part of the British way of life': The BBC's culture in its

own words 131

9 'Underdogs and outsiders': CNN's culture in its own words 150

vi Contents

10 Reithianism versus Birtism: New strategic directions versus

old cultural values at the BBC 165

11 Adrenaline: Culture's impact on performance, process and

strategic options at CNN 187

12 A special case? Why media organisations need managing

differently 200

Appendix 223
Notes 227
Bibliography 233
Index 239
Illustrations

Tables
Tabl es 35
2.1
3.1 A paradigmfunding
Television shift foroptions
public service broadcasters 51
3.2 Decline of the mass paradigm 66
6.1 BBC stakeholder demands 96
7.1 CNN stakeholder demands 118
12.1 The impact of culture on environmental adaptability 203
12.2 Organisational implications of programming policy 215

Figures
1.1 Levels of culture 10
1.2 Assumptions as a paradigm 11
1.3 Interaction between organisation, professional, industry and
national cultures 14
1.4 Theoretical understanding of culture, strategy and
environmental context 16
2.1 Audience share in Western Europe 27
2.2 Environmental factors and their impact on the
broadcasting industry 30
2.3 Spheres of activity before convergence 39
2.4 Steps in 'disaggregated' media processes 42
3.1 Journalism as an industry sector - layers of influence 60
6.1 The BBC's stakeholder groups 89
6.2 The BBC's core competence 105
7.1 CNN's stakeholder groups 111
7.2 CNN's core competencies 121
8.1 The BBC's cultural paradigm 133
8.2 The BBC's assumption and attitude 'map' 148
9.1 CNN's cultural paradigm 151
9.2 CNN's assumption and attitude 'map' 164
viii Illustrations

10.1 The 'fit' between the BBC's environment,

strategy and culture 173
10.2 The influence of its culture on the strategic
dimensions of the BBC 178
10.3 Tension between commercial activities and public
service remit 179
10.4 The licence fee — source of cultural strength and organisational
weakness 184
11.1 Assessment of the 'fit' between CNN's environment,
strategy and culture 191
11.2 The influence of culture on the strategic dimensions of CNN 195
11.3 Tension between news and scheduled programming at CNN 197
12.1 Broadcasting policy dilemmas 214
12.2 Lead or feed? The impact of increased choice on programme
strategy 216
12.3 The influence of culture on strategic processes 218
12.4 Radical environmental change destroys alignment between
strategy and culture at the BBC 219
12.5 Dissonance between culture and strategy at the BBC 220
A Research design 224
B Accessing culture's successive levels' 225
Acknowledgements

The book and the study that underlies it would not have been possible without
the support and encouragement of a great many individuals and institutions.
First of all, I am indebted to the two organisations that provided the focus for
this study, the BBC and C N N , for their open-minded support for the project
and their readiness to open themselves to academic scrutiny. Within this
context, I am particularly grateful to Bob Nelson at the BBC and to Tom
Johnson, Lynn Gutstadt and Ken Tiven at C N N , all of whom not only made so
much of their own time available, but also helped to open many other doors,
both inside and outside their own organisations. As a result of their backing, a
great many individuals declared themselves willing to share some of their inner-
most perspectives on their professional lives. I am deeply appreciative of the
ready accessibility and openness shown by all of those I interviewed.
This book began its life as a PhD thesis at the University of St Gallen and
my thanks also go to my two academic mentors, Professor Louis Bosshart and
Professor Peter Gomez, whose interest and guidance enhanced my work enor-
mously.
Writing a PhD is at times a tortuous process but the effort is amply rewarded
if, as in this case, the author has the opportunity to broadcast her findings to a
wider audience. I am therefore extremely grateful to Rebecca Barden and her
colleagues at Routledge for their enthusiastic response to this project.
Particular thanks are also due to those who provided friendship and hospitality
during the many international research trips this project entailed. Many, many
individuals helped turn potentially arduous experiences into pleasurable ones and I
am grateful to all of them, particularly Fran Clark, Gill Hudson, Brian and Anke
Ma Siy, Sue Mack, Olive and Allen Synge, Jill Shankleman and Martin Shankleman
in the UK, and Robert Kronley, Wendy Puriefoy and Jane Starr in the US.
Finally, my deepest appreciation is to my husband Gebi for his unfailing
good humour, intellectual engagement and unflinching support during what
must have appeared a tedious and unending process of writing and rewriting. I
dedicate this book to him, and to the memory of my parents.

Lucy Küng-Shankleman
Zürich, November 1999
Abbreviations

ABC American Broadcasting Corporation

BBC British Broadcasting Corporation
CBC Canadian Broadcasting Corporation
C4 Channel 4 (UK)
CD-Rom Compact disc read-only memory
CNN Cable News Network
DBS Direct broadcast satellite
DTH Direct to home (broadcast satellite)
ISDN Integrated systems digital network
IT Information technology
LAN Local area network
NVOD Near video on demand
PBS Public broadcasting service
PC Personal computer
PSB Public service broadcaster
TBS Turner Broadcasting Systems Inc.
TV Television
VCR Video cassette recorder
VOD Video on demand
Introduction

By (say) 2020 a large number of suppliers may be offering broadcasting

products to millions of viewers in several different ways ... Broadcasting
will no longer be the pre-eminent example of a public good, but instead
a host of broadcasting services and products will seek customers like
other private goods.
(Congdon, 1991: xv)

At the turn of the millennium the world's broadcasting industries are under-
going a period of tumultuous and unparalleled change. A cocktail of closely
interwoven changes ranging from the digitisation of information to the
development of global electronic networks, from dramatic increases in com-
puting power and bandwidth capacity to the emergence of the internet, are
combining to change the world's media industries for ever.
Whenever environmental change is discussed in management literature,
it is inevitably coupled with a set of adjectives so over-used as to have
become clichés. It is almost always 'rapid', 'radical' and 'discontinuous'.
These default descriptions have become so familiar that they have virtually
lost their meaning. However, when applied to the world of broadcasting,
such extreme terms are for once absolutely correct. The developments under
way in the global media arena are so far-reaching that none of the industries
involved will ever be the same again.
Since its inception, television broadcasting has been a classic example of a
'public good', with a distinctive financing sector and special regulatory
arrangements. The industry was traditionally characterised by stable, nation-
ally bounded spheres of activity that were clearly circumscribed by
regulation, markets that tended towards the oligopolistic, processes that
were rooted in well-established technologies, strong organisational cultures
derived from the confluence of a variety of professional, national and indi-
vidual influences, and audiences who clearly understood their role in the
broadcasting process.
However, from the late 1980s onwards a series of tremors, including
market liberalisation, the introduction of new transmission technologies,
2 Introduction

and changing social attitudes, triggered the beginnings of an industry restruc-

turing. This was followed by a series of even stronger technologically driven
shocks which have provoked the so-called 'digital revolution'. Developments
such as the internet and World Wide Web, digitisation, rapid advances in
computing power and bandwidth availability and the development of open
global networked electronic platforms are gradually eroding the structural
barriers between the media, telecommunications and information technology
industries. This phenomenon, known as convergence, is leading to profound
change. For broadcasters, channel capacity is fast becoming unlimited. The
potential to design specialist channels for niche audiences, even for an audience
of one, now exists. Viewers are increasingly able to dictate which broadcasting
products they want to consume and when, and to pay for these directly.
Undreamed of categories of interactive products and services are now possible.
Every single element of the broadcasting business model — whether funding,
programming, production, delivery or audience - is subject to forces of disag-
gregation and fragmentation.
As a result, the characteristics of television supply have been altered.
Broadcasting is evolving into a wholly market-orientated system. It is no
longer the pre-eminent example of a public good, but a private good which
must compete for customers like any other. Public service broadcasters can
no longer assume automatic access to every home in the country, nor auto-
matic funding from the public; they must now fight to maintain access to
viewers and, even if publicly financed, expect to find a significant propor-
tion of their income from commercial sources. As a consequence, the way in
which they fulfil their basic function (or, in some cases, whether they are
able to fulfil their basic function at all) is open to re-examination. For all
players, competition is rising steeply, with new competitors coming from
outside national boundaries and from within, as well as from other industry
sectors. Partnering the rise in competition is a rise in uncertainty. How will
media audiences react to these new products and services? Are they willing
to become 'senders' as well as 'receivers', consumers as well as viewers?
The broadcasting world to come will be very different than that in which
the current players grew up. Environmental change means that new
strategic directions are inevitable. The question explored in this book is how
the cultures of these organisations are responding to the change in strategic
direction. What is the nature and extent of their impact on strategic process
in broadcasting organisations?

The BBC and C N N

Against such a backdrop, this study focuses on two organisations.1 The
BBC, the world's oldest public service broadcaster (PSB), operates according
to a clear public mandate, is financed by a universal licence fee, and broad-
casts the traditional 'PSB' wide range of programming. It has always been
 Introduction 3

accustomed to some level of protection against commercial forces and holds

the dominant position in UK broadcasting. CNN is a relatively young US
cable broadcaster that specialises in news and, because it broadcasts on cable
and satellite, is considered to be outside the mainstream of US television. In
1996 it was catapulted into the big league of US broadcasting when it was
bought by Time Warner Inc. and became part of the largest media organisa-
tion in the world.
These organisations were selected on grounds of their dissimilarity,
because they offer the maximum possible range of circumstances to be found
among English-speaking broadcasting organisations, and thus the widest
possible range of cultural influences. The study does not attempt to compare
like with like'. Rather, through examining two organisations which exhibit
strong differences in terms of fundamental mission, national context,
product range and financial basis, it seeks to expose the wide range of value
orientations possible within the same industry, and the way in which
different organisational value orientations create different strategic responses
to fundamentally similar environmental contexts: different organisations,
different business models, same business, same dilemmas.
By the same token this book does not seek to provide any type of judge-
ment, qualitative or quantitative, on the organisations' respective performance
or output. Its goal is to understand how culture affects strategy in these
organisations, not to assess the respective merits of their actual strategies. It
is important for readers to understand that of the two organisations the BBC
is by far the longer established and the more complex entity. This provides a
wonderfully fertile ground for research, but inevitably creates a much
greater scope for analysis and comment. As a result, this book devotes more
space to the unique challenges and dilemmas faced by the BBC than it does
to those of CNN, but this should not be construed as implying that of the
two organisations one is better or worse managed than the other. To repeat,
this book does not attempt to compare and judge the two organisations'
corporate strategies or performance.

Theoretical foundations
This book is concerned with the challenges of managing media organisa-
tions. It explores these issues through close analysis of two leading players in
the Anglo-Saxon media world, the BBC and CNN. Of course, any type of
empirical research into organisations needs to be conducted from a specific
perspective; a theoretical lens' must be adopted through which the objects
under scrutiny can be observed. In this work, the lens' through which the
BBC and CNN are scrutinised is culture, a frustratingly elusive organisa-
tional element which nevertheless has a powerful impact on an organisation's
strategic options. The model of culture that provides the theoretical under-
pinnings of this research was developed by Schein (1992). He contends that
4 Introduction

at the heart of every organisation there is a paradigm of interrelated and

unconscious shared assumptions which directs how members of that organi-
sation think, feel and act.
However, this book is not just about organisation culture and its role in
the management of media organisations. A particular feature of the research
described here is its broad scope both in terms of the range of academic
disciplines encompassed and the span of organisational activities - func-
tional and geographic - analysed. Although about management of media
organisations, its theoretical 'roots' include the social sciences, media and
mass communication studies, national media systems in Europe and North
America, as well as the technology of communications. Pluralism is reflected
also in the variety of ways in which the term 'culture' is used: this book
focuses on the 'culture' of organisations concerned with 'cultural' products,
viewing 'culture' from national, industry and organisation perspectives.

A b o u t t h e research
The in-company research underpinning this analysis of the BBC and CNN
was conducted between 1994 and 1995. During that period twenty-one
senior members of staff were interviewed at the BBC and thirteen at CNN.
The majority of these individuals were interviewed twice, once for the initial
data-gathering and once for feedback. In addition, nineteen expert inter-
views were carried out with senior industry figures and academics in the UK
and US. Full details of the research methodology used can be found in the
Appendix.

Guide t o this book

This book falls broadly into four parts. The first part, comprising Chapters 1
to 3, provides the theoretical background and context to the study. Readers
whose primary interest is the organisations and not their industrial, organi-
sational or competitive context, are recommended to skip this portion of the
work and move straight to Chapter 4 onwards. Chapter 1, 'What is organi-
sation culture', discusses current theoretical understanding of the concept of
organisation culture and its links to strategic processes and organisational
performance. The study's central model, the Schein model of culture, is
introduced and explained, as are related theories concerning how culture is
founded and transmitted and the nature of subcultures, professional cultures
and national cultures. The strategic terms and concepts which are high-
lighted by the Schein model are briefly discussed.
Chapter 2 is entitled 'The status quo is not an option' and has as its
subject broadcasting's changing environmental context. It analyses the global
trends shaping today's and tomorrow's television industry and considers their
implications for broadcasting organisations. Developments such as market
 Introduction 5

liberalisation and deregulation, changes in social structures and attitudes to

the digital revolution, convergence and media mergers and alliances are
discussed.
The changing nature of broadcasting itself is the subject of Chapter 3,
entitled 'The mass paradigm fragments'. This provides an explanatory back-
drop to the analysis of the BBC and CNN by defining and explaining the
broadcasting industry and some of the terms and concepts particular to the
sector. It discusses the various options for funding, delivery, programming
and regulation, major organisational types, the role and function of broad-
casters in general and of public service broadcasters in particular, and surveys
academic research on the culture of broadcasting, the culture of journalism,
and of national differences in journalists' role perception. The chapter closes
by exploring the phenomenon of fragmentation which is currently affecting
many dimensions of the broadcasting industry.
The second part of the book concentrates on the two organisations which
are the focus of this research, the BBC and CNN. Chapter 4, 'Serving the
nation' and Chapter 5, 'The "Mouth of the South" and his "Chicken Noodle
Network" ' provide introductions to these organisations by analysing their
origins, span of activities and performance, and discussing each organisa-
tion's national context - including national and industry culture, regulation
and national media policy and levels of industry competition.
Chapter 6, 'Continuous revolution' and Chapter 7, 'Reinventing the
news', provide assessments of the BBC and CNN as businesses. They
consider the organisations' respective strategic goals and missions, organisa-
tional competencies, strengths and weaknesses, key stakeholder demands
and environmental challenges.2
The unique cultures of these organisations and their implications for
managing media companies are explored in the third part of this book,
which in some respects is its heart. Chapter 8, 'Part of the British way of
life' and Chapter 9, 'Underdogs and outsiders', present the cultures of the
BBC and CNN in terms of an interlinked paradigm of basic assumptions.
Chapter 10, 'Reithianism versus Birtism' and Chapter 11, 'Adrenaline',
explore the implications of the BBC's and CNN's unique cultures for how
these organisations are managed. They explore how culture underpins
strategic processes, look at how culture governs general attitudes towards
strategy, assess the level of 'fit' between culture and strategic processes and
priorities, and analyse dilemmas arising from the confluence of culture and
strategy.
Chapter 12, 'A special case?' concludes the book by exploring the impli-
cations of this analysis for the management of media firms in particular and
for organisations in general.
A brief outline of the research methodology, describing the research
design, methodology, interview sample and themes and methods of data-
collection and analysis can be found in the Appendix.
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