CNN's CEO under fire: What it means for Warner Bros. Discovery

CNN CEO Chris Licht has been facing criticism over the network's town hall with former President Trump and an unflattering profile in The Atlantic. NPR Media Analyst Eric Deggans and Dave Heger, Senior Equity Analyst at Edward Jones, join Yahoo Finance Live to discuss how Licht's decisions have impacted the company and what the future looks like for the CNN CEO.

Video Transcript

JULIE HYMAN: CNN executive Chris Licht reportedly apologized to staffers after an unflattering profile in The Atlantic called his authority into question. Licht saying he'll, quote, fight like hell to win back his staff's trust. But some say the damage is already done. A lot of reporting both outside and inside the organization. Frustrations came to a head when a recent Trump town hall, which Licht was quoted he wanted the audience to be extra Trumpy, drew condemnation from staff.

Licht took the helm as CEO of CNN just 13 months ago. And in his short tenure, the network has weathered declining ratings, layoffs, programming shakeups, and several high profile departures. Warner Brothers Discovery CEO David Zaslav recently appointed David Levy, a close associate, to a leadership position at the network, fueling speculation of declining trust in Licht's authority.

CNN trails in the ratings behind partisan cable favorites MSNBC and Fox News, which still boasts strong viewership despite the sudden departure of audience favorite Tucker Carlson. With more on what this shakeup means for CNN and its parent company Warner Brothers Discovery is Eric Deggans-- he's NPR TV critic and media analyst-- alongside Dave Heger, Edward Jones senior equity analyst.

Thanks to you both very much for being here. Eric, I want to start with you. And kind of there's all the sort of behind the scenes drama that we in the media industry always have fun covering and talking about, and it's interesting for us because we're in it. What about what's happening on air? Are viewers seeing evidence of this beyond that Trump town hall?

ERIC DEGGANS: Yeah, I think the biggest evidence, of course, was when Chris Licht first took over. Several people were let go, including Brian Stelter, who was a vocal critic of the conservative-oriented Fox News Channel and had written a book taking them on. They cancelled the media analysis show "Reliable Sources" and let him go. They let go John Harwood, another correspondent who was considered a vocal critic of conservatives.

So-- so you know, right away they sort of set the idea that they were going to try and reset CNN's image as a more centrist network. And then, as time went on, of course, they had to figure out what to do with 9:00 PM. Chris Cuomo, the person who'd been the star there, was forced out before Chris Licht took over, and they-- and they still really haven't figured out exactly what to do with that 9:00 PM. Kaitlan Collins is going to take it over now.

And you know, Chris was known as a [? one-of-a-kind. ?] In the morning he had redesigned CBS's morning show. He had-- was one of the minds behind "Morning Joe" on MSNBC. So the thought was that he would redesign CNN's morning show. And that, of course, didn't go out-- go well because Don Lemon, the anchor there, said controversial things, wound up being let go, and the show just has never caught fire with viewers.

So in addition to all this behind the scenes drama that Chris is having, he's having a real hard time doing what his reputation was-- creating compelling programming that viewers might want to see. And he's been-- he's faced two real problems, which is that viewership for regular cable television is dropping every year anyway. And-- and I think CNN's loyal viewership reacted really negatively to some of the things that he's done in terms of trying to change the channel's image because they viewed it as limiting criticism of conservatives rather than moving CNN to the political center.

BRAD SMITH: And Dave, is this turmoil anything that would show up within the stock price reaction? Has it shown up within the valuation of Warner Brothers Discovery, the parent company?

DAVE HEGER: Well, I'd say in the short-term, I don't think it's having a significant impact on the share price. I think the broader question with Warner Brothers Discovery, the parent company, is getting through the post spin off and merger, combining Discovery with Warner Media and getting the cost structure of the business to where it can be a profitable business as a whole.

And so management's had a lot of challenges on that front just doing that integration. And unfortunately, the cost-cutting has impacted CNN and a number of the other operations within the company. But I think ultimately, in the shorter term, the market is more focused on how the company does towards hitting its financial targets. But certainly, if challenges at CNN continue, that will definitely have a ratings impact and ultimately a financial impact within CNN.

JULIE HYMAN: Dave, how much of a revenue contributor is CNN to the overall operation? I mean, I know, you know, obviously it's a big company, but how important is CNN? And then beyond sort of the just dollars and cents of it, how important is it as a reflection, say, of David Zaslav's management?

DAVE HEGER: Well, the company doesn't break out detailed financials for CNN. But I think suffice to say, within traditional cable TV news shows and news channels, have still been decent ratings draws. Certainly you look, for instance, at Fox. It does fairly well in terms of primetime ratings for a cable TV channel.

So certainly getting CNN back on track and improving viewership, I think, could be a positive financially for the company in-- I think the strategy of trying to take it back to being more of a neutral news source is an admirable goal. It seems like so far the execution has not hit on the mark of where it needs to be.

BRAD SMITH: And--

ERIC DEGGANS: You know, um--

BRAD SMITH: Yeah, Eric?

ERIC DEGGANS: I could-- I could weigh in on that a little bit and say that, as someone who's covered CNN for a long time, I think one of the quandaries that the company has faced is that it's American TV operation is a smaller part of its-- the larger sprawl of the company than people realize. But it is a major definer of the brand.

And I think one of the biggest challenges that Warner Brothers Discovery faces is that the American TV operation defines CNN's brand across the world. And you know, it has this news operation that reaches across the world, can be seen in TV sets across the globe. But it is often defined by what the American news channel does.

And so it's not necessarily just about the ratings that they get on American TV sets. It's about how that brand is regarded as a journalism arbiter and also how that brand is regarded when you get outside of the polarized political environment that we have here in the United States.

What do news audiences in India and China and Britain think about CNN outside of the haze of the political partisanship that we have here in America? And I think, again, they might look at some of the changes that were made to CNN and say, they don't make a lot of sense because they don't seem to reflect a larger plan for pulling-- successfully creating compelling content out of a new direction for CNN.

And I think that's Licht's other issue is that he came to a staff, he criticized the work they had done in the past, but he didn't offer a comprehensive plan for how they were going to do things differently. And as the criticism began to mount over what he was doing, he had a tighter and tighter circle of people close to him that he would talk about his plans with.

So a lot of people in the company felt they had no idea what he was planning. They weren't really sure how he was going to reflect his values in actual programming, and they felt like the things that were being asked to do were not succeeding. And so that's a big problem when you're trying to rally the troops for a new direction.

BRAD SMITH: And so Eric, just to kind of follow on that, it sounds like the troops know because of Chris Licht's acknowledgment that he has been a distraction, which he apologized for. But it seems like he was even kind of glossing over why he was the distraction. So if there is a leadership change at CNN, number one, do you expect there to be a leadership change at CNN? And number two, how does that drastically change the culture internally?

ERIC DEGGANS: Well, it depends. It all depends on why that leadership change happens. I mean, the other thing that comes out through The Atlantic article that has become such a crisis point for Licht is that he was doing what the people who own and control Warner Brothers Discovery wanted him to do. So-- so if you bring in a new person and they do exactly the same thing that Licht did, I'm not sure you're going to get much different results.

Also, who in the world of TV news wants that job now? You know, good luck finding someone who is qualified to take that job. There were even questions about whether Licht was qualified because he had never really run a company as big as CNN before he got the job. Good luck finding someone who's qualified to take the job who's willing to take it on now given the level of criticism, the level of attention, and the level of animosity amongst the staff and their skepticism about the leadership at Warner Brothers Discovery.

It is going to take someone with superhuman powers of management to come in there and unwind some of the problems that have happened. So I think it's largely up to Licht to try and figure out how to undo this. And with a new COO by his side, he can focus on programming, which is supposed to be what he's good at. And hopefully he will come up with some things on the-- some wins in terms of new programming that will sort of restore his confidence amongst the staff at CNN.

JULIE HYMAN: Well, there's maybe somebody who could do that job. It's the guy who had it before and it sounds like maybe he kind of wants it back. I'm talking about Jeff Zucker. And in another story that the many that has been following this whole situation, the idea was floated that maybe he's talked at time-- one time or another about trying to buy the network from Warner Brothers Discovery, although it doesn't seem to be in current talks or anything like that. But Dave, just quickly for you, would that be good for Warner Brothers Discovery? Would shareholders actually want it to offload the network entirely?

DAVE HEGER: Well, it could be depending on the financial situation of the network as, you know, it's struggled with ratings recently. That could potentially be well received. It would help remove another cost-- sorts of costs in the business. And certainly CEO David Zaslav has been focused on improving the cost structure and positioning the company for the transition to streaming.

And-- because certainly, that's the direction the industry is going. And they really have not set a streaming strategy for CNN. They cut off CNN Plus, which was a streaming strategy under the prior management, s because the cost was too high. And so it might make sense, you know, if there was an interested buyer on the right terms. That might be received well by investors if it could improve the overall financial results of the company.

BRAD SMITH: Interesting. Eric Deggans, who is NPR TV critic media analyst, and Dave Heger, who is the Edward Jones senior equity analyst. Thanks so much, gentlemen, for taking the time here and discussing this story that continues to evolve here in front of our eyes. Appreciate it.