Edsel, Quibi and CNN +? New addition to business errors

NEW YORK (AP) – Edsel. Quibi. The cola. The Segway. DeLorean sports cars. The Pantheon of Colossal Business Mistakes has a new member of the streaming service CNN +.

The news network’s subscription offer had not even been in operation for a month before Warner Bros. Discovery announced this week that it would shut down April 30th.

“It’s going to be in the Top 10,” said Steve Rosenbaum, CEO of NYC Media Lab and an expert in business innovation, examining the long history of products going up.

While “CNN minus” comments quickly spread, it’s no joke for the more than 300 people employed by CNN +, who were under development for two years. CNN is expected to absorb some of these jobs, but there will be layoffs – a clear picture of 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.

Oldtimers remember Edsel, a new car model introduced by Ford in 1957, which was poorly made and too expensive. It was discontinued after two years and cost 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. Aside from his cameo role in the “Back to the Future” movies, DeLorean did not make a dent. In 1999, inventors of the Segway found that not many people wanted to spend about $ 5,000 on 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.

In advance, journalist Josef Adalian recalled this failure in an article for Vulture with the headline “CNN + has Quibi Vibes”, which was released two days after launch.

“CNN + in its formative phase feels a bit like Quibi for news streaming,” Adalian wrote. “A lot of money has been spent, big stars are on board, but it’s hard to figure out what the service should be and why a large number of people will pay for it.”

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

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

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

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

“When we launch a new business, timing is everything, and their timing could not have been worse,” said Allen Adamson, co-founder of 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 former business owner, AT&T, many observers thought CNN + would eventually be absorbed into a larger app that also had entertainment offerings.

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

One of the service’s biggest proponents, former CNN chief Jeff Zucker, was kicked out of the picture on February 1, when he was forced to resign due to not revealing a romantic relationship with a colleague.

CNN + was launched on March 24, just days before Discovery executives took over. In a sense, it was a business provocation: Why start a project devised by a former management team just before new managers came up with their own ideas, not to mention a mandate to reduce costs?

Upcoming CNN CEO Chris Licht in Thursday’s meeting with staff compared it to a new owner who came in and saw a beautiful new house, but declared he needed an apartment instead.

The Discovery team made it clear at the meeting that they did not believe CNN + would work, based on their own streaming experience.

“If we go in a new direction, we can not let it go for a moment longer than it should,” said JB Perrette, head of streaming for the new company, at the staff meeting.

Licht has repeatedly praised its staff for the quality of CNN +, and there is no way of knowing if the product itself would have failed if it had a few years to fall for.

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 continued and became a black hole of money.”

___

New York business writer Mae Anderson contributed to this report.

Leave a Reply

Your email address will not be published. Required fields are marked *