As a seasoned movie reviewer who’s seen more than a few industry titans rise and fall over the years, I must say, watching Warner Bros. Discovery navigate these turbulent waters is akin to a rollercoaster ride without the fun part – the upside.
A little over a year ago, Warner Bros. Discovery was basking in the cultural wave created by “Barbie.” However, it’s now apparent that the radiance from this blockbuster success, symbolized by its pink glow, has significantly diminished.
As a long-time media industry observer with over two decades of experience, I can’t help but feel a sense of dismay as I watch Warner Bros. Discovery (WBD) navigate through the tumultuous waters of its own making. Having worked closely with various companies in similar situations, I have seen firsthand the consequences of such self-inflicted battles and hard-line stances that are increasingly out of touch with the current industry landscape.
Just last week, it was revealed that WBD had written off a staggering $9.1 billion from the worth of its cable channel portfolio, signaling an acceptance of the fact that the era of rapid, double-digit expansion in subscription fees and ad revenue is unlikely to return.
Last week, as a film enthusiast, I found myself reflecting on the words of WBD CEO David Zaslav in a call with investors. He attributed recent declines to a significant shift or disruption affecting our beloved industry, referring to it as a generational upheaval. Interestingly, he highlighted that just two years ago, the market valuations and circumstances for traditional media companies were vastly different from what we’re experiencing today.
Confidence among Wall Street investors regarding Zaslav’s capability to steer the company back on course is gradually decreasing. In fact, the company’s stock value has plummeted to record lows. Moreover, there’s an increasing buzz about the possibility of splitting up Warner’s assets.
According to Jessica Reif Ehrlich, a notable analyst at BofA Securities, the present structure of the consolidated public company is not proving effective as it stands. In her opinion, considering alternative strategic moves for WBD could potentially generate greater shareholder value compared to maintaining the status quo, given the current market conditions. She emphasized that all possibilities should be open for discussion in this regard.
With these popular brands like HBO, TNT, CNN, and Warner Bros. being caught in a storm, it seems inevitable that some significant changes within the management structure are on the horizon, don’t you think?
As a passionate film enthusiast, I must clarify that the rumors about Zaslav stepping down seem doubtful at this moment. Contrary to what may seem on the surface, Warner Bros. Discovery (WBD) is financially healthier than one might think. The company’s leadership is dedicated to preserving an investment-grade rating.
Despite some cost reductions, they’ve rubbed certain groups the wrong way. Team Zaslav discarded projects considered non-essential, such as completed films like “Batgirl” and CNN+ platform, leaving employees at various departments feeling that management has gone too far in trimming expenses. Warner Bros. Discovery (WBD) announced its third round of layoffs in three years, with over 1,000 job cuts starting last month.
As a passionate movie enthusiast, I’m all about ensuring our company thrives amidst the tumultuous sea change that is streaming. My primary goal, under Zaslav’s visionary leadership, is to strengthen our unity while transforming Max into a global titan, rivaling giants like Netflix and Disney+. That’s why I dedicated a significant portion of our Q2 call to discussing Max’s strategic expansion into key markets across Latin America and Europe.
Simultaneously, Zaslav’s well-known tough stance in negotiations has strained relationships with significant contributors to WBD’s revenue: advertisers, sports leagues, Hollywood talent, and even some CNN journalists. This atmosphere of resentment could negatively impact the lasting success of a company whose primary asset is creativity rather than its TV networks or digital platforms.
As a film enthusiast, it’s no surprise that I find myself sharing the sentiment of WBD’s talented roster. Despite Charles Barkley recently renewing his contract with TNT Sports for “Inside the NBA,” his public expressions of disappointment over the company’s inability to retain the NBA partnership, after more than three decades together, are telling indeed.
“Scott D. Anthony, a professor at Dartmouth’s Tuck School of Business, points out that one problem organizations often face is they tend to believe they are primarily concerned with handling and controlling data in spreadsheets. This oversight causes them to neglect focusing on growing their business by understanding customer preferences and employee needs. When this shift occurs, the game essentially comes to an end.”
For many years, advertisers have voiced criticisms concerning the sales strategies employed by WBD. During the latest upfront market, which is when television networks attempt to sell most of their advertising space, Warner demanded that media agencies agree to increase their spending (referred to as “growth”), compared to what was committed in 2023. This is quite a challenge considering the declining financial health of cable TV.
However, according to two media-buying experts who were part of the recent talks, Warner Bros. Discovery (WBD) has been perceived as rather unyielding in their negotiations. WBD announced they received “strong” upfront agreements in sports and observed growth in streaming, but declined to disclose an exact dollar amount for overall commitments tied to their comprehensive portfolio.
A single instance of haggling over small amounts with cable providers or sports leagues might be acceptable, according to one purchaser. However, consistently displaying such behavior during annual negotiations is a different story. This buyer suggests that Zaslav may not fully grasp the distinction between these two types of discussions. The advertiser’s sentiment, as echoed by this buyer, is that they find it displeasing to be told that the large sums they invest are insufficient.
Warner often presents challenges through various tiers of individuals,” the executive notes. “It’s not exactly a pleasure to handle business with Warner Bros.”
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2024-08-14 20:48