Through the Heart: Stelter Gets Confronted with CNN+’s FAILURE

On his CNN+ program The Daily Sources of Reliable Information 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 it at the end of the program. He lamented his loss. “[y]Development could be going to the gutter. Some shows might never get aired. 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.

Fischer, the panelist who he first spoke with, noted that although the merger had played some role in the formation of CNN+, the final decision was made to end the service.

They finally took a peek at the books following the April 8th merger. The thought was that this would be too costly and might not make any profit.It doesn’t align with our goals. It is better to get rid of it now rather than wait for them to 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. However, she also believed that Warner Brothers Discovery knew the move was a failure commercially.

As the new owner you will be able to make your points. do you come in and see something that’s not working and continue to throw good money after bad? It appears they decided to stop doing this.They didn’t think that this would be in the long-term best interests of the company.

Stelter went to Fischer again and stated that he was afraid for his colleagues, and what could happen to them. 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.’

However, the problem lies in the amount of money that was expended to acquire those subscribers. To date, they have invested $300 million. With the goal of achieving profitability in four years, the plan was to invest a quarter of a trillion dollars over the next four year.

Brian, the question becomes, “Is it worth paying for 5.99 or 2.99 for this, you know?, lifetime membership?”

“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. You can find their contact information here.

You can find the transcript below. To read it, please click on “expand”.

CNN’s Trustworthy Sources
April 25, 2022
Eastern, 11:00:53

BRIAN STALTER: First, let’s talk about the turbulent week that was for media giants like CNN, Netflix and Disney. There wasn’t any stopping them.

CNN announced that the new management decided to shutter the CNN+ streaming site less than a month following its launch by the old management. This was shocking news, painful news, and front page news. Many years of effort may have gone sour. Some of these shows could never be seen. The company may lay off hundreds of workers, but it is still trying to get many people into new jobs.

People are struggling to understand the chaos amid these headlines. Partisans have jumped to the predictable talk points on politics. This was actually a corporate decision. The timing of a merger, and conflicting streaming strategies were the main reasons CNN+ was in trouble.

Warner Brothers Discovery is the new owner and operator of CNN. They have big plans for multiple streaming platforms in order to challenge Netflix.

(…)

Eastern, 11:02:19

STELTER – Sarah, thank you for being a guest on my CNN+ first episode. Next, you reported on the impending demise of the service. We’ll be open and transparent. Was there anything you learned this month? What was the reason for CNN+’s closure?

SARA FISHER: Yes. This was something that CNN executives planned for over two years. We found out in 2021 that CNN’s parent firm Warner media was merging 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 was looking to establish a large streaming platform. However, it wanted the service to offer general entertainment. CNN+, a subscription service that is smaller than the others. They decided to take a closer look at what was left after April 8th’s merger. The merger was too expensive and might not be profitable on time. It also doesn’t match with our plans. It is better to get rid of it now, than wait for them to 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. It’s estimated that $300 million was spent on marketing, promotion and big name names like Chris Wallace, Audie Cornwallish, Eva Longoria. This was shocking because it happened so quickly.

This is, at the end of it all, a business decision. There are many debates over whether journalism should be considered a business or a public service, but the fact is that it’s a business.

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? It appears they decided to stop doing this. This was because they didn’t think it would be in the company’s long-term best interests.

But again, from the outside looking in, I’m very curious to see what they’re going do with all of this talent. They are massive names, with large followings. They are going where?

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 tried to launch streaming services similar to CNN+. However, they were not as successful. Discovery doesn’t believe that this model works.

It’s difficult to believe that, as an employee of CNN, I was worried about the layoffs of my colleagues, but this was purely about corporate strategy. That’s exactly what it was.

FISCHER (Yes, it was). It was also controversial. People inside CNN —

STELTER: Well, wasn’t it too soon to know?

FISCHER : That’s 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. It’s impossible to know. 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.’

However, the problem lies in the amount of money that was expended to acquire those subscribers. To date, they have invested $300 million. With the goal of achieving profitability in four years, the plan was to invest a quarter of a trillion dollars over the next four year.

Brian, the question becomes, “Is it worth paying for 5.99 or 2.99 for this, you know?, lifetime membership?”

STELTER: Right.

FISHER: This was the problem. Discovery probably looked into this, and concluded that it wasn’t worth the expense. Although it’s an excellent number of subscribers right now, this might not prove to be a wise business decision long-term.

STELTER – They’ll be focusing on core business and CNN digital as well. Oliver, What’s next at 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 must appoint a 9:00 p.m. new host. He must decide what to do about the talents that were brought in to CNN+, and there is the possibility of hundreds of layoffs. 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.