CNN needs more than a new CEO. It needs a business strategy

Warner Bros. Discovery CEO David Zaslav could have chosen for any number of reasons to fire Chris Licht as head of CNN.

Licht, who left the network on Wednesday after just over a year in the role, struggled with leadership style, morale-boosting, programming decisions, how to cover former President Donald Trump and, ultimately, hubris.

But Licht’s entire tenure at CNN might have turned out differently if he had convinced Zaslav to keep CNN+.

This may sound absurd. Hardly anyone watched CNN+ in the first two weeks of its existence last year. Zaslav and several other Discovery executives, including the current head of streaming at Warner Bros. Discovery’s JB Perrette and now CNN COO David Leavey were skeptical of spending hundreds of millions of dollars on niche or half-baked content ideas like Jake Tapper’s Book Club and Parenting with Anderson Cooper. Levy is now part of the executive team that will help Zaslav find a new CEO.

Zaslav thought CNN+ was a waste of resources for a company saddled with $50 billion in debt that needed to increase free cash flow and generate $3 billion in merger-related synergies. But before he made any decisions, he wanted to hear Licht’s thoughts.

Licht was supposed to start his job on May 2, 2022, but he started a few weeks earlier to provide an opinion piece on CNN+. In several virtual conferences, he met with CNN+ head Andrew Morse, CNN+ general manager Alex McCallum and CNN chief technical officer Robin Peterson, according to people familiar with the matter. Perrette and Discovery streaming CFO Neil Chugani (who would become CNN’s CFO) were also there.

Licht expressed his skepticism about the product’s programming, according to people at the meeting. The discussion centered around the viability of offering a product named after CNN without actually featuring live broadcasts of the network’s cable programming. Perrette told CNN+ management to stop all marketing spending and not launch on Roku.

While the CNN+ team walked away from the meetings, suggesting the streaming service was likely to be destroyed, they sent financials to Discovery management. They plan to spend $440 million in 2022 and $550 million in 2023, the people said. The proposal called for CNN+ to turn a profit by 2025 and break even on the cumulative investment by 2028.

Less than three weeks later, CNN+ was dead. A spokesman for Warner Bros. Discovery declined to comment on details of the meetings.

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

Licht’s production is show production. He started “Morning Joe” on MSNBC and “Late Night with Stephen Colbert” on CBS. CNN+ would have given him a canvas to create shows from scratch. It would also give it a growth story to pitch to the press and investors. If the additional costs weren’t anticipated, he could cut the budget but keep the bones of the subscription product alive, iterating on creative ideas until he found something that worked. CNN+ started at $4.99 per month, although prices could be adjusted.

Former CNN chief Jeff Zucker, who left the network after disclosing a workplace affair just months before the WarnerMedia-Discovery merger, had aspirations to turn CNN+ into a subscription product similar to the New York Times. It would take years, but it could also give employees and management a north star. Attention to CNN+ may have been a ready distraction from falling linear TV ratings, which Licht could dismiss as relatively unimportant compared to building the company’s future.

Without CNN+, Licht was left with a failed cable TV network and no coherent digital strategy. This is anathema to a modern media company.

During his year on the job, Licht fired hundreds of employees and mostly moved around existing CNN anchors and reporters to build a new morning show and primetime programming. His experiment to move host Don Lemon to primetime in the morning failed. CNN fired Lemon in April. Licht tried to move Tapper, an afternoon anchor, to primetime, but early ratings were not good and Licht scrapped his plans.

In Licht’s defense, his lack of future strategy reflects Zaslav’s limited vision.

“When [Zaslav] He called me and offered me the job, he told me what he was looking for from CNN,” Licht told CNBC last year. “And I said, ‘That’s exactly the kind of network I’d like to see.’ There is no daylight between his vision for this network and my vision for this network. The only reason I took the job is because he was in charge. I thought I could deliver that for him.”

Zaslav told Licht that he wanted to make CNN less of an advocacy network and more of a pure news network. The member of the board of directors of Warner Bros. Discovery’s John Malone told CNBC in 2021 that he “would like to see CNN go back to the kind of journalism it started with and actually have journalists, which would be unique and refreshing.”

CNN journalists, however, claimed it was a straw man. They claimed to stand for nothing but the truth. Several took offense to Malone’s comments as an affront to their journalistic skills.

CNN may change the tone of its programming around Trump, who is the front-runner for the GOP presidential nomination in 2024. It may tone down the hyperbole and rhetoric surrounding his lies and exaggerations, depending on the situation.

However, this is not a business strategy. CNN+ may be destined to be nothing more than a fledgling streaming service. But it represented hope for how a brand might move into the future. A successful CNN leader will have to figure out a way to boost ratings with compelling programming while fostering new digital businesses that bring in revenue and a younger audience.

It’s possible CNN+ never took off and Licht spent the past year doubling down on a flawed concept that his bosses at Discovery never liked — which probably would have gotten him fired anyway. Investors thumbed their noses at the increased costs of streaming services last year, so any plan around CNN+ had to emphasize its long-term appeal.

The problem was without CNN+, Licht held a weak hand. CNN’s profit fell in 2022 to about $750 million (including $200 million in CNN+ losses) from $1.25 billion the previous year due to a weak advertising market and declining cable subscription fees, according to The New York Times. CNN’s ad revenue has fallen nearly 40% under Licht, The Daily Beast reported, citing data from MediaRadar.

The 2024 election and a more robust political advertising market should help CNN’s financials improve next year, but “wait until 2024” isn’t a strong message — and it doesn’t provide a solution for 2025 and beyond this.

If Zaslav wants to find a CEO who can win the hearts and minds of employees and boost the top and bottom lines, he’ll need to find someone with a more holistic strategy than simply programming for a 55-and-over cable TV audience years.

Thus, Licht was doomed from the start.

WATCH: Chris Licht’s tumultuous tenure