CNN to shut down $100 million streaming service, CNN Plus, after a month

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CNN’s new parent company abruptly ended the network’s $100 million online streaming business – a dramatic reversal that stunned employees just three weeks after launching the service, known as CNN Plus.

After months of planning and hiring and a huge promotional campaign, CNN Plus has garnered modest subscriptions and faces uncertain long-term prospects. But insiders and analysts saw his demise as the result of a new business owner‘s brutal calculation rather than a commentary on his viability.

Notably, the service was designed and developed under CNN’s former owner, WarnerMedia, but launched just days before Discovery Inc.’s acquisition of the company was finalized. Discovery executives are now in charge of the combined company, called Warner Bros. Discovery, and made the decision to end CNN Plus at the end of the month.

CNN Plus was the cable news giant’s bet on digital streaming and its coverage against the growing popularity of “cord cutting” that has led to a steady erosion of cable subscriptions. It sought to entice viewers with exclusive, original programs hosted by familiar CNN reporters and newcomers such as former Fox News host Chris Wallace and actress Eva Longoria that could be watched live or on demand. . It also offered documentaries and specials already aired by CNN, including the popular food and travel programs hosted by Stanley Tucci and the late Anthony Bourdain.

But CNN Plus has been unable to offer its subscribers streaming access to CNN’s popular daily news programs due to non-competition restrictions in its contracts with the cable companies. And in its first month, it seemed to be struggling to persuade enough customers to sign up for the $5.99 monthly service.

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Its sudden end reflects one of the biggest and most costly misfires in recent media history. Quibi, another heavily promoted entertainment-focused streaming service, shut down at the end of 2020 after less than seven months and more than $1.5 billion in investment.

The announcement, made by new CNN Chairman and CEO Chris Licht, stunned employees who gathered at a television studio on the 19th floor of CNN’s New York headquarters. After her speech, Sara Sidner, a longtime CNN correspondent who moved from Los Angeles to New York to host a CNN Plus show, took the microphone.

“It’s mind-blowing, to be perfectly honest,” she told the rally, according to a staff member who was at the meeting and spoke on condition of anonymity because they weren’t authorized to comment.

CNN did not say how many employees will be laid off with the shutdown of CNN Plus. The company hired about 700 people for its launch. A network source said 350 people would be affected by the layoffs, though the company expects many of those employees to find new roles at the company, rejoining CNN or open jobs on CNN-owned networks. to Discovery such as the HBO Max streaming service.

Besides Wallace, CNN Plus had built new shows around several other high-profile talents hired by top news outlets, including MSNBC’s Kasie Hunt and NPR’s Audie Cornish. A spokesperson did not respond to questions Thursday about whether these high profile hosts will remain on the network. Hunt, however, already appears on CNN’s main television channel, and all three likely signed multi-year contracts when they joined.

Overall, the shutdown order could be the biggest and biggest blow to CNN, a network that remains hugely profitable but has recently been beset by declining ratings and scandals that have made headlines.

In recent months, he has weathered controversy over the firing of his most popular host, Chris Cuomo, who was fired by former CNN chairman Jeff Zucker in December. The firing was prompted by Cuomo’s efforts to help his brother, former New York Governor Andrew Cuomo (D), fight accusations of harassment during strategy sessions and behind-the-scenes conversations that crossed lines ethics. Around the same time, CNN received a sexual harassment complaint that also involved the host, which he denied.

Two months later, Zucker himself was kicked out after admitting he had failed to disclose a consensual romance with a top CNN executive to his bosses at Warner Media.

As these dramas unfolded, CNN Plus headed for a late March launch. It began streaming less than two weeks before Discovery’s acquisition of the brand closed.

An outside observer who had been cautiously optimistic about CNN Plus’s chances last month said Thursday that its demise “was always predestined” by the takeover of the company hot on its heels.

“It has nothing to do with the success or failure of the CNN Plus launch,” said digital media veteran Chris Balfe. “It was killed long before we knew if it was a hit product.”

He added that he saw no connection to Wednesday’s plunge in Netflix’s share price, which plunged after the streamer announced it had lost 200,000 net subscribers since the start of the year – its first drop in a decade.

But Jon Klein, the former president of CNN US, said the decision “must have felt like a simple call” for the new boss, the chief executive of Warner Bros. Discovery, David Zaslav, as Netflix’s decline suggests Wall Street is downgrading in streaming. “Timing is everything,” he added.

Klein said Warner Bros. Discovery was likely chafing at the “startup business model” employed by CNN Plus, which planned to spend $1 billion over four years to become profitable – “take a dip early, lose a ton of money in the short term , while creating long-term value,” as Klein sums it up.

In a memo to staff earlier Thursday, Licht called the decision to shut down CNN Plus “incredibly difficult,” but would allow the company to “refocus its resources” on CNN journalism.

A veteran staffer said there had been rumors about changes to CNN Plus as part of the new company, but a wholesale shutdown was not expected.

“We expected them to cut off a few fingers, not the whole arm,” he said. He spoke on condition of anonymity because he is not authorized to speak on behalf of CNN.

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The network did not release any data on how many people signed up, but early media reports suggested the number was lower than expected given the overall cost of the project.

Meanwhile, Zaslav, the new chief executive, had expressed a desire for the larger company to have one main streaming service, rather than a multitude of them.

At the town hall, Licht called the closure decision “only [bad] situation,” using an expletive, and told staff that “it’s not your fault you had the rug removed from under you,” according to one employee.

In his memo to staff, Licht said the decision aligned with the company’s broader strategy to reach viewers. “In a complex streaming market, consumers want simplicity and a comprehensive service that delivers a better experience and more value than standalone offerings,” he wrote in his memo.

He also praised the staff for “flawlessly building and launching CNN+ in a very short time” and promised that some of the new programming they developed will move to CNN or the company’s other networks. where news will be “an important part of a broader and compelling offering as well as sports, entertainment and non-fiction content.

While CNN Plus featured a heavy dose of lifestyle programming and cultural conversations, Licht said CNN will now focus on news gathering and journalism.

As part of the transition, the company announced the departure of Andrew Morse, a veteran CNN digital executive who ran CNN Plus, with Alex MacCallum stepping in to oversee the network’s digital efforts.

The news marked a bleak first chapter for Licht, who most recently served as executive producer of Stephen Colbert’s late-night show but previously launched MSNBC’s hit ‘Morning Joe’ and revamped the news show. morning of CBS.

Kasie Hunt, in an interview with The Post last month, said she was happy to get Licht’s advice on her CNN Plus show. “I will be begging him for five minutes of his time to let me know how to make this show better,” she said.

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