Hollywood Reporter: CNN+ Is Dead, But Its Owner Isn’t Giving Up Global News Ambitions

Story from Hollywood Reporter: 

It seems that CNN+ was doomed before it even launched.

The subscription streaming service, which launched on March 29 and will shut down on April 30, was misaligned with the long-term strategy outlined by Discovery executives, who took over WarnerMedia just a week or so after the service launched, and who plan to create a super-service that combines entertainment and news into one compelling package.

“Some of this was avoidable,” Warner Bros. Discovery’s top streaming executive JB Perrette told employees in a town hall Thursday, according to an attendee who spoke with The Hollywood Reporter. Perrette also lamented that WarnerMedia leadership pushed forward with the plan to launch a standalone service, knowing that the new ownership was coming in skeptical of the idea.

Indeed, on March 28, the evening before CNN+’s launch, there was no indication that the service’s future was in question. The company hosted an opulent launch party at The Peak, an event space located 1,000 feet up on the 101st floor of its Hudson Yards headquarters, with attendees munching on hors d’oeuvres that included caviar-topped potato chips, and miniature lobster rolls.

Andrew Morse, the CNN executive who spearheaded CNN+’s launch (who said Thursday he would exit the company), touted the importance of the launch in a toast, thanking (now former) WarnerMedia CEO Jason Kilar, and former CNN chief Jeff Zucker, as well as CNN founder Ted Turner, who he said was CNN+’s first subscriber.

Just three weeks later, most CNN+ employees were told they would be losing their jobs, in what incoming CNN CEO Chris Licht told staff was a “uniquely shitty situation.”

“It is not your fault that you had the rug pulled out from underneath you,” Licht added, noting that the company would be providing a generous severance for staff — a minimum of nine months — that were unable to find jobs elsewhere at the company.

But to anyone who was closely watching CNN+’s launch, the decision made Thursday was not a surprise, and that CNN+’s future always rested with HBO Max. Indeed, a month before launch, THR reported that WarnerMedia was conducting market research on a CNN+ bundle with HBO Max, and multiple sources said that such a bundle was likely coming in the near future. Of course, now it’s clear that there won’t be a bundle at all, just a single service, incorporating a wide array of WB Discovery content.

And WB Discovery CEO David Zaslav had been telegraphing his intentions for months, while heaping praise on the work of CNN journalists, and the value of CNN as a brand.

In a CNBC interview in February, over a month before CNN+’s launch, he touted the “huge ambitions” the combined company had for CNN, and when asked about CNN+ he noted that news is habit-building, saying: “I think directionally, it’s absolutely what we need to do.”

But when he continued, Zaslav made it clear that his vision was about competing for subscribers with streaming giants, not with The New York Times.

“The objective is that CNN would be seen everywhere in the world on every device so people get up in the morning and they’ll turn to us for what’s going on in their country and what’s going on around the world,” Zaslav said. “That’s powerful, that’s differentiating versus a Netflix or a Disney.”

Zaslav told CNN employees in meetings in New York and Washington D.C. that he viewed CNN as a valuable asset to the company because of its “impact,” not its business, which brought in about $1 billion in profit last year. “David Zaslav has given me one simple directive: To ensure that CNN remains the global leader in NEWS as part of Warner Bros. Discovery,” Licht wrote to staff in his intro email in February, emphasizing the news part of the equation.

And so Perrette told employees that while CNN+ won’t exist as of next month, CNN as a news organization will play a critical role in the company’s streaming strategy, bringing gravitas with it. 

“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,” Perrette said. “We have very exciting opportunities ahead in the streaming space and CNN, one of the world’s premier reputational assets, will play an important role there.’’

While a source cautioned that it still isn’t clear what CNN and CNN+ programming will end up where just yet, there is an expectation that CNN will get its own “tile” within HBO Max in the not-too-distant future. Zaslav’s comments certainly suggest that live news will be a part of that future too.

While CNN+ had some daily live programming, it leaned into an on-demand format, encouraging users to watch at their leisure. With CNN’s main channel a pivotal piece of the pay-TV bundle, the company didn’t want to compete too directly with its main offering. If a CNN-within-HBO Max offering does have live programming, it will either need to take a similar approach, and use talent distinct from CNN proper, or else find a way to bring CNN’s live programming to the app, likely requiring a negotiation with pay-TV partners. Other free streaming services, like CBS News streaming or NBC News, use their own studios and anchor teams to deliver the news, and also run replays of shows that aired on the broadcast network.

Still, it remains to be seen what happens to some of CNN’s high-profile hires at CNN+. Most notably, CNN poached Chris Wallace from Fox News to host a CNN+ interview series, and Audie Cornish from NPR to anchor on CNN+ and host a podcast for CNN Audio. And it hired non-news talent like social media influencer and former NBA player Rex Chapman, chef and author Alison Roman, and NYU professor Scott Galloway to host shows that are outside of CNN’s traditional wheelhouse.

And current CNN talent like Jake Tapper, Wolf Blitzer, Anderson Cooper and Don Lemon signed on to host streaming shows, including a parenting show for Cooper, and a talk show for Lemon. What happens to all of those programs remains uncertain, and with the talent under contract, it may take some time to iron it out.

Licht told CNN employees that some of the shows will end up on CNN proper, or on other WB Discovery networks or platforms.

“The process for making those decisions is already underway and we will communicate to those affected as quickly as possible,” he said.

CNN spent about $300 million to launch CNN+, and was planning to spend hundreds of millions of dollars more in the months and years ahead to build out the service. Perrette told employees Thursday that once the new leadership officially took over and made the decision to change course (ahead of Licht’s first official day at the company, as it happens), they pulled the plug as quickly as possible.

And Zaslav, who is as comfortable schmoozing with Wall Street as he is with talent, surely understands the philosophy of risk-taking fund managers.

“One of our learnings from past mistakes is to act promptly when we discover new information about an investment that is inconsistent with our original thesis,” hedge fund icon Bill Ackman wrote to his investors earlier in the week, explaining why his Pershing Square ventures offloaded its entire stake in Netflix, taking a roughly $400 million loss in the process.

On Thursday, it was WB Discovery’s turn to rip the $300 million band-aid off.

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