Inside the Collapse of CNN+: Dashed Hopes in a Start-Up’s Woes

From a Wall Street Journal story by Lillian Rizzo headlined “Inside the Collapse of CNN+”:

CNN’s new owner, Warner Bros. Discovery,  said on April 21 that it was shutting down the weeks-old streaming service CNN+, leaving several hundred employees to look for new jobs.

A week later, several of those staffers received packages from CNN: boxes filled with network-branded gear, from pens to food containers, as well as items such as a popcorn maker and headphones, people who received the gifts said.

Some came with welcome notes. “This is an incredible time to be part of CNN,” one note said. “Build relationships and take time to connect with colleagues and learn so that you make the most of your time here.”

The ill-timed gifts, which CNN says were sent mistakenly, were another gut punch for staffers that had bet on CNN+—drawn by the promise of growth in streaming—only to watch it collapse in epic fashion.

CNN’s short-lived experiment is the story of a $300 million-plus bet gone wrong. It’s about power plays in a big corporate merger—the union of Discovery with CNN-parent WarnerMedia that was consummated in April—and starkly different visions about the future of the streaming business.

For the more than 400 workers involved, it’s also the story of the dashed hopes of those caught up in a startup’s woes. CNN+’s rise and fall speaks to the risks people are willing to take to be on the ground floor of something big, especially in a legacy media industry that is searching for a future-proof business model.

Interviews with more than a dozen people involved in CNN+ describe a culture where excitement over what one top producer described as CNN’s “Apollo Mission”—a reference to the program that successfully landed the first humans on the moon—gave way to the realization that failure was arriving swiftly and mercilessly. Many employees of the streaming service started in the past six months or even just a few weeks before the service launched. Several said they left stable jobs or freelancing gigs.

CNN+ staffers who are not placed in other internal roles will get six months of severance so long as they don’t leave the company within 90 days.

The chief executive of the newly formed Warner Bros. Discovery, David Zaslav, decided to end CNN+ after learning the $5.99-a-month service signed up roughly 150,000 subscribers in its first few weeks and was being watched by somewhere between 5,000 and 10,000 people at any given moment, people familiar with the situation said.

In Discovery’s view, those figures were a poor sign. CNN executives argued that CNN+ was on track to hit an internal target of two million U.S. subscribers in the first year and that currently-active-users was the wrong metric to judge a new service, the people said.

In interviews, several CNN+ staffers said they were frustrated Discovery made what they see as a snap judgment and said the new owners should have been more open to input, given Discovery’s lack of experience in the news business.

Still, several staffers said they were concerned, even before the launch, about the service’s business strategy. One producer noted that CNN+ launched without any way for users to sample it—unlike Apple TV+, for example, which initially gave people purchasing new Apple devices a year of free service.

One challenge was that CNN+ didn’t carry live programming from the CNN TV channel. Doing so without the support of cable providers who carry the channel could jeopardize lucrative distribution contracts. CNN+ did plan to add live TV and held talks with major providers before the service’s launch, including about the possibility of distributing the app through their set-top boxes, two people familiar with the planning said.

Also on CNN+’s road map: a plan to offer CNN+ in a discounted bundle alongside WarnerMedia’s HBO Max service by October, the people said. The idea was to mimic what Disney had done in bundling Disney+ and ESPN+.

Discovery and WarnerMedia announced their merger in May 2021. Around that time, CNN was ramping up plans for CNN+ and top executives scoured the organization for experienced staffers who could get it launched in less than a year. One veteran executive described it as a SWAT team. Network recruiters told potential internal hires CNN was prepared to spend $1 billion over four years on CNN+. “How could you turn it down?” the veteran executive asked.

By February of this year, CNN+ was taking shape, having signed deals with Fox News veteran Chris Wallace, former MSNBC journalist Kasie Hunt and other talent, while enlisting network anchors such as Jake Tapper, Wolf Blitzer and Kate Bolduan to create original programs for the platform.

Inside CNN, some senior staffers were concerned about moving ahead with the service, given that the Discovery merger was expected to close soon. But the message came down from the highest levels of the company, including from WarnerMedia Chief Executive Jason Kilar, to go “full steam ahead,” according to senior staffers.

The venture took on startup-type excitement. Alex MacCallum, a New York Times veteran and CNN+ general manager, had a clock in her office counting down to the March 29 launch. In the early going, CNN+ employees were told to spend whatever they needed on travel or flying guests in, and they were told to hire aggressively, network staffers familiar with the situation said.

Discovery and WarnerMedia completed their merger on Friday, April 8. The following Monday, Andrew Morse, the head of CNN’s digital operations and executive in charge of CNN+, met with top Discovery executive JB Perrette—the company’s new head of global streaming—and incoming CNN chief Chris Licht, people familiar with the meeting said. Discovery’s executives got their first financial readout on CNN+ and said they were unconvinced it had a path to success.

They pointed to Discovery’s challenges in launching niche streaming services, including products centered on tennis, the Food Network and its Motor Trend brand for car enthusiasts, people familiar with the meeting said. The comparison of CNN to Motor Trend was jarring for some on the CNN side. Discovery executives see news as another enthusiast category, one person said.

CNN executives argued CNN+ wasn’t meant to be an entrant in the streaming-video wars—alongside giants like NetflixInc.—but rather a subscription news business, people familiar with the discussions said. In Discovery’s view, CNN should focus on its already-large digital platform, CNN.com, one of the people said.

The Discovery executives said they were suspending CNN+’s external marketing.

The same day, April 11, during his visit to WarnerMedia’s New York office Mr. Zaslav stopped by the CNN+ floor. He praised the work CNN’s TV network was doing covering the war in Ukraine, and didn’t focus on CNN+, which staffers who attended said they took as an ominous sign. Staffers concerned about Discovery’s lack of experience in news weren’t reassured when Mr. Zaslav mentioned Discovery’s news channel in Poland, TVN24.

A few days later, after press reports saying the CNN+ service wasn’t getting traction, Mr. Morse had a meeting for hundreds of staffers, from talent to producers to engineers, people familiar with the meeting said. Mr. Morse told staffers to ignore the public noise and said CNN+ was meeting expectations, but didn’t say what the expectations were—leaving some employees concerned.

Warner Bros. Discovery completed plans to shut down the service on April 14, a person familiar with the decision said. Mr. Licht wasn’t slated to take over at CNN for another few weeks. He was aware plans were being drawn up to make the shutdown announcement and didn’t want that to be his first interaction with CNN+ staffers, the person said. He went to the CNN+ office on April 19 and walked around shaking people’s hands, making small talk and mentioning that his wife worked at CNN for years, people who attended said.

Two days later, Mr. Licht broke the news to top CNN officials that the service was closing. He blamed the previous management of WarnerMedia for pushing forward with the launch on the eve of a merger. “We have to own what happened, even though it’s not a result of what we did,” Mr. Licht said. He said some CNN+ content could move to other Warner. Bros. Discovery platforms. Several staffers credited Mr. Licht with being empathetic in a difficult moment.

National Public Radio veteran Audie Cornish was in the process of shooting the third episode of her show for CNN+ when Mr. Licht called. Ms. Cornish, former co-host of “All Things Considered,” had closed a deal to join CNN+ earlier in the year, because she was excited about the prospect of a streaming venture. Mr. Licht told her CNN would find a new home for her and her content.

The last day of operations for CNN+ was April 28. CNN+ logos were quickly removed from the floor, staffers said.

A big CNN+ sculpture was replaced with one for HBO Max.

Lillian Rizzo covers the cable media industry, focusing on operators Comcast, Charter and Altice, as well as television station owners Sinclair, Nexstar and Liberty Media.

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