CNN’s new parent company abruptly pulled the plug on the network’s $100 million venture into online streaming — a spectacular reversal that stunned employees barely three weeks after the launch of the service, known as CNN Plus.
CNN to shutter $100 million streaming service, CNN Plus, after a month
Notably, the service was conceived and developed under CNN’s former owner, WarnerMedia, but was launched just days before Discovery Inc.’s long-gestating acquisition of the company was finalized. Discovery executives are now in charge of the merged company, called Warner Bros. Discovery, and made the decision to end CNN Plus at the end of the month.
CNN Plus was the cable-news giant’s bet on digital streaming and its hedge against the rising popularity of the “cord cutting” that has led to a steady erosion of cable subscriptions. It sought to lure viewers with exclusive, original programs hosted by familiar CNN journalists and newcomers such as former Fox News host Chris Wallace and actress Eva Longoria that could be watched live or on-demand. It also offered documentaries and special series already aired by CNN, including the popular food-and-travel programs hosted by Stanley Tucci and the late Anthony Bourdain.
But CNN Plus was unable to offer its subscribers streaming access to CNN’s popular daily television news programs because of noncompete restrictions in its contracts with cable distributors. And in its first month, it appeared to be having trouble persuading enough customers to sign on to the $5.99 monthly service.
Its sudden end reflects one of the biggest and most expensive misfires in recent media history. Quibi, another heavily promoted streaming service that centered on entertainment, shut down in late 2020 after less than seven months and more than $1.5 billion in investment.
The announcement, delivered by CNN’s newly appointed chairman and CEO Chris Licht, astonished employees who gathered in a TV studio on the 19th floor of CNN’s headquarters in New York. After his speech, Sara Sidner, a longtime CNN correspondent who moved from Los Angeles to New York to host a CNN Plus show, took the microphone.
“This is mind-blowing, to be perfectly honest,” she told the gathering, according to one staffer who was at the meeting and spoke on the condition of anonymity because they were not authorized to comment.
CNN Plus hired about 700 people for its launch. A person at the network said that 350 people will be affected by layoffs, though the company expects many of those employees to find new roles at the company, absorbed back into CNN or into open jobs at Discovery-owned networks such as the HBO Max streaming service.
Besides Wallace, CNN Plus had built new shows around several other marquee talents hired away from prominent news organizations, including Kasie Hunt from MSNBC and Audie Cornish from NPR. A person close to the situation, who spoke on the condition of anonymity because they were not authorized to comment, said that all three, who are believed to have signed contracts, are expected to remain with the company. Hunt has already made appearances on CNN’s main channel.
In all, the shutdown order may be the largest and most substantial blow to CNN, a network that remains enormously profitable but has recently been beset by declining ratings and headline-grabbing scandals.
In recent months, it has weathered controversy over the firing of its most popular host, Chris Cuomo, who was dismissed by CNN’s former chairman, Jeff Zucker in December. The firing was prompted by Cuomo’s efforts to help his brother, former New York Gov. Andrew M. Cuomo (D) battle accusations of harassment in strategy sessions and back-channel conversations that crossed ethical lines. About the same time, CNN received a complaint of sexual harassment involving the host as well, which he has denied.
Two months later, Zucker himself was nudged out after acknowledging that he had failed to disclose a consensual romantic relationship with a top CNN executive to his bosses at Warner Media.
As these dramas played out, CNN Plus moved toward a launch in late March. It began streaming less than two weeks before Discovery’s acquisition of the brand closed.
One outside observer who had been cautiously optimistic about CNN Plus’s chances last month said Thursday that its demise “was always preordained” by the corporate takeover on its heels.
“It had nothing to do with the success or failure of the CNN Plus launch,” said Chris Balfe, a veteran digital media executive. “It was killed way before we would ever know whether it was a successful product.”
He added that he saw no connection to Wednesday’s drop in Netflix’s stock price, which plunged after the streamer announced that it shed a net 200,000 subscribers since the start of the year — its first decline in a decade.
But Jon Klein, the former president of CNN U.S., said the decision “must have seemed like a straightforward call” for the new boss, Warner Bros. Discovery’s chief executive David Zaslav, since Netflix’s decline suggests that Wall Street is souring on streaming. “Timing is everything,” he added.
Klein said that Warner Bros. Discovery probably chafed at the “start-up business model” employed by CNN Plus, which planned to spend a reported $1 billion over four years to become profitable — “make a splash early, lose a ton of money in the short-run, while creating long-term value,” as Klein summarized it.
In a memo to staff earlier Thursday, Licht called the decision to close CNN Plus “incredibly difficult,” but said that it would allow the company to “refocus resources” on CNN’s journalism.
A veteran staffer said there had been rumblings about changes to CNN Plus under the new company, but a wholesale closure wasn’t expected.
“We expected them to cut off a few fingers, not the entire arm,” he said. He spoke on the condition of anonymity because he isn’t authorized to speak on behalf of CNN.
The network has not released any data on the number of people who have subscribed, but early media reports suggested that the number was lower than expected considering the overall cost of the project.
Meanwhile, Zaslav, the new chief executive, had expressed a desire for the larger company to have one primary streaming service rather than a bevy of them.
During the town hall, Licht called the shutdown decision a “uniquely [bad] situation,” using an expletive, and told staff that “it is not your fault that you had the rug pulled out from underneath you,” according to one employee.
In his memo to staff, Licht said the decision was aligned with the company’s broader strategy for reaching viewers. “In a complex streaming market, consumers want simplicity and an all-in service, which provides a better experience and more value than stand-alone offerings,” he wrote in his staff memo.
He also commended the staff for “building and flawlessly launching CNN+ in a very short period of time” and promised that some of the new programming they developed will move to CNN or the company’s other networks, where news will be “an important part of a compelling broader offering along with sports, entertainment, and nonfiction content.”
Whereas CNN Plus featured a heavy dose of lifestyle programming and cultural conversation, Licht said that CNN will from now on focus on newsgathering and journalism.
As part of the transition, the company announced the departure of Andrew Morse, a veteran CNN digital executive who has served as head of CNN Plus, with Alex MacCallum stepping in to oversee the network’s digital efforts.
The news marked a somber first chapter for Licht, who most recently served as executive producer for Stephen Colbert’s late-night show but previously launched MSNBC’s hit “Morning Joe” and overhauled CBS’s morning news show.
Hunt, the former MSNBC journalist, said in an interview with The Post last month that she was excited to get Licht’s advice on her CNN Plus show. “I will be begging him for five minutes of his time to let me know how to make this show better,” she said.
Source: WP
