When Al Jazeera America was launched to great fanfare in 2013, its then-leader boasted he didn’t have to worry too much about profits, Wall Street Journal reported Thursday.
After all, the cable news channel was backed by the oil-and-gas-rich government of Qatar, and oil was trading around $100 a barrel.
On Wednesday, with oil trading near $30, Al Jazeera made an about-face, announcing it was shutting its American cable channel by April 30 for economic reasons.
“The economic landscape of the media environment has driven its strategic decision to wind down its operations and conclude its service,” wrote Al Anstey, an Al Jazeera executive who took over as chief executive of the American channel in May after its founding CEO was ousted in the wake of discrimination suits.
Charles Herring, president of Herring Broadcasting Co., which runs the conservative One America News Network, said his company is interested in buying the channel because of its valuable affiliation agreements. One America is currently available is about a quarter as many homes as Al Jazeera America and would like to put its channel in this wider footprint, he said. A spokesman for Al Jazeera declined to comment. Trade publication Multichannel News earlier reported Herring’s interest.
The move follows internal announcements from its Doha headquarters in recent months that there would be significant cuts at Al Jazeera, which runs several channels, including its flagship Arabic channel and an international channel in English that isn’t currently distributed in the US, said people familiar with the matter. The government of Qatar, which backs Al Jazeera, gets about 90% of its budget from the energy industry, according to the International Monetary Fund.
But the US channel faced acute financial challenges of its own. After purchasing Al Gore’s Current TV for nearly $500 million, Al Jazeera put some $2 billion into Al Jazeera America, said people familiar with the matter. It hired some 800 journalists at launch and opened 12 bureaus around the US.
The channel hoped to differentiate itself from other cable and broadcast news outlets by doing investigative journalism. The channel steered clear of the traffic chases, celebrity gossip and political shouting matches. Its on-air look was stripped of the graphics that fill the screens of CNN, Fox News, MSNBC and other outlets. The strategy paid off in awards for its work. High ratings and distribution proved more challenging.
The channel, which made its debut in 50 million homes and is now in 60 million, had to fight so hard to keep distribution that it sometimes ended up paying distributors instead of getting paid by them, according to people familiar with the matter.
Competing cable-news networks are in 90
million homes or more. Al Jazeera America’s television audience was small, often fewer than 25,000 viewers, giving the independent channel little leverage with either advertisers or distributors.
Partly as a result of its weak negotiating position, Al Jazeera America was forced to stop streaming Al Jazeera English online in the US, which had helped it build influence thanks to its close-up coverage of the Arab Spring. It was a condition of its deals with distributors, who are never fans of paying for channels that also put their content online free.
As part of its announcement on Wednesday, Al Jazeera said it will now “expand its existing international digital services to broaden its multiplatform presence in the United States.”
In addition, the channel carried baggage from its name and faced challenges of overcoming perceptions of anti-American bias. There is still hostility among many Americans because Al Jazeera’s Arabic channel provided an outlet for Osama bin Laden after the Sept. 11, 2001, terrorist attacks.
That rancor never really left. When the network recently aired a controversial report about athletes doping, which included a suggestion that quarterback Peyton Manning may have used human growth hormone, ESPN commentator and former Chicago Bears coach Mike Ditka called the channel “garbage” and “not a credible news organization.”
There were also internal controversies and embarrassments at the channel. Last year, lawsuits were filed over the management style of CEO Ehab Al Shihabi, and several top executives quit because of similar issues. He was replaced by Mr. Anstey.
Then it was revealed that Al Jazeera America’s General Counsel David W. Harleston was practicing law without a license.
Employees were notified of the impending channel shutdown on Wednesday. Mr. Anstey said in a statement that Al Jazeera America is “committed to conducting this process in a way that is consistent with its respect for colleagues.”