Media: BBC World battles as CNN steals show

The praise for BBC World's coverage of East Timor was of the highest order. "Every hour I am able to watch the suffering of my people thanks to BBC World," said East Timorese resistance leader Xanana Gusmao from his refuge in the British embassy. "It is very, very important to us that you cover our suffering and do what we cannot do - say to the world that we are dying."

It is the sort of testimony that the BBC is proud of - reminiscent of the days when Beirut hostages John McCarthy and Terry Waite praised World Service radio for keeping them in touch with the world. It underlines the view of Patrick Cross, the head of BBC World, that the television channel "benefits Britain, British culture and British trade".

The argument that BBC World represents the best of British journalism and presents it on a global stage will be pushed in coming weeks. After last week's announcement of 50 job cuts at the channel, plans are afoot for top BBC journalists from Kate Adie to Ben Brown and George Alagiah to lobby both Greg Dyke and the parliamentary foreign affairs select committee for more money.

BBC World has been stripped back to its bare bones. Thirty production staff have been lost, and most of the channel's current affairs programmes stripped away. Output will now consist of half-hour news bulletins broadcast on the hour, with most of the rest of the time filled in with BBC domestic programmes.

In terms of the international status of the BBC, and the Corporation's ambitions to be a global player, the cutbacks are being presented as a crisis, and BBC Worldwide boss Rupert Gavin's comment that the channel is now "a clear, marketable proposition" were portrayed as something of a joke.

BBC World, campaigners point out, has been left with a budget a small fraction of that of America's mighty CNN. Its lack of money showed onscreen, where it was plainly a struggle to fill up the airspace, and that can only get worse.

From its beginnings in 1991, BBC World has trailed miserably behind CNN International, mounting up huge losses which last year came to pounds 15.6m. Patrick Cross explains why: "CNN was lucky enough to start first and it took it 12 years to break even. It's a slow take off for any business in this area."

But that is not the full story. In 1991, CNN's success during the Gulf War prompted competitors to enter the market in global news - not just BBC World but also Euronews, now owned by ITN, and Sky International. CNN instantly lost its monopoly. But it has spread its coverage from 7.5 million homes to 150 million, and built its revenues to a handsome $200m last year, with profits of about $50m.

And if Iraq was where CNN made its name, then BBC World had reason to believe that Kosovo would be its war. The corporation has publicised the fact that Pristina was a "BBC town", and that refugees and ethnic Albanians used the service to keep up with what was going on.

CNN's strategy has been based on the idea that there is no longer a market for real, global news. Instead, it has invested $30m in regionalising its output, and produces four international versions - for Asia, Europe, North and South America. "It's a very, very competitive marketplace - not for the faint-hearted," says Chris Cramer, president of CNN International. "In this environment you have to reinvent yourself."

The reinvention of CNN is about to enter a new phase - what Cramer describes as the "second level of regionalisation". The US news organisation is now linking up with domestic news suppliers in Europe to take a stake in particular markets. CNN Plus is a joint venture with Canal Plus in Spain, while CNN Turk and CNN Deutschland are also underway.

The regionalisation strategy also incorporates CNN's Internet businesses: eight news sites have generated four billion page views in the first eight months of the year, and according to Cramer, CNN online, unlike most Net businesses, is making a profit from advertising.

BBC World, according to Cross, is sticking with the view that "global news should be global", but, says Jonathan Barnard of media buyers Zenith International, advertisers prefer the CNN approach. They prefer an established, verifiable presence in a particular market, he says, to a pan-regional approach where ratings figures and viewer demographics are hard to come by.

BBC World says that its most successful market is Europe, and yet it has only a fraction of the CNN audience - with just 270,000 people tuning in at a given point in the day, to CNN's 1.45 million.

Rupert Gavin admits that BBC World will not go into profit within the next couple of years, but he hopes to be in the black within the decade. Having been told by the Government that the channel should be commercially run, it now seems inevitable that it will struggle financially for the foreseeable future, and is unlikely to have the budgets to match CNN's rapid move into local markets.

The commercial imperative "is not the only reason for doing BBC World", says Gavin. "It has very important benefits for the BBC's overall news organisation. It is part of projecting the BBC and Britain around the world."