The as-yet-unpriced plans are part of effort to reach $1 billion in digital revenue by 2022Two years ago, an employee in CNN’s digital news group in New York decided to attach rearview mirrors to her desk near the team’s “war room,” where a real-time display shows web traffic to CNN.com stories. She wanted to be ready just in case network president Jeff Zucker decided to drop by.
These days, he’s a frequent visitor.
Mr. Zucker, a veteran television executive who once warned that the TV business couldn’t afford to trade “analog dollars for digital pennies,” is now embracing online publishing as central to CNN’s model.
After investing in digital “verticals,” or distinct web brands, focused on business and politics and acquiring an online-video startup, CNN is gearing up for another big step: the launch of tiered subscription offerings for its digital news business as early as the second quarter of next year.
A proposed premium offering will give subscribers access to special content on topic-specific verticals, such as CNN Money and CNN Politics, built around network personalities. A second option will provide additional, though less specialized, content across all of CNN’s sites. Pricing hasn’t been finalized.
The move is part of a broader five-year plan to develop new revenue streams and reach $1 billion in digital revenue by 2022. CNN’s digital arm expects to pull in $370 million this year, according to a person familiar with its financials.
“We have to find more subscription products,” Mr. Zucker said in an interview. “We have to experiment with e-commerce. And I think we have to find ways to monetize mobile traffic.”
CNN Digital currently makes most of its money on ads that run before videos. Ultimately, CNN wants its digital arm to split revenue evenly between advertising and direct-to-consumer products, said Andrew Morse, executive vice president of CNN U.S. and general manager of CNN Digital Worldwide.
Convincing users to pay for news won’t be easy. Even more challenging will be making headway in the already cutthroat online-ad business, which is dominated by Facebook Inc.and Alphabet Inc.’s Google.
“We’re conscious of these trends,” said Mr. Morse. “And we know that we will need to address them and overcome them if we’re going to be successful.”
TV networks have long treated their digital operations as a vestigial limb whose primary purpose was to recycle and promote content created for television.
“These are all relatively minor extensions relative to the gravy train that drives all these businesses,” said Rich Greenfield, an analyst for BTIG Research.
CNN has been trying to buck that trend, building a newsroom with journalists who can break news on TV or online, or both. Bringing in multiplatform reporters like Brian Stelter from the New York Times and Chris Cillizza from the Washington Post was part of that approach. The company has more than 600 digital-focused employees.
“For the most part, the story of legacy media transitioning into the digital space has been to take digital as an afterthought,” said Mr. Morse. “What we realized a long time ago is that doesn’t work for digital audiences.”
Under Mr. Zucker, the company has invested in its politics and business verticals. CNN Politics now ranks No. 1 in unique visitors among sites or verticals dedicated to politics, ahead of Politico, TheHill.com and Fox News Politics, according to measurement firm comScore. Outlets that don’t break out their audience for politics stories, including the New York Times and Washington Post, weren’t included in the ranking. CNN Money is sixth among financial sites.
As the TV business in general comes under pressure, other broadcast networks are also investing in stand-alone digital brands. NBC News launched several verticals this year: Mach, which focuses on tech, science and the future; Better, focusing on health and wellness; Think, a commentary site; and Left Field, a digital video skunk works. CNN Digital is working on other revenue streams. On Thursday, the company launched CNN Underscored, an online shopping guide that recommends products and services for readers, with CNN receiving a cut of revenue when purchases are made on other sites.
It is also considering making its CNN Go app, with live TV content, available to consumers outside the U.S. for a recurring fee. Currently, the app is only available to American cable subscribers.
CNN is also betting big on original digital video. Its Great Big Story unit was created in 2015 to offer a combination of branded content, creative services and content production. The editorial team now numbers 35, with staff in Stockholm and London, and CNN expects the division to break even next year.
Last year, CNN acquired Beme, the video-sharing app founded by YouTube star Casey Neistat, for $25 million. The company has begun beta-testing a new app, called Beme Panels, which allows users to share their opinions on current events, tech and entertainment. Also in the works is a daily YouTube show, to be hosted by Mr. Neistat. Beme’s growth has been slow since the acquisition, but that is deliberate, said Chris Berend, senior vice president for digital video at CNN. CNN wouldn’t disclose Beme’s revenue.
“A lot of big companies, when they do new things, they say: How many people do we need?” said Mr. Berend. “We’ve managed to keep it very conservative on the cost front because we have been very precise about what we’re doing next.”
Excerpts from an article by Benjamin Mullin on The Wall Street Journal CNN Plans To offer Subscriptions for Digital News Next-year
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