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Success of CNN+ was in doubt before launch

CNN spent hundreds of millions of dollars on the project, but no one knew when, or if, losses would be replaced by profits.
Credit: AP
This image shows the logo for the new CNN streaming service CNN+ which debuted on March 29. (CNN+ via AP)

WASHINGTON — The Edsel. Quibi. New Coke. The Segway. DeLorean sports cars. The pantheon of colossal business failures has a new member in the CNN+ streaming service.

The news network's subscription offering hadn't even been operating for a month before Warner Bros. Discovery announced this week that it would be shutting down on April 30.

“It's going to be in the Top 10,” said Steve Rosenbaum, executive director of the NYC Media Lab and an expert in business innovation, surveying the lengthy history of products that went belly-up.

While “CNN minus” comments quickly proliferated, it's no joke to the more than 300 people hired for CNN+, which was in development for two years. CNN is expected to absorb some of those jobs but there will be layoffs — a clear picture on those numbers is still emerging.

The company spent hundreds of millions of dollars on the project and no one knew when, or if, losses would be replaced by profits.

Old-timers remember the Edsel, a new car model introduced by Ford in 1957 that was poorly made and too expensive. It was discontinued after two years, costing Ford an estimated $250 million, the name remembered as a synonym for business failure long after the car itself was forgotten.

Coca-Cola's attempt to introduce a new flavor in 1985 was dropped in weeks. Except for its cameo role in the “Back to the Future” movies, the DeLorean didn't make a dent. Inventors of the Segway found in 1999 that not many people wanted to spend around $5,000 for a glorified scooter.

Quibi, short for “quick bites,” had the backing of Hollywood's biggest names and $1.75 billion from investors when the mobile video service was introduced in 2020. It lasted six months.

Presciently, reporter Josef Adalian recalled that failure in an article for Vulture headlined, “CNN+ has Quibi Vibes,” that posted two days after its launch.

“CNN+ in its formative phase feels somewhat like the Quibi of streaming news,” Adalian wrote. “Lots of money has been spent, big stars are onboard, but it's hard to figure out just what the service is supposed to be and why a large number of people will want to pay for it.”

Rosenbaum, a self-described news junkie, couldn't figure out what CNN+ offered that was unique and vital to him. He said he never even considered paying the monthly $5.99 fee to subscribe.

He said it had “lots of famous faces that I get other places.”

CNN+ has a handful of its own news programs, documentaries and talk shows and big names like Chris Wallace, Anderson Cooper and Jemele Hill but, because of cable and satellite contracts, could not offer a streamed version of what most people know CNN for, the television network's continuous news coverage.

People can find streaming news in several places — ABC, CBS and NBC all have their own services, for example — for free.

“In launching a new business, timing is everything and their timing couldn't have been worse,” said Allen Adamson, cofounder of the marketing firm Metaforce. “Streaming services were in a bubble and everyone knew there was a limit to how many streaming services they would get.”

When Discovery bought out CNN's previous corporate owner, AT&T, many observers believed CNN+ would eventually be absorbed into a larger app that also had entertainment offerings.

It never got that far, leaving some of its employees shell-shocked at the Thursday meeting when they were told the service would abruptly close.

One of the service's biggest champions, former CNN chief Jeff Zucker, was bumped out of the picture on Feb. 1 when he was forced to resign because of not disclosing a romantic relationship with a co-worker.

CNN+ launched on March 24, only days before Discovery executives took over. In a sense, that was a business provocation: Why start a project that was the brainchild of a former leadership team, just before new leaders were coming with ideas of their own, not to mention a mandate to cut costs?

Incoming CNN chief executive Chris Licht, in Thursday's meeting with employees, likened it to a new owner coming in, seeing a beautiful new house, but declaring he needed an apartment instead.

The Discovery team made it clear in the meeting that they didn't think CNN+ was going to work, based on its own experience with streaming.

“If we're going in a new direction, we can't let it go on one moment more than it needs to,” said J.B. Perrette, head of streaming for the new company, in the employee meeting.

Licht repeatedly praised his staff for the quality of CNN+, and there's no way of knowing whether the product itself would have failed if it had a few years to settle in.

And Rosenbaum said he might have been enticed to see if it was worth it with an offer of a few free months.

Time, however, was one thing CNN+ did not have.

“It's a big failure,” Adamson said, “but not as big as it would have been if it kept going and became a black hole of money.”

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Business writer Mae Anderson in New York contributed to this report.

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