United states

What went wrong and why it was canceled

Executive producer Chris Licht of the TV show Our Cartoon President speaks on stage during the CBS / Showtime portion of the 2018 Winter Television Critics Association’s pre-tour at The Langham Huntington, Pasadena on January 6, 2018 in Pasadena, California .

Frederick M. Brown | Getty Images

Chris Licht did not have to start his new job as head of CNN until May.

But on Thursday, he found he was addressing about 400 full-time CNN + employees, some in person and others through a remote video channel. Hundreds of other CNN employees got the remote connection, which was passed from person to person, to hear what their new boss had to say.

The purpose of Licht’s introductory speech to many employees was not what he expected when he agreed to take over Jeff Zucker earlier this year. Licht told employees that the project they have been working on for the past six to nine months, the CNN + subscription streaming service, ends on April 30, about a month after it launched. He acknowledged that many would lose their jobs.

Licht, who officially starts on May 2, left his job as executive producer of “The Late Show With Stephen Colbert” to direct CNN. On Thursday, he seemed passionate and sympathetic, according to people who listened to him speak.

The failure of CNN +

CNN + will last only a few weeks. Several factors led to her death. Here are some key findings:

  • Prior to their merger, Discovery and WarnerMedia executives could not discuss planning operations. Discovery leaders were already skeptical of CNN +.
  • WarnerMedia executives expected CNN + to reach 2 million subscribers in one year, but the new management saw the early numbers of the service as weak.
  • David Zaslav, CEO of the new Warner Bros. Discovery refers to another streaming strategy that focuses on grouping rather than stand-alone.

For some CNN + employees, this was the first time they had heard of Licht. But, awkwardly, it wasn’t for dozens of others – they had met Licht just two days earlier when he toured CNN’s New York headquarters. Licht decided to stop on the 16th floor, which was recently converted from a Turner Broadcasting floor to a CNN + home.

He shook hands with employees – whoever was in the office that day – without a hint that he would tell them two days later that the stand-alone streaming service would be shut down. CNN + employees will be allowed to re-apply for other CNN roles. Axios reports that about half, or 350 employees, are likely to be laid off.

“This is a uniquely nasty situation,” Licht said more than once on Thursday.

What led to the launch of CNN + on March 29 and its rapid disintegration is an unusual combination of corporate deals, disagreements with management, unexpected resignations and legal restrictions.

“This is going to be a Harvard case,” said a Warner Bros. CEO. Discovery.

CNBC talks to a dozen people directly connected to CNN + why it folds so fast – and why it starts at all.

CNN + is born

Zucker and deputy Andrew Morse, head of CNN’s global digital business, who eventually became head of CNN +, initially discussed launching a streaming service in early 2020, months before Jason Killar joined WarnerMedia as CEO , according to people familiar with the issue.

Jason Killar

Phil McCarton Reuters

In Killar, Zucker and Morse found a digital evangelist. He was drawn to transform WarnerMedia into a company that revolves around video streaming, not one that focuses on distributing content to cable networks and movie theaters.

CNN’s management saw CNN + as something like The New York Times, a subscription news product that will eventually feature videos, podcasts, and all of CNN’s interviews and entertainment programs. CNN also believes it has a global advantage over the Times, which is better known in the United States than abroad. Killar believed CNN needed a digital subscription strategy after seeing dozens of advertising-based digital media properties suffer from low ratings and volatile advertising markets.

Over time, as millions of households cancel their cable subscriptions each year, CNN + will become the landing site for CNN’s line network. Like ESPN.com, executives plan to fill CNN.com with more and more paid content and subscribe to CNN +. Executives explored the possibility of making the entire CNN.com part of a subscription, but decided that the content was not strong enough to deserve a full paid wall. CNN.com is already profitable and is the most-watched news website, often generating more than 200 million unique visitors worldwide each month.

CNN hired consulting firm McKinsey to help with CNN + operations, but Killar, Zucker, and Morse managed the strategy. Based on months of research, they believed that CNN + would reach 2 million subscribers by the end of the first year. Killar believed that figure was “pressure” and a conservative estimate. The goal was to compete with The New York Times, which crossed the 10 million subscriber mark this year after acquiring the digital sports website The Athletic.

The leaders of WarnerMedia had a plan to achieve their goal: they will use HBO Max, CNN.com and CNN’s linear channel as a permanent marketing presence – “funnel” – to attract subscribers. The strategy was to launch CNN + earlier this year and then tie it to HBO Max in September. This “do you want fries with this” approach for the millions of subscribers who sign up for HBO Max (HBO and HBO Max had 3 million new net additions in the last quarter) will eventually lead to a stable, globally large news service.

A series of unexpected events

Both Zucker and Killar were caught unprepared by AT&T’s decision to separate WarnerMedia and merge it with Discovery Communications, a deal announced in May 2021. Neither was involved in the merger discussions, which were largely secret between the chief AT&T CEO John Stankey and Discovery CEO David Zaslav.

The merger gave Zucker a second wind. He was a longtime friend of Zaslav, who would replace Kilar as CEO of the new company. Instead of reporting on AT&T costumes, Zucker seemed on the line for a big role with Zaslav.

According to CNBC, Zucker decided that he will not leave the summer at the end of the year. With a refreshed career outlook, Zucker began digging into CNN +. Killar entrusts him with defining her strategy and programming.

WarnerMedia President Jeff Zucker attended CNN Heroes at the American Museum of Natural History on December 8, 2019 in New York.

Mike Coppola Getty Images

Zucker set a launch date in the first quarter of 2022 and began hiring hundreds of people as producers, software engineers and marketing support.

CNN Worldwide Chief Marketing Officer Alison Golust was responsible for promoting the new service. Morse led the day-to-day operations. Zucker received the green light from Killar to spend hundreds of millions on the new service to give CNN a quick start in the digital age.

“We’re going to make a big swing here, and the company is behind it,” Morse said in July 2021, when CNN officially announced it would build the new service.

The plan was for the premiere to be with eight to 12 hours of live programming per day in the service. Zucker began recording outside talent for leading shows, including Casey Hunt, who left NBC News to take the job, and longtime Fox News presenter Chris Wallace.

When the merger was announced, AT&T said the deal was likely to close in mid-2022.

Given this timeline, the CNN team has set a launch date for CNN + for the first quarter of 2022. This will give the service several months to breathe before Zaslav’s leadership team takes over from Kilar, who already knew that he will not remain in the company after the merger. Zucker wanted to launch the service in January, but ran into technical problems. CNN was making a product from scratch with a brand new technology stack, not just upgrading HBO Max. It took time and CNN didn’t want to release a buggy product. Zucker and Morse recalibrated to start in late March.

Over the months, regulators have gone through the approval process faster than originally expected. By February, AT&T and Discovery were heading for a closing date around April 11 – months earlier than expected.

This set CNN + up just weeks before the merger was completed.

And then, on February 2, Zucker abruptly resigned.

Influence of Zucker’s resignation

Superficially, leaving Zucker for an undisclosed relationship with Gollust did not change the trajectory of the product. Officials say daily operations around the division were not particularly interrupted by sudden absences because Morse remained and continued to steer the ship forward. If nothing else, CNN + has become a unifying mission for employees. Although CNN may have lacked a clear strategy for progress with interim leadership and the impending merger, launching CNN + on time was a clear goal for employees.

In this sense, the main effect of the resignations of Zucker and Golust is not necessarily harm to the CNN + product. Rather, their departures reinforced the determination of other employees to release him on time. CNN +, which launched on March 29, looked a lot like Zucker’s vision. There were fewer live programming hours than eight to 12 in July, which could have hurt the product, given the demand for news and content about the war in Ukraine, but it started more or less as planned. .

But without Gollust, insiders said the product’s marketing was not as strong in the key weeks before launch. Officials said Morse had worked overtime so far, trying to wear multiple hats, launching the service and receiving corporate support – previously the work of Zucker and Gollust.

As a result, CNN + ‘s internal marketing – how CNN executives viewed the product compared to Discovery’ s upcoming leadership – led to its demise.

Different strategies

Until the beginning of this year, Zaslav has focused on a streaming strategy for Warner Bros. Discovery.

He …