David Zaslav was chief executive of Warner Bros. for a few hours. Discovery when he heard he had a problem.
On April 11, the day his newly merged company began trading on Nasdaq, Mr. Zaslav presented the New York workers with pasta and ice cream bars, delivering an impromptu rallying cry for his new indictment. He was on his way to Washington, the next stop on the coronation tour, when a call came in.
His team had just gotten their first look at data from CNN+, the much-promoted subscription streaming service launched two weeks earlier, and the news was grim. There were fewer than 10,000 viewers watching at any one time, despite a multimillion-dollar ad campaign and major contributors like Chris Wallace. They recommended a cold-blooded review.
Three days later, shortly after Mr. Zaslav appeared with Oprah Winfrey outside a town hall of a rah-rah company, he gathered his deputies in a low-slung stucco building in Burbank, California, on the Warner Bros. studio lot, and said he was agree with their conclusion: stop it.
CNN+’s near-instantaneous collapse amounted to one of its most spectacular media busts in years, a $300 million experiment that ended abruptly with layoffs looming and careers in disarray. The corporate tug-of-war over its fate exposed deep philosophical divisions about the future of digital media, as executives struggle to navigate a rapidly evolving marketplace where technology and consumer habits shift from day to day.
And it reflected the uneasy regulatory dance of two media giants merging even as a high-profile project hurtled toward completion. Discovery had some concerns about CNN+, but was limited from directing any of its streaming competitors until the deal was closed.
CNN must now emerge from one of the most chaotic periods in its history: the firing of its highest-rated anchor Chris Cuomo; the impeachment of his longtime president Jeff Zucker over a secret romance with a colleague; and the acquisition of parent company WarnerMedia by Mr. Zaslav’s Discovery.
The collateral damage included the long friendship between Mr. Zaslav and Mr. Zucker, former allies in business and in life. Mr Zucker, who once called the Discovery chief “the best friend anyone could ever want, and I’m lucky he’s mine,” has not spoken to Mr Zaslav since he left on Feb. 2.
Inside CNN, employees remain baffled. “This isn’t easy news, and I don’t want to downplay that,” Chris Licht, the network’s new chairman, told CNN+ staff in a solemn appeal to announce the shutdown. “I’m proud of it,” he added. “I’m proud of this team and I’m gutted about what this 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, a day before its debut, with a sizzling party on the 101st floor of 30 Hudson Yards, the futuristic skyscraper in Manhattan where CNN is located. Network stars posed for photos through a giant fiberglass sculpture of the CNN+ logo, New York City sprawled beneath their feet.
But within the network, the service missed its most prominent champion.
Mr. Zucker, CNN+’s leading advocate, was gone. Jason Kilar, the chief executive of WarnerMedia, was a streaming evangelist; he toasted the CNN+ party, but it was one of his last public appearances before leaving the company a week later. The internal guru, Andrew Morse, CNN’s chief digital officer of CNN, who previously ran Bloomberg Television, had to defend the platform internally.
Understand the turmoil at CNN
It shouldn’t have gone like this.
CNN announced plans for CNN+ in July 2021, calling it the network’s most important venture since its founding in 1980. Zucker called it a bold and necessary step into subscription-based digital news at a time when consumers were moving away from traditional cable television. Hundreds of new employees would be recruited to produce eight to 12 hours of live programming per day.
Crucially, AT&T — which controlled WarnerMedia and CNN at the time — was on board.
AT&T had already agreed to split WarnerMedia into Discovery and exit the entertainment and news business. But in June 2021, the telecom giant’s leaders met Mr. Zucker in Dallas and approved a four-year $1 billion budget for CNN+.
Mr. Zucker got to work, luring stars like Eva Longoria, who signed to a Mexico-based travel show, and Audie Cornish, the former NPR star. A March 2022 start date has been set.
Then Mr. Zucker abruptly resigned, followed a week later by his top deputy, Allison Gollust. In addition to not disclosing their relationship, the two were accused of violating the network’s news standards. (Both denied this.)
Mr. Morse, who oversaw all of CNN’s global digital operations, decided to intervene. In late February and again in early March, he asked if his team could share their vision for CNN+ with Discovery officials before the merger was complete. He thought making an early case was the best way to convince Discovery that CNN+ represented the future.
Both times the requests were not granted. In intercompany transactions, executives are wary of violating rules that preclude gun-jumping: coordinating their business activities in the critical days before deals close.
Then came an ominous sign. On March 14, two weeks before CNN+ was due to launch, Discovery’s chief financial officer Gunnar Wiedenfels appeared at a Deutsche Bank conference and stated that Discovery+ and WarnerMedia’s HBO Max would be rolled into one giant “blowout” mega-platform.
Mr Wiedenfels did not mention CNN+. After that conference, Mr. Morse again asked if his team could speak to Discovery; for the third time, no such meeting has taken place.
His concerns were well founded.
Discovery executives were skeptical about CNN+. Mr. Zaslav and his team had been unlucky with single topic streaming services; their niche platforms for cars, food and golf were expensive and ended in failure.
Mr. Zaslav, a pioneer of cable television known in the industry as “Zas,” had come up with the deal that Discovery and Warner Bros. together, a late career move that made him one of the most powerful people in the media.
Discovery believed in the power of marquee streaming services, especially given the overcrowded market. It was also about to take on $55 billion in debt as a result of the merger, and executives had 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 the start of CNN+. He assumed Discovery had fully understood when it agreed to the merger that WarnerMedia was preparing an ambitious new CNN digital product.
Furthermore, Mr. Kilar did not think that CNN+ conflicted with Discovery’s “all-in-one” streaming philosophy. He had already planned to include some CNN+ content with HBO Max, while still offering CNN+ as a standalone service.
He went ahead. “It’s hard to overstate how important this moment is for CNN,” he wrote on Twitter on the day the service started.
mr. Zaslav and his team were stunned. Discovery was about to take over the company within weeks. Why not just postpone?
Still, Mr. Zaslav one advantage: they could get a peek at CNN+ performance, similar to the opening night of a movie. Perhaps once they got under the hood, CNN+ would exceed their low expectations.
Immediately after the merger was completed on April 8, Discovery officials began asking for data on CNN+’s progress. They didn’t like what they saw. A disturbing sign was that the number of downloads for the service was declining, despite significant marketing pressure.
On April 11, when the “WBD” ticker symbol went live on Nasdaq, CNN+ officials met with the new management of Warner Bros. Discovery and made their case, an opportunity they’d been asking for since February.
Mr. Morse said CNN+ had landed 150,000 paid subscribers in its first two weeks and was on track to meet its first year goals. He argued that consumers were willing to pay for high-quality digital news (CNN+ cost $6 a month), citing the success of The New York Times.
Zaslav’s representatives — including Mr Licht, the new CNN chairman, and JB Perrette, Discovery’s longtime head of streaming — were unconvinced. They said they are suspending external marketing for CNN+ for two weeks pending a formal review.
The next day, some unflattering statistics were reported by CNBC and Axios. CNN executives were stunned. And they grew suspicious of their new Discovery superiors, assuming they had leaked the data to create a pretext to shut down the service.
After meeting CNN staff in Washington and Atlanta, Mr. Zaslav arrived at the Warner Bros. property on April 14. in Burbank. He recruited Ms. Winfrey, who co-founded her OWN cable network with Mr. Zaslav and Discovery, for an interview. him on stage in front of an introductory town hall with employees.
Later that afternoon, Mr. Zaslav gathered his brain trust in a building where Jack Warner, an earlier-era Hollywood tycoon, worked from the 1930s to the 1960s.
They agreed that CNN+ was consuming too many resources and that its potential as a digital destination couldn’t justify its small audience and huge cost. mr. Perrette called from London and said it was time to stop operations. Mr Zaslav agreed.
Over the next week, the Zaslav team finalized the details. Mr. Licht, along with Adria Alpert Romm, Warner Bros. Chief People Officer. Discovery, states that CNN+ employees should receive three months’ wages and an opportunity to stay with the company; anyone fired would receive an additional six months of departure.
Early on April 21, Mr. Break the news to top CNN officials that the service would end on April 30. Morse was also not told until that morning. Mr. Light called Mr. Wallace, Ms. Cornish and other top anchors to say that CNN would try to find a place for them. Mrs Cornish and Mrs Longoria’s shows hadn’t started yet.
CNN+ supporters lamented the streaming service’s lack of opportunity and argued that the decision was damaging to the CNN brand, a misstep that would leave the network unprepared for a future where few Americans watch cable TV.
For the common man it was a hard blow. Feeling sorry for donuts, employees of Rebecca Kutler, CNN+’s chief programming officer, were told not to come to the office if they had no specific responsibility.
Kasie Hunt, who left an MSNBC job for CNN+, ended her last show on Friday with a tribute to its staff. “They left steady jobs, some moved across the country, they all took huge risks,” she said. “When you hire journalists, they are top of the class.”
