How What to Do With CNN+ Was Decided

From CNN’s Reliable Sources:

When WarnerMedia and Discovery merged earlier this month, the incoming management team faced an immediate question: What to do with CNN+.

So at 8 a.m. on April 11, the first morning of Warner Bros. Discovery’s corporate life, before the stock even began trading on Wall Street, the company’s new streaming boss J.B. Perrette and incoming CNN CEO Chris Licht held a critical meeting about the two week old subscription service. On the other end of the video call were CNN chief digital officer and EVP Andrew Morse, CNN+ general manager Alex MacCallum and chief technology officer Robyn Peterson.

The meeting was Discovery’s first full look at the CNN+ business model and the initial subscriber numbers. That’s because executives at competing companies are legally barred from such discussions during a merger review process.

But everyone in the meeting knew that Perrette and his longtime boss David Zaslavwere inclined to roll all of the company’s assets into one super-sized streaming platform. Discovery executives were clear about that in public statements a number of months ago. It became even more evident when Morse, an outspoken believer in CNN+, shared his status report on April 11. Perrette’s concerns were readily apparent.

The situation “is honestly really simple,” a CNN executive remarked. “Two very different strategies for a future caught in the middle of a corporate merger.”

Ten days later, on Thursday, CNN+ was cancelled in a highly public way. Licht and Perrette announced that the service will cease operations on April 30. Subscribers will receive prorated refunds. Hundreds of staffers will either land new positions at the company – or be laid off.

There were certainly rumblings that the new management team was going to take some action. But few really anticipated that the entire service would be shuttered less than a month after it had debuted.

From the POV of the leadership team that launched CNN+, one of the world’s top news brands had to start a subscription business to secure its future. It was an expensive but necessary bet – and had to be made regardless of merger timing.

From the other POV, conveyed by Perrette during a town hall with staffers on Thursday, the “prior leadership” of CNN endangered the brand because they “decided to just keep going” with the planned March launch of CNN+ despite the impending merger.

“This wasn’t fair to the incoming team or all the employees who have worked so hard at CNN+,” a Discovery veteran remarked. “Why not be prudent and wait two weeks till the close?”

Discovery has tried niche streaming services in the past with little success. Perrette’s statement in the end-of-CNN+ press release spelled it out: “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.”

This back and forth is the talk of the media biz right now. It’s likely going to become a business school case study. So we’re going to analyze it in detail… just a couple of paragraphs from now… but let me first say this on a personal note: TV is a team sport, and “Reliable Sources Daily” is made by an amazing team. From the cold opens to the closing thoughts, the guest bookings to the graphics, the show is superb, thanks to the producing staff. And on Thursday evening, despite this news, we got together and planned Friday’s show.

One of those outstanding team members, Ellie Smith, tweeted a message that went viral on Thursday. She wrote: “PSA if you’re going to tweet something snarky about CNN+, hundreds of journalists and technicians who did nothing but work their tails off just had the rug pulled out from under them. So be kind.”

More key details

>> Morse is leaving CNN after a transition period. He said in an internal memo that “the vision the new leadership has for the future is different than the one we’ve had. That’s OK. That’s all part of change…”

>> Licht told staffers that he wanted Morse to stay, but respected the decision…

>> MacCallum “will step in to lead CNN Digital” and work with Licht “to determine a leadership strategy going forward,” the company announced. Execs said they intend to double down on CNN Digital’s strengths…

>> Within the halls of CNN, Licht got credit for his blunt and empathetic approach. He highlighted the quality of CNN+ and called its closure a “uniquely shitty situation.” He told the affected staffers, “It is not your fault that you had the rug pulled out from underneath you.” And he vowed to minimize the impacts to staff…

>> Here’s our full story for CNN Business

“Total and utter shock”

Astonishment and disbelief reverberated throughout the 16th floor of CNN’s Hudson Yards office, which houses some of the hundreds of CNN+ employees. “Total and utter shock” is how one staffer put it to me after Licht and Perrette’s town hall meeting. “At first, people were really freaking out,” explained the person. “And then, toward the end of the meeting, it just turned to sadness. Every team was just huddling with each other.” CNN+ employees broke out bottles of whiskey and wine to commiserate, and some later retreated to nearby bars…

Part of the equation?

WBD has billions in debt and executives are under pressure to realize $3 billion in savings. Which is to say, CNN+ was obviously an attractive opportunity when looking to implement cost-cutting measures. As CNBC’s David Faber put it, “Spending $500m a year on a venture the boss doesn’t believe in while he tries to quickly fulfill a $3b cost synergy promise. CNN+ never had a chance…

“It’s all TBD”

So what happens to the CNN+ programming now? That’s up in the air. Licht said at the town hall that some of the content “will have a home on CNN.” Other programs may move to HBO Max or CNN Digital. Others will not continue in any form. An agent for one CNN+ host, who was set to host a weekly show on the streaming service, described their client’s program at the network as facing an uncertain future. “It’s all TBD,” the agent told me. But the agent added that the network has gone out of its way to make clear that it is committed to finding roles elsewhere for CNN+ hosts…

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