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Inside the CNN + implosion

David Zaslav was the CEO of Warner Bros. Discovery a few hours when he learned he had a problem.

On April 11, the day his newly merged company began trading on the Nasdaq, Mr. Zaslav greeted New York staff pasta and ice cream bars and made an impromptu shout to his new charges. He was on his way to Washington, another stop on the coronation tour when he was called.

His team just looked at CNN + data for the first time, a highly publicized subscription streaming service started two weeks ago, and the news was grim. It was watched by less than 10,000 viewers at any one time, despite a multi-million dollar advertising campaign and large recruits like Chris Wallace. They recommended a review with cold eyes.

Three days later, shortly after Mr. Zaslav appeared with Oprah Winfrey at Rah-Rah City Hall, he gathered his deputies in a low-rise stucco building in Burbank, California, on the grounds of Warner Bros. Studios. agreed with their conclusion: turn it off.

The near-instantaneous collapse of CNN + was one of the most remarkable media failures in recent years, a $ 300 million experiment that suddenly ended in dismissal and career in disarray. The company, torn by its fate, has revealed deep philosophical contradictions about the future of digital media as managers struggle to navigate a rapidly changing market where technology and consumer habits change from day to day.

And it reflected the embarrassing regulatory dance of the two media giants who teamed up, even as the high-profile project rushed to completion. Discovery had some concerns about CNN +, but was forced to directly lead one of its streaming competitors until an agreement was reached.

CNN must now break out of one of the most chaotic periods in its history: the dismissal of its top-rated presenter Chris Cuom; the overthrow of its longtime president Jeff Zucker over an unpublished affair with a colleague; and the absorption of its parent company WarnerMedia Discovery by Mr. Zaslav.

The collateral damage included a long friendship between Mr. Zaslav and Mr. Zucker, former allies in business and in life. Mr. Zucker, who once called Chief Discovery “the best friend anyone could wish for, and I’m lucky to be mine,” has not spoken to Mr. Zaslav since he left on February 2.

Inside CNN, employees remain impressed. “It’s not easy news and I don’t want to minimize it,” Chris Licht, the new chairman of the network, told CNN + staff in a shutdown ceremony. “I’m proud of it,” he added. “I’m proud of this team and I’m overwhelmed by what it means to you.”

This account is based on interviews with a dozen people familiar with the rise and fall of the streaming service. They spoke on condition of anonymity to share the details of sensitive conversations.

CNN + was introduced to the world on March 28, the day before its debut, at a great party on the 101st floor of 30 Hudson Yards, the futuristic Manhattan skyscraper where CNN is headquartered. The stars of the net were photographed at a giant fiberglass statue with the CNN + logo, New York City spread out beneath their feet.

But inside the net, the service lacked her most prominent champion.

Mr Zucker, CNN +’s biggest supporter, was out. Jason Kilar, CEO of WarnerMedia, was a streaming evangelist; led a toast at a CNN + party, but it was among his last public appearances before he left the company a week later. Internally defending the platform remained its internal guru Andrew Morse, chief digital director of CNN, who previously headed Bloomberg Television.

Understand the confusion on CNN

It shouldn’t have gone this way.

CNN unveiled plans for CNN + in July 2021, calling it the network’s most important venture since its inception in 1980. Mr Zucker called it a bold and necessary foray into subscription-based digital news as consumers left traditional cable television. Hundreds of new employees would be added to produce 8 to 12 hours of live programming per day.

Crucially, AT&T was on board – which at the time controlled WarnerMedia and CNN.

AT&T has already agreed that WarnerMedia will separate Discovery and leave the entertainment and news business. But in June 2021, the leadership of the telecommunications giant met with Mr. Zucker in Dallas and approved a $ 1 billion, four-year budget for CNN +.

Mr. Zucker began recruiting and attracted stars like Eva Longoria, who signed up for a travel show in Mexico, and Audie Cornish, a former NPR star. The start date was set for March 2022.

After that, Mr. Zucker abruptly resigned, followed a week later by his chief of staff, Allison Gollust. In addition to not disclosing their relationship, they were both accused of violating the network’s intelligence standards. (They both denied it.)

Mr. Morse, who oversaw all of CNN’s global digital operations, decided to act. In late February and again in early March, he asked if his team could share its CNN + vision with Discovery before the merger was completed. He decided that creating an early case was the best way to convince Discovery that CNN + was the future.

In both cases, the requests were not complied with. In transactions between large companies, managers are careful not to conflict with rules that exclude “arms bounces”: they coordinate their business activities on critical pre-trade days.

Then came the ominous sign. On March 14, two weeks before the launch of CNN +, Gunnar Wiedenfels, CFO of Discovery, appeared at a Deutsche Bank conference and announced that Discovery + and WarnerMedia’s HBO Max would be merged into one giant “shot” mega platform.

Mr Wiedenfels did not mention CNN +. After this conference, Mr. Morse asked again if his team could talk to Discovery; no such meeting took place for the third time.

His fears were justified.

Discovery’s management was skeptical of CNN +. Mr. Zaslav and his team were unlucky with streaming services on one topic; their specialized platforms dedicated to cars, food and golf were expensive and failed.

Mr. Zaslav, a pioneer of cable television known simply as “Zas” in the industry, came up with an agreement that brought together Discovery and Warner Bros., a late career move that made him one of the most powerful people in the media.

Discovery believed in the power of streaming services in large tents, especially given the crowded market. He was also about to take over the $ 55 billion debt from the merger, and executives needed to find $ 3 billion in savings.

Despite the skepticism emanating from Discovery, Mr. Kilar – who oversaw Mr. Zucker’s departure and has a reputation as an iconoclast – did not consider canceling CNN +’s launch. He assumed that Discovery fully understood when it agreed to the merger that WarnerMedia was preparing a new ambitious digital product, CNN.

Furthermore, Mr Kilar did not think that CNN + was at odds with Discovery’s “all-in-one” streaming philosophy. He has already planned to include some CNN + content in HBO Max, while still offering CNN + as a standalone service.

He walked forward. “It would be hard to overestimate how important this moment is for CNN,” he wrote on Twitter on the day the service was launched.

Mr. Zaslav and his team were confused. Discovery was ready to take over the company within weeks. Why not just delay?

Nevertheless, Mr Zaslav’s assistants admitted one advantage: they could watch CNN +’s performance, similar to the film’s premiere. Maybe once they look under the hood, CNN + will exceed their low expectations.

Immediately after the merger closed on April 8, Discovery officials began requesting information about the CNN + process. They didn’t like what they saw. A worrying sign was that the download of the service was declining, despite great marketing pressure.

On April 11, when the “WBD” symbol was launched on the Nasdaq, CNN + officials met with the new management of Warner Bros. Discovery and presented their case, an opportunity they have been asking for since February.

Mr Morse said CNN + had secured 150,000 paying subscribers in the first two weeks and was aiming to meet its first-year goals. He argued that consumers are willing to pay for high quality digital news (CNN + costs $ 6 a month), citing the success of The New York Times.

Mr Zaslav’s representatives – including Mr Licht, the new CNN chairman, and JB Perrette, Discovery’s longtime streaming boss – were not convinced. They said they suspended external marketing for CNN + for two weeks until a formal review.

The next day brought unflattering statistics from CNBC and Axios. CNN executives were horrified. And they became suspicious of their new Discovery superiors because they believed they had leaked data to create an excuse to shut down the service.

After meeting with CNN staff in Washington and Atlanta, Mr. Zaslav arrived at Warner Bros. on April 14. in Burbank. He recruited Mrs. Winfrey, who created her OWN cable network in tandem with Mr. Zaslav and Discovery, for an interview. him on stage at the opening town hall with staff.

Later in the afternoon, Mr. Zaslav convened his think tank to the building where Jack Warner, a former Hollywood mogul, worked from the 1930s to the 1960s.

They agreed that CNN + consumes too many resources and that its potential as a digital destination cannot justify its small audience and enormous costs. Mr Perrette, who called from London, said it was time to close. Mr. Zaslav agreed.

Over the next week, the people of Zaslav fine-tuned the details. Mr. Licht, along with Adria Alpert Romm, CEO of Warner Bros. Discovery argued that CNN + employees should receive a three-month salary and a chance to stay in the company; each released would receive another six months of severance pay.

Early on April 21, Mr. Licht announced to CNN executives that the service would end on April 30. Mr. Morse was also not …