A major investment by CNN, which poached big-name anchors and threw a splashy launch party, ends abruptly at the hands of a new corporate leadership team.
Michael M. Grynbaum, John Koblin and
At sunset on the last Monday of March, CNN stars gathered for a gala on the 101st floor of a Midtown Manhattan skyscraper to celebrate the launch of CNN+, the streaming service that was supposed to take the network into the digital future.
Ethan Hawke, who directed a film for CNN+, mingled with Anderson Cooper and Carl Bernstein as guests nibbled on miniature lobster rolls and gawked at the dizzying views of the New York City skyline.
It took three weeks for CNN’s new owners to bring them down to earth.
In a move that stunned the media and tech worlds, Warner Bros. Discovery said on Thursday that it will abruptly shut down CNN+ on April 30. “While today’s decision is incredibly difficult, it is the right one for the long-term success of CNN,” Chris Licht, the network’s incoming president, told staff.
The shutdown is an ignominious end to an operation into which CNN sank tens of millions of dollars: from a nationwide marketing campaign to hundreds of newly hired employees to big contracts for name-brand anchors, including the former “Fox News Sunday” host Chris Wallace and the former NPR co-host Audie Cornish.
It collapsed just two days after Netflix reported a quarterly decline in subscriptions for the first time in a decade, a potential warning sign for major media companies joining the increasingly crowded field of streaming services.
The abrupt demise of CNN+, as well as Netflix’s projection that it will lose two million more subscribers over the next three months, has raised questions about how many people are willing to pay for numerous streaming services, as well as how profitable these businesses can become in the next few years.
CNN+ was the brainchild of CNN’s former corporate parent, WarnerMedia, and its former president Jeff Zucker, who envisioned a versatile digital product with big-name hosts that could buttress the network amid a decline in traditional cable viewership.
But the service had a powerful skeptic: David Zaslav, the chief executive of Discovery, who was on the verge of completing a merger with WarnerMedia that would put him in control of the news network.
Executives at Discovery, wary of antitrust rules, were constrained from advising their counterparts at CNN until the merger was done. CNN+ had lost its champion when Mr. Zucker left in February because of an undisclosed romantic relationship with a colleague. But Jason Kilar, the WarnerMedia chief executive, forged ahead anyway, launching the streaming platform on March 29 to the frustration of the Discovery leadership.
It quickly became apparent that Mr. Zaslav had a very different view on digital strategy.
On the morning of April 11, the first business day of Discovery’s ownership — and 90 minutes before its WBD stock even went live on Nasdaq — JB Perrette, Discovery’s global head of streaming, convened a meeting with CNN executives.
Mr. Perrette had a message: Marketing of CNN+ was to be suspended, pending a formal review of the business, three people familiar with the conversation said.
Executives at Warner Bros. Discovery wanted to merge its other subscription platforms — Discovery+ and HBO Max — into one giant streaming service. They were not convinced that a niche product like CNN+ could be viable on its own.
And there was the matter of the debt. Discovery’s merger left the conglomerate owing about $55 billion, which executives are now under pressure to repay. CNN had been planning to spend more than $1 billion on CNN+ over four years, two people familiar with the matter said, even renting out an additional floor of its pricey Manhattan skyscraper.
Andrew Morse, CNN’s chief digital officer and a key architect of CNN+, who became the biggest internal champion of the service, countered that subscription-based online news could be successful, citing The New York Times as an example. Executives at CNN+ said they had secured 150,000 paying subscribers and were on a pace to hit first-year subscription goals.
Executives at Discovery were not impressed: At any given time, fewer than 10,000 people were watching the service, said two people familiar with the numbers, who were not authorized to speak publicly. (On Thursday, Mr. Morse said he was leaving the network entirely.)
As the corporate tug of war played out, CNN+ anchors tried to go about their jobs. On his daily interview hour, Mr. Wallace questioned Jen Psaki, the White House press secretary, about federal mask policy; Ms. Cornish was developing a show slated to debut in May. Programs featuring the actress Eva Longoria and the food writer Alison Roman were expected soon.
All that came to a halt on Thursday morning.
“It’s not your fault that you had the rug pulled out from underneath you,” Mr. Licht, CNN’s new president, told the shocked staff during a solemn all-hands meeting, according to a recording reviewed by The New York Times.
Mr. Licht, who officially starts his role on May 2, compared CNN+ to a residential property that had been constructed without the input of its intended owner.
“Then the new owner came in and said: ‘What a beautiful house! But I need an apartment,’” he said, according to the recording. “And that doesn’t take anything away from this beautiful house you built. I am proud of it, and I am proud of this team, and I am gutted by what this means for you.”
To the left of Mr. Licht sat Mr. Perrette of Discovery. He invoked tweets that called the service “CNN Minus,” because it did not include any programming from CNN’s cable network, “the global calling card of this new organization,” he said. (CNN+ carried only unique programming to avoid running afoul of CNN’s agreements with cable carriers.)
Mr. Perrette also referred to Discovery’s own “painful” history of starting niche streaming services — focused on cars, food and golf — and said they were costly to market and ended up with few subscribers.
“We have failed almost at every turn launching these products,” he said, according to the recording.
More than 300 employees had already started working at CNN+, and the network said it would try to transfer them to open positions in the company. Layoffs are likely for people who are not placed in new jobs; they would receive at least six months of severance.
Existing subscribers will receive prorated refunds.
The fate of CNN+ programs — and the future of the anchors it poached from rival networks — remains unclear. Several titles are expected to be moved to HBO Max, Discovery+ or CNN.com, two people familiar with the discussions said.
Kasie Hunt, who left a role at MSNBC to host a CNN+ show, wrote on Twitter that she was taking the announcement in stride. “The news is the news is the news is the news no matter how or where it airs or comes from,” she wrote. “Will keep at it tomorrow.”
Scott Galloway, a professor and financial journalist who was planning to host a show on business and technology, posted a tweet with a blunter take.
“Well,” he said, “that was fast.”