Uh oh: Parent company suspends all external marketing for CNN+, lays off CNN's CFO

AP Photo/Ron Harris

The platform isn’t even a month old yet. Warner Bros. Discovery can’t possibly be at the “cut your losses” stage already, can it?

Axios says it can. Besides, we already knew that “big cuts” were coming due to the disappointing early subscription numbers.

Increasingly this reminds me of the old “Simpsons” episode in which Homer gets to design the concept car of his dreams for his brother’s company and comes up with a hugely expensive monstrosity that no one but him would like. What is CNN+ if not Jeff Zucker’s streaming equivalent of that?

The Axios story is longish by that site’s standards but it’s worth reading in full for all of the newsy bits.

Warner Bros. Discovery has suspended all external marketing spend for CNN+ and has laid off CNN’s longtime chief financial officer as it weighs what to do with the subscription streaming service moving forward, five sources tell Axios…

Discovery executives are frustrated that the service launched. If CNN held off launching CNN+ until after the merger, it would have been easier to pivot the company’s efforts towards something better aligned with Discovery’s goals…

Discovery executives are focused mostly on returning CNN to its journalistic core, a point Warner Bros. Discovery CEO David Zaslav reiterated in a town hall last week. That includes less of a focus on primetime perspective programming, and more of a focus on hard, breaking news. CNN+ features an array of soft news content, which doesn’t align with Discovery’s broader vision for CNN…

Blame bad timing, limited communications and misaligned incentives for how CNN and Discovery got strategically misaligned on such a massive product rollout.

It’s taken Fox Nation, which has a built-in ideological fan base and strong anchor personalities, three years to amass 1.5 million subscribers. CNN+ was hoping to somehow attract two million subscribers in just one year despite the fact that they lack that same kind of base and their hosts are known more for being news readers than culture warriors like Tucker Carlson.

Per Axios, they’ve amassed 150,000 subscribers so far, which would be fine if they kept up that pace for the next 11 months. But I assume the way subscriptions typically work are with a big burst immediately after launch as the early adopters sign up, then a steep decline followed by a plateau unless and until buzzworthy content causes another uptick via word-of-mouth. There’s nothing very buzzworthy happening on CNN+ so far. So Warner Bros. Discovery execs presumably have concluded that they’re going to miss the annual target — badly — and have cut marketing spending for now rather than exacerbate their losses.

Now there’ll be a chicken-and-egg problem within the company. If CNN+ flatlines on subscribers, its supporters will blame its detractors for cutting off marketing while its detractors will blame its supporters for not building a more successful product out of the chute to warrant marketing.

There’s also a question of why CNN insisted on launching an expensive, dubious new platform so soon before the merger with Discovery. Axios claims that Discovery didn’t want to communicate internally with Warner Bros. before the deal for fear of attracting government interest, so they opted instead to say some discouraging things about CNN+ publicly in hopes that CNN would take the hint and postpone the launch. But they didn’t. I wonder: Did supporters of CNN+ rush the launch precisely so that it would happen before Discovery took over, believing that it’d be much harder for the new owner to shutter the platform once it was already on the air than to cancel it before it launched? It’s strange that the service went live before its app was available on Roku, no?

The fact that WBD has now slashed marketing spending raises the possibility that they’re going to shutter it anyway, which would make this a “New Coke”-scale debacle.

But there’s another possibility, per Axios. WBD may try to bundle CNN+ with other streaming services it owns to sweeten the pot for consumers by broadening the variety of content available. That strategy has worked before, notes the Motley Fool:

The merger between WarnerMedia and Discovery presents an opportunity for the company to bundle the three streaming services under its control — HBO Max, Discovery+, and CNN+. The three services are all complimentary with limited overlap in content, but broad appeal. And it could work similarly to the extremely successful Disney bundle.

The Disney bundle supercharged interest in ESPN+. The sports streaming service had garnered just 2.2 million subscribers one year after its launch. Bundling the service with Disney+ and Hulu took it from 3.5 million subscribers at the launch of Disney+ to 10.3 million one year later, and it added the same amount over the next year. It saw even stronger momentum in the first quarter this year, now counting over 21 million subscribers.

HBO Max and Discovery+ alone include a lot of archived programming. Package them with a news service like CNN+ for an extra buck or two a month and cordcutters may find that hard to say no to, especially if CNN+ eventually includes CNN’s live newscast. That’s another key takeaway from Axios’s report today — WBD wants CNN to get back to hard news programming, to the point where they’re even toying with doing a traditional newscast in the 9 p.m. hour instead of bringing in a new opinion-ish host to replace Chris Cuomo. If CNN+ is already headed to the trash bin, I assume that’s where Chris Wallace will end up. But WBD may already have so much money sunk into the platform that they have to at least try to bundle it in order to recoup some of those expenses. CNN+ likely can’t survive independently, but maybe it can if it’s hooked up to HBO/Discovery life support.

I’ll leave you with this clip of Dan Abrams asking the question on everyone’s minds.