With his CNN+ show Reliable Sources Daily not even surviving through the final week of the streaming service, chief media reporter Brian Stelter kicked off Sunday’s Reliable Sources by bemoaning the death of his show and again claiming it was “too early to know” if it was a “success or failure.” But during the panel discussion, Stelter was confronted by Axios reporter Sara Fischer about how CNN+ was a financial flop and Warner Brothers Discovery put it out of its misery before it became a money sink.
“Here at CNN, new ownership decided to shut down the CNN+ streaming service less than a month after it was launched by the previous management team,” he announced at the top of the show. And he lamented the “[y]ears of development possibly down the drain. Some of the shows may never be seen. Hundreds of staffers may be laid off, though the company is trying to place many of them in new jobs.”
Stelter decried how “partisans are leaping to predictable talking points about politics” since CNN’s new boss has reportedly said he wants less “red-hot liberal opining.” “But the truth is, this was a corporate move. This CNN+ service was doomed because of the timing of a merger and clashing streaming strategies,” he suggested.
The first panelist he spoke to was Fischer, who noted the merger did play a bit of a role but the call to ax CNN+ came after looking at the books:
And so, ultimately they took a look at the books after the merger completed on April 8. They thought this is too expensive, it might not ever get to profit on time and it doesn't fit in with what we want to do. It's better to cut it off now than to keep it for lagging months while they decide.
That didn’t seem to sit well with Stelter who immediately went to former ABC and NBC correspondent Mara Schiavocampo, who agreed with Stelter that the move was shocking and a pure business decision. But she too seemed to think that Warner Brothers Discovery knew it was a commercial failure:
And so, to your point as the new owner, do you come in and see something that’s not working and continue to throw good money after bad? And it appears that they made the decision to not to continue doing that. That they did not think this was in the best long-term interest for the company.
Stelter went back to Fischer and said he was fearful for his colleagues and how they could be laid off. But he wouldn’t let her finish her thought after she noted “there's also a differing view on whether or not it was successful.”
After he press his “too soon to know” argument, Fischer countered with the numbers to show how the new owners saw CNN+ as a financial liability and too big of a risk to keep around (Click “expand”):
We know in the two and a half weeks since launch, it got about 150,000 subscribers – paid subscribers. Now, some people in the news business have been saying to me, ‘hey, that's pretty good.’
But the challenge is the money they spent to get those paid subscribers. You're talking $300 million of investment to date. The plan was to spend a billion dollars over the next four years with the hope of getting to profitability after four years.
The question, Brian, becomes if people are paying 5.99 or 2.99 for that, you know, lifetime membership, is it ultimately going to be worth the spend?
“I think Discovery took a look at this and they said we don't think it will ultimately be worth the spend. Even though that's a good number of subscribers, for now, it might not be a good business move long term,” she added to Stelter’s chagrin.
Brian Stelter’s bellyaching was made possible because of lucrative sponsorships from Chase and T-Mobile. Their contact information is linked.
The transcript is below, click "expand" to read:
CNN’s Reliable Sources
April 25, 2022
11:00:53 a.m. EasternBRIAN STELTER: But first, what a turbulent week for major media companies with CNN, Netflix, Disney, and Twitter all left spinning with no stopping in sight.
Here at CNN, new ownership decided to shut down the CNN+ streaming service less than a month after it was launched by the previous management team. The U-turn was front-page news, stunning news and painful news for everyone involved. Years of development possibly down the drain. Some of the shows may never be seen. Hundreds of staffers may be laid off, though the company is trying to place many of them in new jobs.
Amid these bruising headlines, folks are trying to make sense of it. And some partisans are leaping to predictable talking points about politics. But the truth is, this was a corporate move. This CNN+ service was doomed because of the timing of a merger and clashing streaming strategies.
The new owner of CNN, Warner Brothers Discovery has big plans to compline multiple streaming platforms to make one big challenger for Netflix.
(…)
11:02:19 a.m. Eastern
STELTER: Sarah, you were a guest on my first episode of my CNN+ show, so thank you. Then you broke news about the service being doomed. So, let's be very transparent about it. What did you learn this month and what led to the closure of CNN+?
SARA FISCHER: Yeah. Well, CNN executives had been plotting this for two years. But then, in 2021, we found out that CNN's parent company Warner media would merge with discovery. And what we came to find is that after CNN’s head Jeff Zucker exited the company – resigned in shock in February, executives at Discovery were starting to question whether or not CNN+ fit in with their strategy.
Discovery, as you mentioned, wanted to create one big streaming service, they wanted it to be general entertainment. CNN+ is a smaller subscription service. And so, ultimately they took a look at the books after the merger completed on April 8. They thought this is too expensive, it might not ever get to profit on time and it doesn't fit in with what we want to do. It's better to cut it off now than to keep it for lagging months while they decide.
STELTER: Oliver. You and I work here, so we’ll save you. Mara, next to you as an outsider looking at this, what’s your perspective on this and what it means for the news business?
MARA SCHIAVOCAMPO: It's certainly shocking from the outside looking in because of the fanfare that preceded this launch. You know, we're talking about an estimated $300 million that was spent, huge marketing and promotion, big names that were brought in, Chris Wallace, Audie Cornish, Eva Longoria. And so, it was shocking that this happened so abruptly.
But at the end of the day this is a business decision. And there are debates about whether or not journalism should be treated as a business versus a public service but it is a business, for better or for worse.
And so, to your point as the new owner, do you come in and see something that’s not working and continue to throw good money after bad? And it appears that they made the decision to not to continue doing that. That they did not think this was in the best long-term interest for the company.
But again, from the outside looking in, I'm very curious to see what they’re going do with all of this talent. I mean, these are huge names with huge followings. Where are they going to go?
STELTER: I had a source say to me this week, ‘everyone’s a product of their history.’ And the new management team at Discovery, their history includes some niche streaming services that did not do well there. Right, Sara? They launched streaming services that were kind of like CNN+, although not the same, and they failed. And so, Discovery does not believe in that model.
And it's hard to fathom as a CNN employee, worrying about my colleagues being laid off, that this was simply about corporate strategy. But that's what it was.
FISCHER: Yeah, that's what it was. And there's also a differing view on whether or not it was successful. People inside CNN --
STELTER: Well, wasn’t it too soon to know?
FISCHER: Well, that's the argument, right? Because this was sort of unprecedented, we’ve never really had a subscription news and video app, people wanted to see what precedent this will set. We're never going to really find out. We know in the two and a half weeks since launch, it got about 150,000 subscribers – paid subscribers. Now, some people in the news business have been saying to me, ‘hey, that's pretty good.’
But the challenge is the money they spent to get those paid subscribers. You're talking $300 million of investment to date. The plan was to spend a billion dollars over the next four years with the hope of getting to profitability after four years.
The question, Brian, becomes if people are paying 5.99 or 2.99 for that, you know, lifetime membership, is it ultimately going to be worth the spend?
STELTER: Right.
FISCHER: And that was the challenge. I think Discovery took a look at this and they said we don't think it will ultimately be worth the spend. Even though that's a good number of subscribers for now, it might not be a good business move long term.
STELTER: They will focus on the core business, this channel as well as CNN digital. Oliver, what's next for CNN?
OLIVER DARCY: CNN as a channel, I mean, Chris Licht is coming in, he’s the new president of CNN, and there's a lot of things on his plate. He has a new 9:00 p.m. host he has to appoint. He has to figure out what to do with the talent that was brought in for CNN+ and also there are hundreds of employees who potentially could be laid off. And so, he's going to try to find – you know, in the town hall he was talking about trying to absorb some of those people into the organization.
STELTER: Right.
STELTER: And so, he’s got work to do if – he's got hundreds of people. So, he’s got work to do if he's going to try to find them other places inside CNN.
