CNN explores business strategy with new CEO after Richt retires

But if Licht had convinced Zaslav to keep CNN+, his entire tenure at CNN might have turned out differently.

That may sound unreasonable. During his first two weeks since its launch last year, very few people watched CNN+. Zaslav and other Discovery executives, including JB Perrette, now head of streaming at Warner Bros. Discovery, and David Levy, now chief operating officer at CNN, said, “Jake Tapper's book I was skeptical about spending hundreds of millions of dollars on a niche or half-baked content idea like ” Club” and “Parent Guidance with Anderson Cooper.” Mr. Leavy is now part of the management team assisting Mr. Zaslav in finding a new CEO.

Zaslav considered CNN+ a waste of resources for a $50 billion debt-laden company that needs to increase free cash flow and generate $3 billion in merger-related synergies. But before he decided anything, he wanted to hear Licht's thoughts.

Licht was scheduled to start work on May 2, 2022, but started a few weeks early to join CNN+. In multiple virtual meetings, he spoke with CNN+ chief Andrew Morse, CNN+ general manager Alex McCollum and CNN's chief technology officer, according to the people, who asked not to be identified because the discussions are private. Mr. Robin Peterson and others met. Perrette and Discovery Streaming CFO Neil Chughani (later CNN's CFO) were also in attendance.

Licht expressed skepticism about product programming, according to people involved in the meeting. Discussion centered around the feasibility of offering a product named after CNN without actually featuring a live feed of the network's cable programming. Perrette told CNN+ executives to pause all marketing spending and not launch Roku.

The CNN+ team left the meeting assuming the streaming service would likely be discontinued, but did send a financial report to Discovery executives. Officials said the budget was to spend $440 million in 2022 and $550 million in 2023. The proposal calls for CNN+ to become profitable by 2025 and break even on cumulative investments by 2028.

Less than three weeks later, CNN+ was gone. A Warner Bros. Discovery spokesperson declined to comment on the details of the meeting.

If Richt had convinced Discovery executives to keep CNN+, his tenure at CNN might have played out differently.

Mr. Licht's background is show production. He started “Morning Joe” on his MSNBC and “Late Night with Stephen Colbert” on CBS. CNN+ would have given him the canvas to create a show from scratch. It would also have given him a growth story to pitch to the press and investors. If he hadn't anticipated the additional expense, he might have kept the bare bones of the subscription product alive while cutting back on his budget, iterating creative ideas until he hit on something that worked. CNN+ started at $4.99 per month, but prices are subject to adjustment.

Former CNN chief Jeff Zucker, who left the network after disclosing a workplace relationship months before the WarnerMedia-Discovery merger. He had ambitions to turn CNN+ into a subscription service like the New York Times. It would have taken years, but it could have given employees and management a north star. The focus on CNN+ may have been staged as a distraction from declining terrestrial television ratings, and Licht may have written it off as relatively unimportant compared to building the company's future. .

Without CNN+, Richt would be left with a fledgling cable TV network and a coherent digital strategy. That's anathema to modern media companies.

In his first year on the job, Licht laid off hundreds of employees and built a new morning and prime-time show, shifting around existing CNN anchors and reporters. His experiment in moving prime-time anchor Don Lemon to the mornings failed. CNN fired Lemon in April. Richt tried to move afternoon anchor Tapper to prime time, but his early ratings were poor and Tapper wanted to keep his slot, so Richt canceled his plans.

In Richt's defense, his lack of future strategy reflected Zaslav's limited vision.

“when [Zaslav] “When he called me and offered me the job, he told me what he wanted from CNN,” Richt told CNBC last year. “And I said, 'That's exactly what I want to see. This is the kind of network that I believe in.'' His vision for this network and my vision for this network will never see the light of day. The only reason I took this job was because he was in charge. I thought I could get this to him. ”

Mr. Zaslav told Mr. Licht that he wanted CNN to become more of a straight news network and less of an advocacy network. John Malone, director of Discovery at Warner Bros., told CNBC in 2021, “I'd like to see CNN go back to its original journalism and evolve to actually have journalists. That would make it unique and fresh.” Deaf,” he said.

But CNN journalists insisted this was a straw man. They claimed they were not claiming anything other than the truth. Some took offense to Malone's comments, seeing them as belittling their abilities as journalists.

CNN may change the tone of its programming to center around Trump, the front-runner for the 2024 Republican presidential nomination. Depending on the situation, you can tone down his exaggerations and rhetoric about lies and exaggerations.

Still, it's not a business strategy. CNN+ may have been destined to be nothing more than a fledgling streaming service. But it expressed hope for how the brand could move toward the future. Successful leaders at CNN must find ways to increase viewership with engaging programming while cultivating new digital businesses that bring in revenue and younger viewers.

It's also possible that CNN+ never got off the ground, and Licht may have spent the past year working on a flawed concept that Discovery's bosses never liked, and in any case, it's likely that it was his It would have led to his dismissal. Plans for CNN+ needed to emphasize its long-term appeal, as investors thumbed their noses at increased spending on streaming services last year.

The problem was there was no CNN+, and Richt was in a weak hand. According to the New York Times, CNN's 2022 profit is expected to be about $750 million (including a $200 million loss on CNN+), down from $1.25 billion a year ago, due to a weak advertising market and falling cable subscription fees. ) decreased to CNN's advertising revenue has fallen by nearly 40% under Licht, the Daily Beast reported, citing data from Media Radar.

The 2024 election and a more robust political ad market should help improve CNN's finances next year, but “wait until 2024” is not a strong message, nor does it offer a solution for 2025 and beyond.

If Zaslav wants to find a CEO who will win the hearts of employees and drive sales and profits, he needs someone with a more holistic strategy than just creating programming for cable TV viewers 55 and older. you'll need to find it.

Thus, Licht was doomed from the beginning.

Correction: Robin Peterson was CNN's chief technology officer. A previous version had his title incorrectly listed. Neil Chugani was his CFO at Discovery Streaming. A previous version misspelled his name.

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