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What went wrong and why it was canceled

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Chris Licht, executive producer of Our Cartoon President, speaks onstage at the CBS/Showtime section of the 2018 Winter Television Critics Association Press Tour at The Langham Huntington in Pasadena. This was January 6, 2018, in Pasadena.

Frederick M. Brown | Getty Images

Chris Licht didn’t start his new position as CNN’s chief before May.

On Thursday, he addressed about 400 CNN+ full-time staffers via remote video link. The remote link was shared with hundreds of CNN employees, who then listened to the new boss’s thoughts.

Licht wasn’t expecting the introductory speech he gave to his many employees. agreed to take over for Jeff Zucker earlier this year. Licht informed employees that the six- to nine month long project, CNN+ subscription streaming service, would be ending on April 30th, a month after it was launched. Licht acknowledged the fact that some employees would be losing their jobs.

Licht is officially established May 2. quit his jobCNN’s executive producer, as well as “The Late Show With Stephen Colbert”. According to those who heard him speak, he seemed passionate and sympathetic on Thursday.

CNN+’s debacle

CNN+ won’t last more than a couple of weeks. It was due to several factors. Below are key insights:

  • Prior to their merger, WarnerMedia and Discovery executives could not discuss operations planning. CNN+ had already been criticized by Discovery leaders.
  • WarnerMedia executives had expected CNN+ to reach 2,000,000 subscribers within a year. However, the new leadership didn’t believe so.
  • David Zaslav, the CEO and founder of Warner Bros. Discovery is pursuing a new streaming strategy, which focuses more on bundles than standalones.

It was the first time that some CNN+ employees had heard of Licht. But, awkwardly, for scores of others, it wasn’t — they had met Licht just two days earlier, when he toured CNN’s New York headquarters. Licht made it a point of stopping by the 16th level, recently transformed from Turner Broadcasting’s floor into the new home for CNN+.

He shook hands with employees — whoever happened to be in the office that day — with no hint that two days later, he’d tell them the standalone streaming service would be shuttered. CNN+ employees will be allowed to apply for other positions at CNN. Axios reported about half, or 350 employeesIt is likely that he will be put off.

People in attendance said that Licht repeatedly stated “This is a unique situation”, more than once.

CNN+ was launched on March 29, but it quickly fell apart due to a strange mix of leadership disputes, corporate deal-making and legal restrictions.

Warner Bros. executives stated that “it will be Harvard case studies.” Discovery executives.

CNBC spoke with a dozen people directly involved with CNN+ about why it folded so quickly — and why it ever launched in the first place.

CNN+ has been born

People familiar with the subject say Zucker and Andrew Morse were initially discussing the launch of a streaming platform in early 2020. It was discussed months before Jason Kilar became chief executive at WarnerMedia.

Jason Kilar

Phil McCarten | Reuters

Zucker and Morse met in Kilar to find a digital ambassador. His role was to turn WarnerMedia into an organization that is profitable. revolved around streaming videoInstead of distributing content to movie theatres and cable networks, it should be a multi-faceted approach.

The CNN leadership envisioned CNN+ as something akin to The New York Times – a subscription news product that would eventually house video, podcasts, and all of CNN’s interview and entertainment programming. CNN felt that it could have a better global brand than the Times which is more well-known in the U.S. than elsewhere. Kilar felt that CNN required a digital subscription strategy after seeing the decline in valuations of many advertising-based media properties and volatility in ad markets.

As millions of cable subscribers drop each year, CNN+ will become the main landing place for CNN’s new linear network. Like ESPN.com executives envisaged CNN.com becoming more rich in paywalled content, and promoting CNN+ subscriptions. The executives explored the possibility of making CNN.com all part of a subscription but concluded that CNN.com’s content was too weak to justify a complete paywall. CNN.com has been profitable for years and attracts over 200 million visitors per month.

McKinsey, a consulting company, was hired by CNN to manage operations for CNN+. However, the strategy was handled by Kilar, Zucker, and Morse. They believed that CNN+ would reach 2 million subscribers by the end of year 1. This was based on months of research. Kilar felt that the figure was conservative and an “upset”. The aim was to rival The New York Times. crossed the 10 million subscriber mark this year after acquiring digital sports website The Athletic.

WarnerMedia executives had a plan to meet their goal: They would use HBO Max, CNN.com and CNN’s linear channel as a constant marketing presence – a “funnel” – to push subscribers. It was decided to launch CNN+ at the start of 2012 and bundle it with HBO Max later in September. The strategy was to offer “would-you like fries with this” for millions of HBO Max subscribers (HBO and HBO Max combined had 3,000,000). new net adds last quarterThe result would be a strong, global news service.

Unexpected events

On December 8, 2019, in New York City, Chairman of WarnerMedia Jeff Zucker attended CNN Heroes at American Museum of Natural History.

Getty Images| Getty Images

Zucker set a launch date for 2022’s first quarter and began to hire hundreds of people in production, marketing and software engineering roles.

Allison Gollust, CNN Worldwide’s Chief Marketing Officer was responsible for promoting the new service. Morse was responsible for the day to day operations. Kilar gave Zucker permission to invest hundreds of millions in the new service, which would give CNN an early jump into the digital age.

Morse: “We are about to make a very big swing, and we have the support of the company.” said in July 2021CNN announced that it was building the service on April 1, 2005.

Premiere was the plan. with eight to 12 hours of live programming a day on the service.Zucker started to sign up external talent for anchor shows. Kasie Hunt……………????…………..??……………………… longtime Fox News anchor Chris Wallace.

When the merger was announced, AT&T said the deal would likely close in the middle of 2022.

CNN+ was launched for use in the first quarter of 2022. This timeline was established by the CNN team. This would allow the service to breathe for a while before Zaslav’s leadership team assumed control of Kilar’s position. Kilar knew that he was leaving the company after the merger. Zucker tried to launch it in January, but technical problems prevented him from doing so. CNN needed to build a product entirely from scratch using a completely new technology stack rather than just building upon HBO Max. This took time and CNN did not want to launch an unstable product. Zucker and Morse adjusted to launch at the beginning of March.

Over the course of the years, the process became more expedient than expected. By February, AT&T and Discovery were targeting a close date of around April 11 – months earlier than anticipated.

CNN+ launched just weeks ahead of the closing date for the merger.

Then, Zucker abruptly resigned on February 2.

Resignation of Zucker has an impact

Surprisingly, Zucker’s resignation over an undisclosed affair with Gollust didn’t alter the product’s course. The staff claim that the normal day to-day activities of the division were not disrupted by his sudden absences. However, Morse was there and continued to lead the ship forward. CNN+ was, in fact, a common goal for employees. Although CNN might not have had a clear strategy for the future with interim leadership, and there was no merger in sight, it did set a goal to launch CNN+ within the deadline.

So, Zucker and Gollust’s departures didn’t have a direct effect on CNN+. Their resignations did not cause harm to the product. Instead, it strengthened the determination of those remaining employees who wanted it launched on schedule. It was very similar to Zucker’s vision when CNN+ launched on March 29. Although there were less live programming hours in March than in July (8-12), it was still a good product.

Internal sources indicated that the marketing for the product was less strong without Gollust in the weeks leading up to launch. Staffers said Morse was working overtime by that point, trying to wear multiple hats by running the service and getting support from corporate — previously the jobs of Zucker and Gollust.

As a result, the internal marketing of CNN+ — how CNN executives viewed the product compared with Discovery’s incoming leadership — helped lead to its demise.

Diverse strategies

Zaslav was already settling on a streaming strategy to Warner Bros. in the early part of this year. Discovery.

In order to increase the appeal of his streaming bundle, he decided to bundle HBO Max and Discovery+ with WarnerMedia’s news and sports. He thought that the collection could rival Netflix in global streaming. CNN will be eventually a tab in the HBO Max Discovery+ service.

David Zaslav, President & CEO of Discovery Inc.

Anjali Sundaram | CNBC

This made CNN+ an antithesis to his strategy.

Warner Bros. Zaslav was concerned that Discovery was spending hundreds and millions to produce programming for CNN+. Wall Street often evaluates media companies according to their primary streaming product. Disney relies heavily on Disney+ subscription numbers. Warner Bros. The number of HBO Max Discovery+ customers bundled with Discovery will influence the Discovery share price.

CNN+ is a niche product. Warner Bros. could lose subscribers to the bigger bundle if the cheaper CNN+ option is offered. It is a wasteful use of resources and Discovery.

One particularly irritating trait of CNN+’s pricing plan to Discovery executives was its “Deal of a Lifetime” plan — offering a 50% discount (initially $2.99 per month instead of $5.99) for as long a consumer remains a subscriber to CNN+. Although it may have been a good perk for CNN+ subscribers, Zaslav found this a poor strategy. Anybody who signed up for the higher bundle because of CNN content had an “everlasting” reason not do so.

Discovery also had niche streaming products that it tried, and they were successful. GolfTV, cycling streaming network GCN+And Food Network KitchenIn 2020 and 2021. Discovery did not benefit from any of these products. Zaslav and JB Perryette (who was taking over as Discovery leader) were among those who lost their jobs. Warner Bros. DiscoveryThe head of streaming at’s didn’t want time wasted on a strategy that didn’t work.

The strategy to use CNN as an HBO Max fan was fundamentally opposed by Zucker, Kilar and Morse. Consumers can access CNN’s world from their own home and not leave it when they view the wide variety of CNN content. They feared that viewers would choose to watch reality TV shows or HBO dramas if CNN were part of larger HBO Max Discovery+. CNN would see its value decline over time.

Zaslav’s staff thought it was ridiculous to compare the New York Times. The New York Times paid to make digital subscribers, and they did this by making their content available behind a paywall. CNN was not doing this. CNN instead would try to convince existing users who already get CNN.com content to watch CNN cable TV, to pay $6 per month more for Discovery programming they don’t need.

Zaslav and his team suggested that Fox’s streaming site Fox Nation be used as a comparison. It hasn’t yet reached 2,000,000 subscribers since its launch in 2018.

Launch

In the weeks before the launch, Morse began begging Kilar and other AT&T executives to see if there was a way he could speak with the Discovery leaders. Staff described the scene as Morse “shouting” from the rooftops in search of a meeting.

CNBC reported that Zucker had left CNBC in February. Discovery wasn’t enamored with CNN+ and disagreed with the strategy.CNBC was informed by Zaslav that he had not received a review of the business plan for CNN+ and its offerings. This was a worrying statement about CNN+’s future.

Morse wanted direct information from Discovery about Zaslav’s wishes. But AT&T told CNN’s team it couldn’t have any discussions with Discovery because of so-called gun-jumping laws which don’t allow the two sides to discuss future strategy until a merger closes. Kilar didn’t speak to Zaslav about CNN+. He also said that he was going not make any decisions on CNN+ based solely on media reports.

Zaslav did meet with CNN executives in early March in a so-called “parlor” meeting with Michael Bass, Amy Entelis, and Ken Jautz, who were running CNN after Zucker left, as first reported by Puck’s Dylan Byers. Zaslav asked for information about CNN+’s go-forward strategy during that meeting. Lawyers in attendance said he was not allowed to ask.

Morse kept going. Within the first 2 weeks of CNN+’s launch, 150,000 people paid for CNN+. CNBC reported that the number of subscribers to CNN+ was still 150,000. fewer than 10,000On a daily basis, they were viewed. CNBC has learned that the number actually was closer to 4,000.

WarnerMedia executives actually were thrilled about the new start. The daily active user (or DAU) statistic was a pointless metric for them. Number of subscribers has been the key metric to all digital services. Discovery executives believed that 150,000 subscribers was not enough to provide sufficient foundation for 2 million users in a single year. CNN+ was not going to be a popular show. Following an initial launch, subscribers began to decline each day. They also considered the daily active users to be significant.

They also decided not to decide about CNN+ if its leader, Licht hadn’t started. Discovery asked Licht for help to get started early so he could determine what to do about the service.

8.30 a.m. ET on April 11 — the first day Warner Bros. Discovery began trading as a combined company — Licht and Perrette told Morse and his team that CNN+’s marketing budget was immediately going to zero. Licht and Perrette met for the first time at CNN.

CNN+ employees left the meeting understanding that CNN+ would not continue to operate as it is. Although they were hopeful that it would not be completely shut down, they were concerned about whether a decision was already made. Morse and his group argued that it was only 12 days old. The DAUs statistic was absurd, they said. The CNN+ head of product Alex MacCallum was originally from The New York Times. CNN wasn’t meant to be considered a streaming service for niche entertainment.

The argument was that 150,000 subscribers is more than The New York Times or The Washington Post got within the first 2 weeks of launching their digital subscriptions.

Discovery thought the analogy was irrelevant. While the discussion on April 11 was never heated, CNN+ expressed clear dismay. The meeting lasted an hour to review two years’ worth of work.

Ten days later, Licht announced he’d decided to kill the product. Morse said last weekHe’s leaving after a transition period.

CNN+’s history

CNN staffers share dismay that Discovery did not backchannel information to derail the launch of CNN+ if they weren’t happy with the strategy.

It is unclear if Discovery deliberately withheld information prior to CNN+’s launch in order to count the thousands of laidoffs and save operation costs that resulted from its shutdown. This was part of Zaslav’s promise to Wall Street of $3 billion worth of synergies as part the merger rationale.

Kilar was very vocal about his belief on CNN+. He was present at the launch of CNN+ on March 29th. wrote a series of tweetsIts importance is underrated.

CNN+ will be, according to my estimation, as crucial to CNN’s mission and vision as the linear channels service in the last 42 years. He tweeted that CNN+ was “undoubtedly as important” and added: “CNN+ also is important because it’s CNN that is unmistakably adopting a robust, scalable digital business model.”

CNN has some questions about whether Zucker could have saved product due to his close relationship with Zaslav. However, it is possible that the surprise departure allowed Warner Bros. to save the product. He was able to avoid a bullet. He didn’t need to inform his friend that the project he had been working on for the last year was no longer at Warner Bros. Discovery. Since Zucker’s resignation, Zucker and Zaslav had not spoken. No one knows who is responsible for Zucker’s resignation. His departure left CNN less stable, which has made Zaslav the first CEO to have major problems with the company.

CNBC was told by several former and current CNN employees that the CNN+ scandal could signal a new era in CNN.

While many WarnerMedia employees have complained about working under the ownership of a phone company that didn’t understand entertainment, AT&T largely left CNN and Zucker alone. He held great power in WarnerMedia and was supported by CNN. Axios reported WarnerMedia planned to spend $1 billionCNN+ for the next four-years.

CNN+’s quick axing of Zaslav, combined with Warner Bros. Discovery board member John Malone’s comments to CNBC about returning CNN to hard news,This will signal that the corporation is more involved in shaping its future.

CNN will align its strategy with its parent company from now. CNN staffers fear that, if CNN is seen as an accessory piece for streaming bundles, it will not be able flourish as a brand and linear TV subscribers are vanishing.

It is not yet clear what the implications of this shift will be. It will bring about a cultural shift for cable news networks whose leaders have gotten used to being given what they want.

They clearly did not with CNN+.



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