Why it matters: The tea leaves were there for people who had been following the lead up to the merger of CNN’s parent WarnerMedia and Discovery on April 8.
State of play: Discovery executives had been publicly dropping hints that they were unsure of the business plan for CNN+ for weeks leading up to the merger.
- “I haven’t gotten a business review on what CNN+ is going to be and how it’s going to be offered,” Warner Bros. Discovery CEO David Zaslav told CNBC on Feb. 4.
- Three days before that interview, Zaslav’s friend and CNN boss Jeff Zucker shockingly resigned.
- Two weeks later, Zaslav announced Chris Licht, an ally and CNN outsider, would replace Zucker after the merger.
In the days following the deal close, CNN+ executives, including CNN+ boss Andrew Morse — who said Thursday he will be leaving the company — had frequent meetings with Licht and “JB” Perrette, a Discovery veteran chosen to lead Warner Bro. Discovery’s streaming efforts.
- It became clear to CNN executives during those meetings that Discovery executives were concerned about the app’s costs and business plan.
- On April 12th, four days after the deal closed, sources told Axios that millions of dollars of cuts and major layoffs were in the works for CNN+.
- Shortly after, all marketing spend for CNN+ was suspended and CNN’s longtime finance chief was laid off and replaced with a Discovery executive.
How we got here: CNN executives first mulled a subscription service in early 2020, before streaming veteran Jason Kilar was hired by AT&T to oversee CNN parent WarnerMedia.
- CNN activated in April that year by acquiring Canopy, the creator of a personalized news app, and hiring New York Times product veteran Alex MacCallum.
- Zucker and AT&T CEO John Stankey endorsed CNN+. The company hired McKinsey to help strategize the service’s launch.
- Morse created separate operating divisions for CNN’s core digital team and CNN+ and was given a budget of $1 billion over four years.
- Kilar’s arrival caused some tension. He was responsible for running HBO Max, creating a competitive dynamic between him and Zucker.
Things took a strange turn when it was announced that WarnerMedia would be spun off to merge with Discovery in May 2021, and that Kilar — caught off guard by the plan — would eventually exit.
- In the months following, sources say Kilar gave Morse and Zucker autonomy and support to launch CNN+, although it was unclear whether Discovery would ultimately keep it.
- After Zucker left, Morse said launching CNN+ was still a top priority, and Kilar continued to support his efforts, publicly lauding the service when it debuted.
- Sources say the three executives that replaced Zucker on an interim basis began to distance themselves from the product. Ultimately, Kilar signed off on a decision before the merger that CNN+ should continue on, two sources told Axios.
Inside Discovery, executives were frustrated that CNN didn’t hold off the launch until after the merger.
- The launch felt rushed in order to stake a claim over the service and the network’s future ahead of the merger, a source told Axios.
The big picture: Zucker’s departure forced Discovery executives to rethink CNN’s role in the larger company.
- The network’s plan for a standalone subscription service never made sense for Discovery, but Zucker — who was presumed to take on a bigger role at the combined company before his resignation — supported it.
- Discovery also wanted CNN to prioritize impartial news. Zucker positioned CNN as a “facts first” network.
What’s next: Discovery wants to build one scaled, subscription streaming app based around HBO Max’s branding that includes a cheaper, ad-supported tier.
- It will eventually combine discovery+ with the HBO Max app after initially offering them as a bundle.
- Much of the CNN+ programming will be reallocated to other platforms. Some features like CNN’s “Interview Club” will likely live on CNN’s free, ad-supported app. Other shows may be included in HBO Max.
As for CNN employees, there will be cuts.
- About 350 of the 700 people that work for CNN+ will be laid off with pay and benefits for the next 90 days. After that, any employee that doesn’t find a new role with the network will be granted at least six months’ severance.
- WarnerMedia has been under a hiring freeze for weeks leading up to the deal. Sources say that the hiring freeze will end this week, allowing CNN+ employees to apply to the roughly 100 open roles at CNN, many on editorial.
- Backend talent, including engineers and designers, will be able to apply for the hundreds of backend roles supporting the streaming efforts at the newly-combined company.
- Morale at CNN is low. A Discovery executive referring to CNN+ as “CNN minus” particularly rubbed people the wrong way, a source told Axios.
Deals are still being negotiated for top talent. Top anchors and show hosts will need to negotiate new roles at the network, either on the TV side or digital, if they wish to say.
- Chris Wallace, who came to CNN after a decades-long career at Fox, could possibly move his interview show to CNN’s linear TV network, a source close to the situation told Axios.
Editor’s note: This article has been updated with new details on morale at CNN.