Scoop: The numbers behind CNN+
New data from a March 2022 pitch deck shows that CNN+ executives predicted that over the next decade, CNN+ would be more profitable than the company’s cable arm today — which currently generates a annual profit of 500 million dollars.
Why is this important: Discovery’s decision to shut down CNN+ last week was driven in part by skepticism that the subscription service would ever achieve profitability in a reasonable time frame, given current spending levels and subscriber numbers. .
- Versions of this pitch deck from March were presented to executives at CNN, WarnerMedia and eventually Discovery.
Be smart: The service also did not fit with Discovery’s broader plans to create a giant general entertainment streaming service, sources told Axios.
- Some CNN executives felt that Discovery management intended to kill the service even before the merger of CNN’s parent company, WarnerMedia, and Discovery was officially complete.
The big picture: The financial projections were based on internal CNN+ research which assumed that CNN+ could one day attract nearly 30 million global subscriptions from a total addressable market of approximately 72 million people.
Executives divided CNN+’s potential audience into three groups, with different overlapping patterns:
- 29 million “CNN super fans”.
- 24 million “fans of news and non-fiction SVOD (subscription video on demand)”.
- 36 million “global news consumers” (people who have ever paid for a news subscription).
CNN+ research estimated that 70% of CNN+ subscribers could be bundled with HBO Max over time.
- By the time the service was shut down, CNN+ had garnered around 150,000 subscriptions in just over two weeks after its launch.
- Most of that was without CNN+ being available on Roku, one of the nation’s biggest smart TV platforms. While CNN executives saw that number as a success, Discovery executives didn’t.
- CNN declined to comment.
Between the lines: Conversations with nearly a dozen CNN and CNN+ employees suggest executives believed a subscription service would eventually serve as an exit ramp for CNN’s linear television network, even if short-term appetite was mixed.
- Internal research for CNN+ from a May 2021 research paper obtained by Axios shows that the value proposition of a paid news video service was never clear to consumers, who were suffering more in addition to news fatigue.
- “We did not hear a self-reported appetite for more premium live news programming from any of our characters,” the research concluded, based on 18 hour-long interviews with potential CNN+ customers.
Yes, but: While one CNN source says the research – which was widely publicized within CNN – was ultimately dismissed as inaccurate, another said it shows why employees outside of the CNN+ team were skeptical about in the service.
- “Even though it was a smash hit on the outside, inside people were still going to resent it,” a source noted.
- The app was never beta tested internally with enough time for broader CNN teams to provide feedback.
In the most recent pitch deck Presented to executives, CNN+ research concluded that “consumers’ willingness to pay for news is increasing.”
- He noted that Wall Street had rewarded the New York Times’ “explosive subscriber growth” over the years “with significant multiple growth” and that if successful, CNN+ would create enterprise value for Warner Bros. . Discovery.
- Live news programs, according to early subscriber data, were among the most popular programs on CNN+, Axios reported.
The bottom line: The creation of CNN+ caused frustration across the entire CNN organization from departments—particularly linear television—who felt handicapped by the disproportionate resources allocated to CNN+.
- Two CNN TV sources noted that salaries for CNN+ employees were higher than regular linear TV roles, which will prevent them from rehiring CNN+ employees in the wider organization now that the hiring freeze WarnerMedia’s company-wide is complete.
- Others complained that spending on CNN+ studios and supplies seemed ad hoc compared to the rigid budgets of CNN’s TV division.
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