CNN has 'tears on the horizon' as Warner Bros. Discovery plots network spinoff, industry insiders say
The corporate split, which is expected to be completed by mid-2026, will have significant ramifications for CNN, which is being treated as a declining asset that weighed down WBD's shinier businesses.
A little over three years ago, Discovery Inc. merged with WarnerMedia to create Warner Bros. Discovery to much fanfare as CEO David Zaslav touted the company as "the best place for impactful storytelling." Things didn't exactly work out, and Warner Bros. Discovery CFO Gunnar Wiedenfels will lead the spun-off group of cable assets, including CNN, while Zaslav keeps the studios and streaming business.
"Putting a bean counter as CEO sends a very clear message: this is finally the beginning of the long-overdue correction of the [Jeff] Zucker-era excesses," a media insider close to CNN told Fox News Digital.
Indeed, former CNN boss Jeff Zucker, who was forced out ahead of the 2022 merger, was known for keeping his anchors happy with lofty salaries. The insider believes that bloated paychecks aren't justified nowadays when CNN struggles to attract a respectable audience.
"It's not just the overpriced talent. It's the overpriced producers. The overpriced executives. The superfluous reporters who barely are on the air. All will either be exited or forced to take massive pay cuts," the media insider said.
"But it will be most devastating for the rank and file," they continued. "With no union protections, there will be massive layoffs and those remaining will be asked to do the work of their departed colleagues."
The insider added that "everyone should feel some sympathy for what's about to happen," even if you aren't a fan of the liberal network's product.
CNN has hit various ratings lows in recent memory and had its second-worst month ever in the advertiser-coveted demographic of adults age 25-54 across both total day and primetime viewers in May. The network has shed viewers in all categories compared to 2024 and is on pace to have its lowest-rated year ever among the demo.
CNN CEO Mark Thompson has been attempting to emphasize digital content amid the linear ratings collapse, but a second longtime media industry insider, who once worked at CNN, doesn't see the situation improving.
"There's nothing but tears on the horizon for CNN," they told Fox News Digital.
"They no longer have much value since it's now easier and cheaper to get video and live reports from news events, especially international events, which is their core competency. And their content — especially on CNN.com — isn't good enough to charge subscriptions," they continued. "Their revenue model is in collapse, but it's a slow death. Gunnar has about ten years to squeeze every last penny out of that place before rigor mortis."
CNN's shows for its domestic network are typically staffed more heavily than programs on MSNBC and other cable news channels. The second insider feels Wiedenfels could "start by making 70% cuts to all show teams for CNN US, bringing their staffing in line with that of their competition" before pivoting to talent salaries.
"CNN's first- and second-tier talent now make, thanks to Jeff Zucker buying their loyalty, about five times what they're worth on the open market. All talent should be offered a choice of an immediate pay cut -- based on a market analysis of their actual value -- with a three-year contract renewal, or we pay out their remaining contract and terminate them," the insider said.
"Overall, you could reduce costs at CNN 50-60% with no change to ratings or revenue, and manage the decline from there, with increasing, annual cutbacks as you wind the company down," they added. "Basically, do palliative care."
A WBD insider pushed back on the doom and gloom, noting it was too early to be surmising about these sorts of plans, and rumors about cost-cutting seem to be from people who are "not informed." The same insider noted that on an investor call last week, Wiedenfels expressed excitement for the cable networks, including investment opportunities.
Economist Michael Szanto is optimistic and feels that if consumers "learn to overcome extreme political polarization in a way that allows Americans to once again trust news coverage," CNN could remain relevant for years to come.
"CNN is actually a gem in the WBD fold. It has a historic, iconic place for its groundbreaking coverage of the Tiananmen Square Massacre in China, the attempted Communist Coup against Gorbachev, and unrivaled coverage of the 1991 Iraq War to liberate Kuwait. For decades the voice of James Earl Jones gave CNN a very powerful voice tagline that is deeply memorable for older Americans," Szanto told Fox News Digital.
Meanwhile, CNN has taken a beating in the press since the looming split was announced.
Variety, a Hollywood and media trade publication, even put a spotlight on CNN's woes last week when announcing the network hired advertising executive Guy Griggs as its new senior vice president of ad sales and client partnerships.
"CNN has been projected to lose both subscribers and ad revenue over the next year, according to estimates from Kagan, a research unit of S&P Global Market Intelligence. CNN's ad revenue is expected to fall to nearly $499.2 million, according to Kagan, compared with $563.9 million in 2024. News networks typically enjoy an economic boost in an election year, but the estimates for CNN would also fall from 2023's $518.1 million," Variety reported.
Dylan Byers, a former CNN media reporter who now covers the industry for Puck, said he "received a deluge of text messages from addled employees at CNN" asking him what the split meant for the network.
"As you may have surmised, running a 24/7 global news network with foreign bureaus is expensive, and the underlying unit economics only make sense to the people inside the building. With the industry in inexorable decline, CNN's ratings at a nadir, and younger audiences turning to user-generated schlock on YouTube and TikTok for news, those costs are increasingly hard to justify," Byers wrote in an opinion piece.
"Inevitably, Gunnar will look at CNN and decide he can maintain relatively similar profits at a mere fraction of the cost," Byers continued. "This will have perceptible ramifications on the talent side. Why, for instance, would Gunnar pay Anderson Cooper $18 million a year when Kaitlan Collins draws the same ratings at roughly a fifth of the salary?"
Byers evoked HLN, a once-prominent CNN sister network formally known as Headline News, which terminated all live programming in 2022. The comparison is essentially nightmare fuel for CNN loyalists who don't want to see the network suffer a similar fate.
"Do CNN's bureaus and infrastructure make economic sense in this brave new world? Increasingly less, of course. Over time, it will look more and more like HLN, which is one reason HLN no longer exists," Byers wrote. "There will also be significant layoffs, diminished resources, and persnickety indignities: sh-ttier offices, fewer perks, and more scrutiny of the T&E."
CNN did not immediately respond to a request for comment.
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