A rushed launch, low subscriber numbers, and a lack of vision led Warner Bros. Discovery to close down the new streaming service
Warner Bros. Discovery is shutting down the newly launched streaming service CNN+ less than a month after it debuted. Several insiders told TheWrap the decision arrived after the new corporate bosses reviewed the product after a rushed launch, low subscriber numbers, and questions over whether it fit the newly merged’s company’s broader streaming vision.
Chris Licht, the incoming chairman and CEO of CNN, told staff Thursday that the platform will cease operations on April 30 in a memo, which TheWrap has obtained and you can read in full below.
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“As we become Warner Bros. Discovery, CNN will be strongest as part of WBD’s streaming strategy which envisions news as an important part of a compelling broader offering along with sports, entertainment, and nonfiction content,” said Licht in a statement.
He continued, “We have therefore made the decision to cease operations of CNN+ and focus our investment on CNN’s core news-gathering operations and in further building CNN Digital. This is not a decision about quality; we appreciate all of the work, ambition and creativity that went into building CNN+, an organization with terrific talent and compelling programming. But our customers and CNN will be best served with a simpler streaming choice.”
The company also announced that Andrew Morse, EVP and Chief Digital Officer of CNN Worldwide and Head of CNN+, is leaving the company following a transition period. Alex MacCallum, CNN Worldwide’s head of product and CNN+ GM, will step in to lead CNN Digital.
CNN+ made its debut on March 29 priced at $5.99 a month, or $59.99 for an annual subscription. Customers will receive prorated refunds of subscription fees.
The streamer features live, on-demand and interactive programming, including “Interview Club,” which invites subscribers to submit questions to guests interviewed on CNN+. It also features live daily shows, original series and a library of more than 1,000 hours of programming from CNN Original Series and CNN films teams.
The mood inside the newly constructed CNN+ newsroom was one of “simultaneous surprise and panic,” said one news producer after Licht’s memo was sent. “Nobody thought a place like CNN would hire all these people, create all the technology, and everything to just shut it down.”
The producer said most inside the company were startled as they previously shrugged off speculation about a potential shutdown, which started within 24 hours of the CNN+ launch with Fox Business reporter Charlie Gasparino’s report that cited anonymous sources within the company.
An internal review
The decision to shut down the service follows a WBD review of the platform, which was rushed to launch just two weeks ahead of the Discovery Inc.-WarnerMedia merger. Due to fiduciary reasons around the merger, the new corporate bosses didn’t have a say in that launch. “Legally we were bystanders,” one insider told TheWrap.
To make matters worse, the service is basically an “orphaned product,” as the source described it. Several of the top individuals who did have a say on the launch are no longer around since CNN boss Jeff Zucker and top communications exec, Allison Gollust, exited the company after their clandestine romantic relationship came to light. And then WarnerMedia President Jason Kilar was let go as a result of the merger.
Licht, who doesn’t officially start in the job until May 2, and Discovery’s global streaming and interactive entertainment president, J.B. Perrette, were trying to figure out the CNN+ conundrum.
The questions they were trying to answer include: What’s the business plan? What’s the budget? How are they to market it? Does the content fit the company’s broader streaming vision?
The broader vision
In the release, Perrette hinted the entertainment giant will have a new strategy for the 24-hour news channel. There has been speculation Zaslav intends to create a central portal that will package CNN along with HBO Max and Discovery’s offerings.
“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,’’ Perrette said in a statement.
The company had already telegraphed that it plans to offer HBO Max’s lauded scripted programming and Discovery+’s reality content under one product, which would place WBD within the top three companies in the streaming wars alongside Netflix and Disney+ for both demand and catalog, according to analysts. Not much has been said about adding CNN to that mix until now, though Parrot Analytics data suggests that such a three-way combination “would overnight become a four-quadrant service, meaning that it appeals to all four core demographics: male and female, over and under 25.”
The streaming channel has a number of shows filling out the rest of its schedule, including Chris Wallace’s show live at 6 pm ET followed by Wolf Blizter’s The Newscast” at 7:30 pm ET. There has been some speculation inside the CNN+ newsroom on Thursday that the company will make a new home for several of the live shows that have gained traction among viewers, two people familiar with the plans said. They include Brian Stelter’s “Reliable Sources Daily,” Chris Wallace’s “Who’s Talking to Chris Wallace,” and Kate Bolduan’s “The Five Things.”
Wallace is expected to get his own daily or weekly show, which was already written into his contract, according to one of the insiders.
By the numbers
WBD hasn’t announced any subscriber numbers publicly, though none of the company insiders we spoke to disputed Axios’ reporting that placed the service at about 150,000 subscribers currently.
It’s tough to find a comp for CNN+. Fox Nation, which was founded in 2009 and transitioned to a streaming service in 2019, has yet to officially release subscriber numbers. A June 2020 Forbes article cited Parks Associates data placing Fox Nation’s subscribers between 200,000-300,000. That’s about eight months after its streaming launch. Business Insider cited Wall Street estimates earlier this month stating Fox Nation currently has about 1.5 million subscribers. For another comparison, though it’s a much broader content service than CNN+, Comcast reported that Peacock had reached 10 million subscribers a month after its April 2020 launch.
Sensor Tower recent figures show that the CNN app, which gives users access to CNN+, got about 18,000 installs on the day of launch. During the seven days ending March 22, it had an average of 9,000 installs per day.
As TheWrap previously reported, CNN initially planned to invest $1 billion in the first four years of CNN+. Soon after the launch, it looked it will likely be cut by the hundreds of millions due to a low adoption rate. At the time, the company had reportedly spent some $300 million on the subscription service.
After the merger, WBD said it needed to find $3 billion in planned cuts. While many of those cuts will come from layoffs in areas of redundancy such as administration, streaming and television, and finance departments, the budget for CNN+ is at least a third of the company’s goal.
Read Licht’s memo to staff below:
Today Warner Bros. Discovery and CNN are announcing that we have decided to cease operations at CNN+, effective April 30. I want to share my perspective with you before the news breaks.
This decision is in line with WBD’s broader direct-to-consumer strategy. 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.
Let me be clear: this move is in no way a reflection of the talented and hardworking people who poured their heart and soul into building and flawlessly launching CNN+ in a very short period of time. It also is not a reflection of the quality of the talent and content of CNN+, some of which will migrate to CNN’s programming or some of the company’s other networks. The process for making those decisions is already underway and we will communicate to those affected as quickly as possible.
But most importantly, we are committed to making the transition as smooth as possible for our CNN+ colleagues. As part of the transition plan, all CNN+ employees will continue to be paid and receive benefits for the next 90 days to explore opportunities at CNN, CNN Digital and elsewhere in the Warner Bros. Discovery family. At the end of that period, any departing CNN+ employee will receive a minimum of six-month severance (depending on length of service at CNN).
We are also announcing that Andrew Morse, Executive Vice President, Chief Digital Officer of CNN Worldwide and Head of CNN+, has decided to leave the company following a transition period. Since joining the network in 2013, Andrew has grown CNN’s global digital business and led it to be the number one digital news destination it is today. Andrew did an incredible job leading the CNN+ team since day one. He also oversees the CNN en Español television network and digital business. I am grateful he will be here to assist in the transition. Please join me in thanking Andrew and wishing him the best on his next adventure.
Moving forward, Alex MacCallum will be overseeing Digital. She and I will work together to develop a strategy that builds on CNN’s dominance in the space.
While today’s decision is incredibly difficult, it is the right one for the long-term success of CNN. It allows us to refocus resources on the core products that drive our singular focus: further enhancing CNN’s journalism and its reputation as a global news leader.I look forward to working with all of you to do just that.
Best regards, Chris
Jethro Nededog is TheWrap's co-executive editor. Previously, he served as TheWrap's assistant managing editor, business news. He has served as a reporter and editor at several top entertainment news publications, including Entertainment Weekly, The Hollywood Reporter, L.A. Times and Business Insider. Previously, he wrote and produced documentary TV for National Geographic, History, Discovery, and E!. He has a BA in journalism from NYU and an MA in writing from USC.
Joe Bel Bruno
Joe Bel Bruno is TheWrap's Editor at Large, Business. He most recently served as the Founding Editor of the business news site dot.LA. He was previously the Managing Editor of Variety, and served as Deputy Business Editor and later Deputy Entertainment Editor at the Los Angeles Times. Bel Bruno also ran markets coverage for The Wall Street Journal. Before that, he was an award-winning reporter at the Associated Press in New York, and held senior posts in London and New York for Knight Ridder Financial.