CNN’s profits are poised to drop below the $1 billion mark for the first time since 2016 as its new boss scrambles for new ways to generate revenue, according to a report.
Chris Licht, who took the helm of CNN three months ago after the surprise exit of former Chief Executive Jeff Zucker, has not only inherited a scandal-scarred network, but he is also running a channel with slumping ratings.
The cable news network’s profitability is on pace to decline to $956.8 million this year, according to projections from S&P Market Intelligence,. That’s well short of the company’s internal target of $1.1 billion, according to the New York Times which reported earlier Tuesday on the projections.
CNN parent Warner Bros. Discovery reports earnings on Thursday, but it is not expected to break out CNN’s financials or provide further detail. A rep for the company did not return requests for comment.
Warners Bros. Discovery quickly shuttered the fledgling CNN+ streaming service on April 30, less than a month after it launched. Licht started his job at CNN a day later, breaking the news to hundreds of newly-hired CNN+ employees who were brought on to build up the service, which was expected to cost the company $1 billion.
According to the report, Licht hired Chris Marlin, a longtime friend who was recently an executive at the Florida homebuilder Lennar, to come up with ways to bring in new revenue.
The Times said CNN employees call Marlin, “Fish Man,” on account of his surname. According to his LinkedIn, Marlin, a former lawyer at the firm Foley & Lardner and Holland & Knight, has no experience runing a cable news network. His Linkedin says his current title at CNN is head of strategy and business operations, where he is a “Strategist and Business Driver. Focused on geopolitics, geoeconomics, innovation, scale, climate change, mis/disinformation, future of media, AI, China, and law.”
Some of his business ideas have included inking advertising deals with major tech firms like Microsoft, selling sponsorships to corporate underwriters, expanding CNN’s brand in China and growing CNN Underscored, an e-commerce play, the report said.
To cull expenses, WarnerBros. Discovery CEO David Zaslav tightened CNN’s travel and expense policy, with work celebrations for senior vice presidents and below to be capped at $50 per person, the report said. Licht has also cut costs in CNN’s reporting endeavors, opting to not send US-based staff to overseas events.
Zaslav has said he wants to shift CNN from its more left-leaning opinion-based, Trump-heavy reporting made famous under former CNN boss Jeff Zucker to more fact-based, middle-of-the rode journalism. That move has come as CNN’s ratings have been on a downward spiral since former president Trump has left office.
“Journalism first. America needs a news network where everybody can come and be heard; Republicans, Democrats,” Zaslav said this summer at Allen & Co.’s “summer camp for billionaires” in Sun Valley, Idaho. “I think you’re seeing more of that at CNN. We’re not going to look at the ratings and, in the long run, it’s going to be worth more.”
But so far, the plan hasn’t paid off. According to Nielsen, CNN has drawn an average of 639,000 people in prime time this quarter, a 27% decline from a year ago. It trails left-leaning MSNBC, which is down 23% in prime time during the same period, and right-leaning Fox News, where viewership is up.
Currently, Warner Bros. Discovery, which includes HBO Max, TBS, Food Network and Animal Planet, is trying to shore up roughly $3 billion in cost savings.
Weighing CNN down is the cost of covering the Ukraine War, paying some costs associated with CNN+ like big salaries of high-profile journalists like Chris Wallace, The Times said, adding that in order to counterbalance those losses, CNN is selling some of the programming CNN+ created to other providers.
The company also faces pricey, public lawsuit filed by former CNN anchor Chris Cuomo, who was fired last year after it was learned that he played an active role in advising his brother, then-New York Gov. Andrew Cuomo, on how to counter sex misconduct claims made against him by former aides.
Weeks later, Cuomo’s boss at CNN, Jeff Zucker, stepped down after it was learned he was carrying on a consensual relationship with his top marketing officer, Allison Gollust.
Cuomo then filed a $125 million claim against CNN after the network refused to pay out the remaining $18 million on his contract. The case is in arbitration.
But CNN’s centrist strategy is a big bet that could blow up, according to Steve Cahall, a senior analyst at Wells Fargo.
“If the strategy delivers more reach — that is, more ratings — then it’s probably a better business,” Cahill told The Times. “If it delivers less reach — if it turns out that the middle is a narrow place to be these days in America — then it’s a less good business strategy.”