Business Maverick

Business Maverick

CNN+ To Shut One Month After Debut

CNN+ To Shut One Month After Debut
An interior view of the venue during the CNN+ Launch Event at PEAK NYC Hudson Yards on March 28, 2022 .

Warner Bros Discovery Inc. is shutting down the CNN+ streaming service just a few weeks after its launch, underscoring the determination of a new corporate parent to refine its strategy amid fresh questions about the growth of online video.

In a week where Netflix Inc. reported its first subscriber loss in a decade – and sent media stocks cascading – the flameout of CNN+ will add to the growing doubts about the public’s previously unquenchable hunger for streamed films and TV shows. While CNN+ surpassed 100,000 subscribers in its first week, it had hurdles to surmount, including new leaders who have vowed to aggressively cut costs and focus on a single streaming service.

CNN came under new management earlier this month, with the merger of its parent WarnerMedia and Discovery Inc., creating Warner Bros. Discovery. The team led by Chief Executive Officer David Zaslav has promised to find $3 billion in savings from the combination. CNN+, which spent about $500 million on its app, including marketing and talent, became an early target.

It wasn’t immediately clear how many CNN employees will lose their jobs as a result of the shutdown. There are 100 open jobs in other parts of the company. CNN+ hired at least 450 people, according to Insider, including journalists and engineers who worked on the streaming service’s technology. Laid off employees will get nine months’ severance pay.

Andrew Morse, who led CNN+, will leave after a transition period. Alex MacCallum, general manager of the service, will run CNN’s digital operations. The service will cease operations on April 30, according to a statement on Thursday. Customers will receive prorated refunds of their subscription fees.

HBO Flagship

Zaslav has talked about making HBO Max the flagship of the new company’s effort to compete with Netflix. As a standalone app, CNN+ didn’t fit into that vision. Another service, Discovery+, is expected to be folded into HBO Max at a later date, according to a person familiar with the matter. The company is also considering whether to rebrand HBO Max.

CNN+ offered a mix of lifestyle shows and traditional news, including a daily interview program from Chris Wallace and a food and travel series hosted by actress Eva Longoria. Its programs will move to CNN’s cable channel and website while longer-form productions will go on HBO Max.

None of the high-profile hosts who were hired for CNN+ are expected to leave the company. Wallace will likely take his show to the CNN cable channel, but the network’s leadership is still trying to decide what is the best platform for each CNN+ program.

The decision to shut down the service follows the shocking drop in subscribers reported this week by Netflix. The streaming leader lost 200,000 customers in the first quarter and expects a further decline of 2 million in the current period, sending its stock into a nosedive.

Shares Fall

Shares of Warner Bros. Discovery fell 6.8% to $21.45 in New York, in part over continuing skepticism about the future of online TV following Netflix’s surprise subscriber decline.

Zaslav and his team are taking over Warner Bros. Discovery almost a year after AT&T Inc. agreed to merge its media operations, including CNN, with Discovery. For much of the past year, while the deal was under regulatory review, Discovery executives were sidelined from making decisions affecting the former WarnerMedia or influencing CNN’s decision to press ahead with its streaming strategy.

The service suffered a big blow just weeks before its launch when Jeff Zucker, who had supported the creation of app, left the company and was replaced by Chris Licht, a longtime television executive.

CNN+ charged $5.99 a month. Executives described it as CNN’s most ambitious new venture since the founding of the network more than 40 years ago.

The abrupt closing of CNN+ calls to mind the demise of Quibi, a short-video upstart founded by movie mogul Jeffrey Katzenberg. Launched in 2020, Quibi shut down six months after its launch, representing one of the entertainment industry’s most dramatic flops.

At an internal town hall, Licht told staffers that while the launch had been “incredibly successful,” the service didn’t fit with the new management’s plans. “It is not your fault that you had the rug pulled out from underneath you,” he said, according to the network. BM

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