Scoop: The numbers behind CNN+

Data: CNN view obtained by Axios; Chart: Simran Parwani / Axios

New data from the March 2022 presentation platform shows that CNN+ executives predicted that within the next decade, CNN+ would be more profitable than today’s cable company arm — which currently generates $500 million in annual revenue.

why does it matter: Discovery’s decision to shut down CNN+ last week was partly motivated by the skepticism that the subscription service would hit profitability at any time within a reasonable time frame, given current spending levels and subscriber numbers.

  • Versions of the March batch of presentations were presented to executives at CNN, WarnerMedia, and eventually Discovery.

be clever: The sources said the service also does not fit within Discovery’s broader plans to create a single giant entertainment streaming service.

  • Some CNN executives felt that the Discovery leadership was intent on killing the service even before the merger of CNN’s parent company, WarnerMedia, and Discovery was officially completed.

The Big Picture: The financial projections were based on internal CNN+ research which assumed that CNN+ could one day attract approximately 30 million global subscriptions from a total addressable market of approximately 72 million people.

Executives grouped CNN+’s potential audience into three groups, with different models of overlap:

  1. 29 million “CNN Super Fans”.
  2. 24 Million SVOD (Subscription Video On Demand) fans.
  3. 36 million “global news consumers” (people who have already paid for a subscription to news).

CNN+ research estimates that 70% of CNN+ subscribers can merge with HBO Max over time.

Data: CNN view obtained by Axios; Chart: Simran Parwani / Axios

  • By the time the service closed, CNN+ had had about 150,000 subscriptions in just over two weeks from launch.
  • Most of that was without CNN+ available on Roku, one of the largest smart TV platforms in the country. While CNN executives saw this number as a success, Discovery executives did not.
  • CNN declined to comment.

Between the lines: Conversations with nearly a dozen CNN and CNN+ employees indicate that executives believe the subscription service will eventually serve as an offshore platform for CNN’s linear television network, even if short-term appetites are mixed.

  • CNN+’s internal research from a May 2021 research document obtained by Axios shows that the value proposition of a paid video news service has never been straightforward to consumers, who are increasingly suffering from news fatigue.
  • The research concluded with 18 one-hour interviews with potential CNN+ clients that “we haven’t heard a self-proclaimed appetite for more excellent live news shows from any of our characters.”

Yes, but: While one CNN source says the research — which was widely distributed within CNN — was eventually dismissed as inaccurate, another said it shows why employees outside the CNN+ team are skeptical of the service.

  • One source noted that “even if it was a huge success both externally and internally, people would always be upset.”
  • The app was never internally tested with enough time for larger teams at CNN to provide feedback.

In the most recent planned presentation CNN+ research provided to executives concluded that “consumer willingness to pay for news is increasing.”

  • She noted that Wall Street has rewarded The New York Times’ “enormous subscriber growth” over the years with “meaningful multi-growth” and that if successful, CNN+ would create institutional value for Warner Bros.’s discovery.
  • Axios reported that live news programs, according to early subscriber data, were among the most popular on CNN+.

Bottom line: The creation of CNN+ caused frustration within the larger CNN organization with departments – especially Line TV – who felt hampered by the disproportionate resources being allocated to CNN+.

  • Two CNN television sources noted that salaries for CNN+ employees were higher than for regular line-television roles, which will make it difficult for them to re-hire CNN+ employees into the broader organization now that the hiring freeze at WarnerMedia has ended.
  • Others complained that spending on CNN+ studios and supplies appeared to be earmarked compared to the tight budgets of CNN’s television division.

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