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CNN+ Could Be a Key Piece of Warner Bros. Discovery

By Adam Levy – Dec 24, 2021 at 2:30AM

Key Points

  • WarnerMedia will launch CNN+ in March 2022, according to reports.
  • Warner Bros. Discovery could bundle HBO Max, Discovery+, and CNN+.
  • The result could echo the success of the Disney Bundle, making it a significant force in streaming media.

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The news streaming service will launch in early 2022, ahead of the merger.

WarnerMedia will launch its CNN-branded streaming service early next year, and it could play a pivotal role in the company's overall strategy. Once the AT&T (T 0.81%)-owned media company merges with Discovery Communications (DISCA) (DISCK), it will have three main streaming services: HBO Max, Discovery+, and CNN+. That puts it in a position to echo the success of Walt Disney's (DIS -1.83%) successful streaming bundle.

Person lounging on a couch streaming video on a tablet.

Image source: Getty Images.

CNN+ is to HBO what ESPN+ is to Disney+

CNN+ will have a price point of $5.99 per month and the company is aiming for a March 2022 launch, according to a report from Bloomberg. It will feature a mix of pre-recorded original series (some of which are currently available on HBO Max), interview shows, and live news content and commentary. 

The programming sounds very similar to ESPN+, the Disney-owned streaming service, which has attracted over 17 million subscribers in three and a half years. It has a similar price point and a similar mix of content. The only difference is ESPN's focus on sports and CNN's focus on politics, global events, and human interests.

Disney's success with ESPN+ is thanks in large part to the success of its streaming bundle, which packages Disney+, Hulu, and ESPN+ into one bill. Subscribers save the cost of the extra subscription by subscribing to all three. Pre-bundle, ESPN+ had just 3.5 million subscribers after a year and a half of operations. It's added about 7 million subscribers per year since.

CNN+ could become an effective piece of a Warner Bros. Discovery streaming bundle packaged alongside HBO Max and Discovery+. HBO Max has about 37.5 million subscribers in the U.S. when counting cable subscribers, nearly as many as Hulu and Disney+. Discovery+ launched earlier this year, and it counts over 20 million global subscribers, although the bulk of those may be outside the U.S.

So, while there isn't as big a subscriber base for Warner Bros. Discovery to build on, it's still fairly sizable. What's more, present Discovery CEO and future Warner Bros. Discovery CEO David Zaslav sees limited overlap in Discovery+'s subscriber base and HBO Max's. That makes bundling a great opportunity to produce incremental revenue.

The value of the bundle

A well-crafted bundle offering could boost the appeal of all three streaming services while improving existing subscriber retention. With a plethora of streaming options, subscribers are more likely to hop from one service to the next. A bundle of services can produce more stable subscriber growth.

That's exemplified by Disney, which now controls three of the top six streaming services in the U.S. While the bundle reduced its average revenue per subscriber, it's likely seen greater gains in total subscribers thanks to the bundle than if it only offered each service separately.

Furthermore, the bundle can get subscribers to try a service they otherwise wouldn't have thought to sign up for at all. And that can be particularly valuable in the case of ad-supported services, which generate additional revenue with increased engagement. While CNN+ didn't plan on using an ad-supported model, both HBO Max and Discovery+ have ad-supported tiers.

If Warner Bros. Discovery wants to become a more significant force in streaming media, using CNN+ to bundle its two existing services will be key.

Adam Levy owns Walt Disney. The Motley Fool owns and recommends Walt Disney. The Motley Fool recommends Discovery (C shares). The Motley Fool has a disclosure policy.

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