Despite Audience, Creative Blowback, Warner Bros. Discovery Feels HBO Max Strategies Are Working As Planned
The sweeping changes that David Zaslav has made at Warner Bros. Discovery since taking over as CEO when the two companies merged earlier this year have been well documented. Under Zaslav’s purview, the company has removed original shows and movies from HBO Max, changed the company’s policy regarding theatrical windowing, and axed big budget movies in favor of tax-write offs.
Zaslav came into the position with a mandate to find $3 billion in budget savings to help offset over $50 million in inherited debt from the acquisition. Company executives may just see that as numbers on a bottom line, but it means job cuts at the company, job cuts for the content creators that had deals with HBO and HBO Max, and less content available to customers on one of the most expensive streaming services in the world. All of this has led many to question whether the company is damaging its previous premium brand.
However, if those questions are being asked internally at WBD, they are satisfied with the answers. Senior Executive Vice President and CFO Gunnar Wiedenfels discussed the changes since the merger of Warner Bros. and Discovery at the Bank of America Media, Communications and Entertainment Conference on Thursday, and judging by his comments, the company is meeting its internal goals, and outside concerns are not likely to sway its course of action.
“When we look at what David [Zaslav] laid out when we reported the second quarter in terms of what the key priorities are here,” Wiedenfels said, “creating the most compelling diverse content, leveraging our amazing storytellers, leveraging that enormous global distribution footprint across all of the distribution outlets that we can orchestrate to monetize the content and to really run this Warner Bros. Discovery as one company with one vision — [it’s] clearly early, but a lot of strong indications for progress across all of these.”
Those priorities, like enhancing the theatrical profile of big-time movies, are part of the larger strategy of cutting costs and bumping up earnings at WBD. After seeing success with a longer window between theatrical and SVOD (subscription video-on-demand) streaming for movies like Baz Luhrmann’s “Elvis,” Wiedenfels said that the company would continue to follow its own path in deciding the best ways to monetize its films. Wiedenfels promised that WBD would have, “No ego, no religious beliefs about the value of one platform over the other.”
Wiedenfels also discussed the possibility of selling more dormant properties to third parties to maximize their revenue. One example given was the sale of “The Lord of The Rings” film trilogy to Prime Video, which Amazon used as a marketing tool for its new show “The Rings of Power.” That helped boost Prime Video’s profile, but WBD simply saw it as an opportunity to revive and re-monetize an older IP.
“Obviously, the way we look at it is we look at what we’re giving up versus what additional revenue we’re generating,” Wiedenfels said. “As a matter of fact, there’s positive knock-on effects on our own platforms as well. So that’s
a perfect example of how it just makes sense to get that additional monetization for the content.”
Clearly, the executives at WBD are feeling no pain, even regarding decisions that were unthinkable to the majority of the entertainment industry. The cancelation of the Max Original superhero movie “Batgirl,” for instance, caused understandable consternation when it was announced. The film was practically a finished product and, with a budget of $90 million, it was no small investment for WBD. But Wiedenfels was dismissive when discussing the controversy surrounding the film’s shelving.
“Media likes to talk about media,” he said. “So I perceive the situation at Warner Bros. Discovery differently and much more positively than some of what you see in the press.”
Those comments are likely to rub many in the media — and more importantly, WBD’s audience — the wrong way, but the team at WBD is clearly not concerned with the optics of mothballing a superhero film led by a BIPOC actress simply for a tax write-off. The film had been highly anticipated since its release and fans had followed its production with glimpses of on-location shoots and more.
Furthermore, Hollywood has not responded well to the rampant discarding of projects that many have spent years working on. WBD has especially deemphasized animated content, leading some shows to be left in limbo, not knowing if completed seasons will ever see the light of day on HBO Max, or potentially sold to another outlet.
However, the company clearly only sees these decisions from a financial standpoint, and until HBO Max customers register their displeasure with their dollars, expect WBD to stay the course.
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