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CNN's newest effort to woo young viewers and cord-cutters

YouTube vlogger and Beme cofounder Casey Neistat. (AP)
YouTube vlogger and Beme cofounder Casey Neistat. (AP)

Amid a rapidly changing digital climate, CNN has bought the video app Beme and plans to launch a new video company using its technology, the cable network announced this week.

The acquisition is an effort to “future-proof” the network, said Andrew Morse, general manager for CNN Digital, in a CNN memo shared with Yahoo Finance.

The deal did not come cheap for CNN. The Wall Street Journal reports that CNN shelled out $25 million to acquire Beme and its 11 employees, including co-founder and YouTube star Casey Neistat, who has nearly 6 million followers on YouTube and nearly 1 million on Twitter.

Beme, which will shut down at the end of January, launched in 2015 and allows users to make 8-second videos taken by holding your phone to your chest. The app had a lot of initial buzz—it reportedly raised $2.6 million in seed funding in its very first week—but eventually lost steam amid competition from Snapchat and Instagram. By this past May, Neistat was announcing a refresh in a video he called, “What the hell happened to Beme?”

The dissolution of Beme comes just weeks after Twitter announced it plans to shut down the 6-second looping video app Vine, which birthed many individual video stars but couldn’t generate revenue for Twitter. Recent reports now say that Twitter still might sell off Vine at a loss.

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CNN’s new standalone company using Beme’s technology is expected to launch in summer 2017 and will focus on, “timely and topical video and empowering content creators to use technology to find their voice,” a CNN spokesperson tells Yahoo Finance.

Apart from that, specific details are scant. But that’s sort of the point. “We have 6,000 ideas and are trying to pin them down,” says the spokesperson, adding that more concrete ideas will take shape in the coming months.

Neistat told The Verge that CNN’s “confidence” in the Beme team “is in the lack of specifics.”

If that sounds strange—that a large corporation is putting its faith in something that never proved itself, and without any concrete vision yet for what to do with it—consider it the new normal.

Cable television networks know they need to capture the millennial audience, and fast. The average age of a CNN viewer is 59, according to Nielsen. (For Fox, it’s 68.) But the network is not aiming to get millennials to tune into CNN (that might be too lofty, given the rise of cord-cutting) but rather to engage them where they already are—on their phones.

“The goal isn’t to necessarily get his viewers to start watching CNN but to build an audience of our own, starting with the ones who’ve closely followed Neistat’s YouTube channel,” says CNN. Neistat has nearly 6 million subscribers on YouTube.

The new company’s business model will likely look very similar to that of Great Big Story, launched in October as a digital independent subsidiary of CNN. Great Big Story aims to tell feature-type stories that are substantive but not categorized as hard news.

“In addition to traditional branded content models, we’re looking at non ad supported models and we’re building a technology play into that monetization,” Morse said in the CNN memo. “We made an acquisition based upon a model that shows considerable growth with the [Great Big Story] path and that’s why we feel good about it.”

CNN has seen a boost in television ratings in the months leading up to and including the presidential election. The network led the coveted 25-54 demographic for the first time in 15 years in October and was up 53 percent in total day viewers in November 2016 compared to November 2012. Despite that streak, it faces the same problem as all cable networks right now: young people are watching less television. Older millennials (ages 25-34) watched 25.6% less television between October 2011 and October 2016, and Generation X (ages 35-49) saw a 12% decline over the same time period.

So networks have to go after digital to capture the audiences that have left television. In October, NBCUniversal made an additional $200 million investment in digital media company BuzzFeed on top of last year’s $200 million investment. CNN.com is among the top five news publishers on the web, according to SimilarWeb. CNN hopes the Beme team can help it rise.

Laura Sanicola is a reporter at Yahoo Finance.

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