‘Better is Better’: Changes Coming to HBO Max, CNN Under Warner Bros. Discovery Leadership
After Warner Bros. Discovery announced on Tuesday morning that discovery+ added 2 million new subscribers in the first quarter of 2022 to bring their international total up to 24 million, WBD President and CEO David Zaslav and Senior EVP and CFO Gunnar Wiedenfels held a call with analysts to discuss their plans for the recently merged company.
One of the main takeaways from the call was that WBD will be looking for opportunities to save money through strategic cuts and and more efficient management — something that it was clear that the execs did not believe was happening at WarnerMedia.
WBD’s first big move came last week as they shuttered CNN+, ending the news streamer's life roughly one month after launch, but there will undoubtedly be more cost-saving measures implemented in the coming months as Zaslav and his mostly Discovery-based team begin to take full control of the company.
One of those changes that has been discussed openly for months is the eventual merging of discovery+ and HBO Max. Wiedenfels indicated that WBD is already at work on plans to unify its two streamers, but that they weren’t ready to make a timetable public just yet.
“When it comes to the timing for the relaunch,” he said, “I don’t want to make any new commitments here. The team is working hard right now as one combined team to hammer out the exact cadence, and we will come back to you all once we have a fully baked firm plan. What I can say about the interim period here is we’re not changing our mindset.”
The philosophy coming from the Discovery team has always been that a single streaming service is far superior to multiple niche services. Zaslav learned that lesson first hand when he initially launched individual streaming apps for all of the networks under the Discovery umbrella. While that experiment failed, by combining all of the services into the single discovery+ — complete with genre specific hubs — the company saw a substantial turn around in customer interest. The exec now touts the service as having some of the best numbers in the industry in terms of churn and women viewers.
That is the idea that the CEO wants to bring to the combined HBO Max-discovery+ service.
“We believe that’s going to be a combustible product that we could really drive around the world,” Zaslav said. “And so the sooner we can get it launched [the better], but we want to get it right. It’s critical because you could have a record-breaking number of people watching ‘Euphoria,’ but we want to make sure that when they finish ‘Euphoria’ … here’s the other eight shows that you would love; whether it’s Chip and Jo, whether it’s Oprah, whether it’s “90 Day Fiancé,” or whether it’s mix in another great HBO Max series.”
Zaslav believes that the major benefit of the unified service will be to keep subscribers engaged with the variety and diversity of content, making the platform an invaluable addition to their entertainment menu that they won’t even think about unsubscribing from when their favorite HBO Max show ends for the season.
“We also think that one of the big opportunities here is going to be churn reduction,” he said. “There’s meaningful churn on HBO Max, much higher than the churn that we have seen [at discovery+]. And so the ability for us to come together is part of one of the thesis here that managing churn, and we’ve seen this because we’ve been at it in Europe for eight years. As you begin to manage churn in a meaningful way, that provides a real meaningful growth.”
While the WBD team acknowledges that there are concerning issues with customer retention at HBO Max, they don’t believe that adding seemingly unrelated content from discovery+ to the platform will dilute the prestige movie and TV aura of the service, especially given that — by some reports — the platform has climbed to No. 2 in U.S. streaming market share.
Max
Max is a subscription video streaming service that gives access to the full HBO library, along with exclusive Max Originals. There are hubs for content from TLC, HGTV, Food Network, Discovery, TCM, Cartoon Network, Travel Channel, ID, and more. Watch hit series like “The Last of Us,” “House of the Dragon,” “Succession,” “Curb Your Enthusiasm,” and more. Thanks to the B/R Sports add-on, users can watch NBA, MLB, NHL, March Madness, and NASCAR events.
“It actually makes every sense because what you need is a diversity of content for everybody in the home,” he said. “They may come in for ‘Euphoria,’ but our research shows that [for people] watching ‘Euphoria,’ their favorite second show to watch is ‘90 Day Fiancé’ … Look at HBO right now, what it really needs is precisely what we have.
“So when you put all this diversity of content together, there’s content for kids, there’s content for teens, it’s basically everybody in the family, why would you go anywhere else? … It’s much harder to turn out of a product when your kids use it or your significant other uses it or your mom and dad are watching, but also if you find yourself watching it more often. So I think it’s precisely why we did this deal. And I think everything tells us that it’s going to make us stronger and more compelling because of the breadth of the quality menu of IP that we have.”
Some of that established Warner Bros. IP that the new team will hope to capitalize on is the deep library of super heroes and villains from DC Comics. While the response to recent DCEU films has been mixed, Zaslav knows that there has to be a more cohesive plan for the comic characters, even if it doesn’t mirror that of their Marvel rivals.
“We think that DC is an extraordinary opportunity,” the CEO said. “Batman, Superman, two of the biggest brands in the world — maybe 1 and 2, maybe 1 in 3. I think there’s over 100 characters, and let’s just say that we’re going to focus very hard on building a long-term plan.”
While there very well might be changes coming to how WBD handles its roster of heroes, there will also be changes happening at the conglomerate’s flagship news organization, and — oddly enough — the goal might be the same for both: “Get back to what you do best.”
For DC that might be telling compelling stories based on their two most popular characters, and for CNN, the plan appears to be to return to a more journalism-focused approach to cable news.
“CNN is the leader in news. They’re the leader in global news. They’re the best journalistic organization in the world, which they’re showing,” Zaslav said. “We think that as we look at news around the world, it’s never been more important. Here in the U.S. and around the world, there is mostly advocacy networks … We need great journalism and great facts to make the right decisions, and advocacy networks that make a lot of money by generating and supporting an audience is a great business, but CNN is in the business of journalism first, and that’s what we’re going to fight for.”
This desire to return to less personality and opinion-driven programming, coupled with unrealistic subscriber projections, led to Warner Bros. Discovery pulling the plug on CNN+. But, despite the company’s lack of faith in the cable news network’s streaming arm, WBD execs seem to still have a lot of faith in the network’s ability to be a major driver for the company both domestically and internationally.
“[Discovery is] already in Europe and the ability to take CNN around the world more aggressively and … own that with the greatest brand in news is really compelling,” Zaslav said. “So we’re committed to it; we think it’s a differentiator. We see already in Europe that when we put it together on our subscription platform that people come to it often, it reduces churn, and it increases appeal.”
On Tuesday’s call, Wiedenfels admitted that “2022 is going to be noisy” for the company as they tweak the massive corporation to fit the more rigid, cost-efficient Discovery way of doing business. So, look forward to more news, changes, and pivots from inside the world of Warner Bros. Discovery over the next seven to eight months.
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discovery+
discovery+ is a video streaming service that offers more than 70,000 episodes of 2,500+ current and classic shows from several popular TV brands including Discovery, Investigation Discovery, HGTV, TLC, Food Network, A&E, Lifetime, and History.
