Chris was supposed to start his job as CNN's chief in May.
He addressed about 400 full-time CNN+ staffers through a remote video feed. Hundreds of other CNN employees got hold of the remote link, which was passed around from person to person, to hear what their new boss had to say.
When he agreed to take over for Jeff Zucker, the purpose of his introductory speech was not what he expected. CNN+, a subscription streaming service, was ending about a month after its launch, according to a message from Licht to employees. He acknowledged that many would lose their jobs.
He quit his job as the executive producer of The Late Show with Stephen Colbert to run CNN. According to people who listened to him speak, he was passionate and compassionate.
CNN+ will only last a few weeks. There were a number of factors that led to its demise. Here are some things that have been learned.
It was the first time that some CNN+ employees had heard from Licht. It wasn't just the scores of others who had met the man two days before. The 16th floor was recently converted from a Turner Broadcasting floor to the home of CNN+.
He shook hands with employees, but didn't tell them that the service would be closed two days later. CNN staffers will be able to apply for other roles at CNN. About 350 employees are likely to be laid off.
According to people in attendance, Licht said more than once on Thursday.
Unusual mix of corporate deal-making, leadership disagreement, unexpected resignations and legal restrictions led to CNN+'s rapid demise.
One Warner Bros. Discovery executive said it would be a Harvard case study.
CNBC spoke with a dozen people directly involved with CNN+ about why it folded so quickly and why it launched in the first place.
Zucker and Andrew Morse, CNN's head of global digital business who eventually became CNN+'s chief, initially discussed launching a streaming service in early 2020, months before Kilar joined WarnerMedia, according to people familiar with the matter.
Zucker and Morse were in Kilar. WarnerMedia was brought on to be a company that focused on streaming video rather than distributing content to cable networks and movie theaters.
The CNN leadership thought CNN+ would be similar to The New York Times, a subscription news product that would eventually house video, podcasts, and all of CNN's interview and entertainment programming. CNN thought it had a global branding advantage over the Times. CNN needed a digital subscription strategy, having seen many advertising-based digital media properties suffer from low valuations and volatile ad markets.
CNN+ became the landing spot for CNN's linear network as millions of households canceled their cable subscriptions. CNN.com was going to push CNN+ subscriptions and have more and more paywalled content. The content wasn't strong enough to merit a full paywall, so executives decided to make CNN.com part of a subscription. CNN.com is the most viewed news website, generating more than 200 million unique visitors each month.
McKinsey was hired by CNN to help with the operations of CNN+. CNN+ would get to 2 million subscribers at the end of the first year, based on months of research. Kilar believed that the figure was a conservative estimate. The goal was to compete with The New York Times, which has 10 million subscribers.
WarnerMedia executives had a plan to meet their goal, which was to use CNN.com and HBO Max as a constant marketing presence. The plan was to launch CNN+ in the beginning of this year and then bundle it with HBO Max in September. The approach for the millions of subscribers that sign up for the service would lead to a robust, globally scaled news service.
Zucker and Kilar were caught off guard by AT&T's decision to spin off WarnerMedia and merge it with Discovery Communications. The merger discussions were held in secret between AT&T Chief Executive John Stankey and Discovery CEO David Zaslav.
Zucker got a second wind from the merger. He was friends with Zaslav, who was going to replace Kilar as CEO of the new company. Zucker seemed to be in line for a big role under Zaslav.
Zucker decided that he wouldn't leave at the end of the year, as reported by CNBC. Zucker had a refreshed career outlook. He was given the responsibility of setting its strategy and programming.
Chairman, WarnerMedia Jeff Zucker attends CNN Heroes at American Museum of Natural History on December 08, 2019 in New York City.Zucker hired hundreds of people as producers, software engineers, and marketing support in the first quarter of 2022.
Allison Gollust was in charge of promoting the new service. He ran the day-to-day operations. Zucker was given the go-ahead from Kilar to spend hundreds of millions of dollars on a new service for CNN.
When CNN formally announced it would build the new service, it was said that the company was behind it.
The service was to have eight to 12 hours of live programming a day. Zucker began signing up outside talent to anchor shows, including Chris Wallace and Kasie Hunt, who left NBC News to take the job.
AT&T said the deal would likely close in the middle of 2022.
CNN set a launch date for CNN+ for the first quarter of 2022. It would give the service a few months of breathing space before the leadership team took over for Kilar, who already knew he wasn't staying on. Zucker wanted to launch the service in January, but ran into technical trouble. CNN was making a product from scratch with a brand new tech stack instead of simply building on top of HBO Max. CNN did not want to launch a buggy product. Zucker and Morse decided to launch at the end of March.
Regulators got through the approval process more quickly than they anticipated. The close date for Discovery and AT&T was months earlier than anticipated.
CNN+ was launched just weeks before the merger's close date.
Zucker resigned on February 2.
Zucker's departure over an undisclosed relationship with Gollust didn't change the trajectory of the product. Staffers say the day-to-day activity around the division wasn't interrupted by the sudden absences because Morse remained and continued to steer the ship. CNN+ became a unifying mission for staffers. Launching CNN+ on time was a clear goal for employees, even though CNN may have lacked a clear forward strategy with interim leadership.
Zucker and Gollust's resignations weren't necessarily bad for CNN+. The resolve of remaining employees to launch it on time was firmed by their exits. The CNN+ that launched on March 29 looked like Zucker's vision. The product launched more or less as designed, despite the fact that there were less live programming hours than was stated in July.
The product's marketing was not as strong in the key weeks before launch, according to internal sources. Staffers said that by that point, Morse was working overtime, trying to wear multiple hats by running the service and getting support from corporate, previously the jobs of Zucker and Gollust.
The internal marketing of CNN+ helped lead to its demise.
Zaslav settled on a streaming strategy for Warner Bros. Discovery by early this year.
He wanted to make the streaming bundle even more attractive by using news and live sports from WarnerMedia. He thought that the collection of assets could take on the likes of Netflix. CNN will be a part of the larger service.
David Zaslav, President & CEO of Discovery Inc.CNN+ was antithetical to his strategy.
If Warner Bros. Discovery spent hundreds of millions of dollars making programming for CNN+, Zaslav felt the company was misallocating resources. Wall Street likes to judge media companies on their main product. Disney mostly trades on Disney+ subscriber numbers. The Warner Bros. Discovery share price is likely to move on the number of customers.
CNN would be a sideshow. Warner Bros. Discovery would be hurt by taking subscribers away from the larger bundle with the promise of a cheaper option in CNN+.
CNN+'s pricing plan annoyed Discovery executives because it offered a 50% discount for as long as a consumer wanted it. It was a mistake for Zaslav to give that perk to a CNN+ subscriber. For anyone who would have signed up for the larger bundle because of CNN, there was now a reason not to do so.
Discovery has already tried niche subscription streaming products, such as GolfTV, GCN+ and Food Network Kitchen. Discovery didn't move the needle with those products. They didn't want to waste time plowing ahead with a strategy they had already decided didn't work.
The strategy of using CNN as an HBO Max supporter was fundamentally disagreed with by Kilar, Zucker and Morse. Consumers enter a world of news when they see the variety of content CNN offers. If CNN is part of the larger world of Max-Discovery+, they fear viewers will choose to watch reality TV or drama. Over time, the effect would be to diminish the value of CNN.
The New York Times comparison was silly. The New York Times put their content behind a paywall. CNN was not doing that. CNN would be trying to convince existing users of CNN.com and CNN on cable TV to pay more for programming that Discovery thought was unnecessary.
Zaslav's team felt that the correct comparison was Fox Nation, which hasn't reached 2 million subscribers yet.
In the weeks before the launch, AT&T executives were asked if there was a way they could speak with the Discovery leaders. Staffers said it was a shout from the rooftops for a meeting.
Discovery disagreed with the strategy of CNN+ the day after Zucker left, according to CNBC. On the next day, Zaslav told CNBC that he had gotten a business review on what CNN+ would be and how it would be offered.
Zaslav wanted to be found directly from Discovery. CNN's team was told by AT&T that it couldn't have any discussions with Discovery because of the gun-jumping laws. Kilar didn't talk to Zaslav about CNN+, and he wasn't going to make decisions based on media reports.
In early March, Zaslav met with CNN executives, including Michael Bass, who was running CNN after Zucker left. Lawyers in attendance told Zaslav he wasn't allowed to ask about CNN+ in the meeting.
So he pushed ahead. 150,000 subscribers paid for CNN+ in the first two weeks. According to CNBC, fewer than 10,000 watched on a daily basis. A source told CNBC that the number was closer to 4,000.
WarnerMedia executives were excited about the start. The daily active user, or DAU, was viewed as pointless by them. The number of subscribers is the most important metric for digital services. The 150,000 subscribers weren't enough to reach 2 million within a year. There wasn't a hit show coming to CNN+. They saw a decline in subscriber numbers after the initial pop. The daily active user number was significant to them.
They weren't going to make a decision about CNN+ when the new leader hadn't even started. Discovery asked Licht to start work early so he could make a decision about what to do with the service.
At 8 a.m. The first day Warner Bros. Discovery began trading was April 11. It was his first meeting at CNN.
CNN staffers left the meeting knowing the product wouldn't continue. They hoped it wouldn't be shut down completely, but they were worried that a decision had already been made. The product was just 12 days old according to the team. They said that the statistics were silly. Alex MacCallum, CNN's head of product, had come from The New York Times and The Washington Post. CNN was a news service and shouldn't be judged against niche entertainment streaming services.
The New York Times, The Washington Post and The Wall Street Journal got their digital subscription products off to a good start.
Discovery didn't think that comparison was relevant. The April 11 discussion never got heated, but there was clear resignation from the CNN+ side. It was an hour-long meeting.
He decided to kill the product ten days later. He said last week that he was leaving the company.
CNN staffers are frustrated that Discovery didn't back channel information to delay the CNN+ launch if they were unhappy with the strategy.
They wonder if Discovery chose not to relay information in the months leading up to CNN+'s launch so they could count the hundreds of layoffs and saved operation costs from the service's shutdown as part of the $3 billion in synergies Zaslav has.
Kilar believes in CNN+. On the day of its launch, he wrote a series of messages about its importance.
CNN+ is likely to be as important to the mission of CNN as the linear channel service has been these past 42 years. It would be hard to overstate how important this moment is for CNN, he said, adding that CNN+ is also important.
Zucker has a relationship with Zaslav, so some at CNN wonder if he could have saved the product. It is possible that his exit allowed the Warner Bros. Discovery CEO to dodge a bullet. He wouldn't have to tell his friend that he didn't have a home for his pet project at Warner Bros. Discovery. Zucker and Zaslav haven't spoken since Zucker resigned. Zucker's departure made CNN less stable and gave Zaslav his first major headaches as CEO of the combined company.
The CNN+ debacle may speak to a new era of CNN according to several past and present CNN staffers.
AT&T left CNN and Zucker alone while many WarnerMedia employees complained about working under the ownership of a phone company that didn't understand entertainment. Zucker had full support for his vision at CNN, even though he had a lot of power at WarnerMedia. WarnerMedia was planning to spend $1 billion on CNN+ in the next four years.
Zaslav and Warner Bros. have joined forces to ax CNN+, signalling a more active corporate hand over the organization's future.
CNN's strategy will have to align with its parent company. CNN staffers fear that if the news organization is only seen as a companion piece for a streaming bundle, it won't be able to flourish as a brand.
The ramifications of that shift are not known. It will be a culture change for a cable news network that has gotten used to getting what it wants.
They clearly didn't with CNN+.
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