DC Comics Owner: Make Sure We Get Paid!

The Warner Bros. Discovery chief wants to be the anti-Netflix: all in on theatrical, a fan of linear TV, happy to sell content to other players and focused on the bottom line.

PLAYLIST 25 VIDEOS: WARNER BROTHERS DISCOVERY & DAVID ZASLAV
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WARNER BROTHERS DISCOVERY, LATEST FINANCIAL RESULTS (SHOWS DEBTS AND INCOME for past 90 days)
https://s201.q4cdn.com/336605034/files/doc_financials/2022/q2/WBD-2022.6.30-10Q-Filed-copy.pdf

In 2015, David Zaslav compared the industrywide rush to scripted TV to a kids’ soccer game — all players are clumped around the ball, while the rest of the field is wide open. “It’s quite crowded, it’s pretty expensive, and it’s looking more and more like the movie business,” the then-Discovery CEO said, explaining why his executive team wouldn’t join the Peak TV fray.

Fast forward to 2022, and Zaslav, as CEO of Warner Bros. Discovery, is running a scripted powerhouse and betting on movies as a key content engine. But he, along with CFO Gunnar Wiedenfels, still vows to zag where the industry zigs. “We have no intention of being beholden to anyone in particular or to a specific business model,” Zaslav said during an Aug. 4 earnings call. “Simply put: we are open for business.”

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As Zaslav detailed, that plan includes setting a measured goal for streaming subscribers, returning to an emphasis on theatrical releases and even declaring an openness to licensing content to third parties. This strategy positions streaming as just one of many segments of a multifaceted media firm, in contrast to Netflix’s all-in model, while feeding into the company’s plan to find $3 billion in cost savings. “The reality is, this is what Warner needs to do given its financial condition,” says analyst Rich Greenfield, who runs LightShed Partners. “What Warner does in the future, if they can de-lever, time will tell.”

As it stands, Warner Bros. Discovery has been a merged company for only about four months. In its first report as a combined entity, the conglomerate reported second-quarter revenue of $9.8 billion and a loss of $3.4 billion, alongside $53 billion in gross debt. (In contrast, Netflix’s gross debt at the end of its second quarter was $14.3 billion, though it did not have debt related to a merger, alongside revenue of $7.97 billion.)

Working within that financial position, Zaslav and team are reversing the strategy of his predecessor, former WarnerMedia CEO Jason Kilar, who doubled down on streaming by releasing the studio’s entire 2021 film slate on HBO Max at the same time as the theatrical releases amid the COVID pandemic. Using Batgirl as the latest example, Zaslav said his team had analyzed the results of this streaming-first experiment, but had not been able to find a business case and financial rationale for the strategy.

SOURCE: WARNER BROS. DISCOVERY FILINGS
“We have a different view on the wisdom of releasing direct-to-streaming films and we have taken some aggressive steps to course-correct the previous strategy,” Zaslav said. “We will fully embrace theatrical as we believe it creates interest and demand.” As films move from theatrical to streaming and elsewhere, “their overall value is elevated, elevated, elevated,” he touted, mentioning such recent examples as Elvis and The Batman.

Other cuts have followed similar cost-cutting measures, including the axing of animated feature Scoob!: Holiday Haunt, the shelving of Wonder Twins, another DC film in development, and the scrapping of J.J. Abrams’ big-budget streaming series Demimonde.

The theatrical-first model marks a return to Hollywood’s traditional approach of optimizing content distribution and maximizing revenue via various platforms, while also serving as counterprogramming to any sector giants that have been putting all their eggs in the streaming basket. Under Zaslav’s plan, Warner Bros. Discovery will create a subscription streaming platform combining HBO Max and Discovery+ content, set to launch in summer 2023, with plans to launch a free, ad-supported service later on.