Warner Bros. Discovery Inc. Chief Executive David Zaslav said the newly formed entertainment conglomerate, whose assets CNN, HBO and Warner Bros. would act quickly to realize its vision.
“We will obviously be taking swift and decisive action on certain items, as you saw on CNN+ last week,” Mr. Zaslav told analysts on Tuesday morning during a profit call, citing the decision to cut CNN’s direct-to-consumer streaming service for about a year. month to close. after it is launched.
Mr. Zaslav also said that the company would not spend a lot of money to increase its various streaming news and entertainment assets.
“We’re not trying to win the war on direct consumer spending,” he said.
Warner Bros. Discovery WBD -5.07%
the stock was down 7.4% on Tuesday early Tuesday.
Mr. Zaslav started Warner Bros. earlier this month. to lead Discovery, after AT&T Inc.
spin-off of its WarnerMedia unit and Discovery merged with it. The merger created a media giant that included the film studio Warner Bros. and the cable channels TNT, Food Network and HGTV, in addition to HBO and CNN.
Warner Bros. Discovery has said it plans to combine its two most prominent streaming services, HBO Max and Discovery+, into one massive offering that will include both an ad-supported platform and an ad-free offering. Mr Zaslav did not provide any updates on when the combined service would go live but said it was a priority.
He said there was a lot of crossover appeal between shows on HBO and Discovery. “You need a diversity of content for everyone in the house,” said Mr. Zaslav. “Our research shows that people who watch [HBO’s] ‘Euphoria’, their second favorite show is [TLC’s] “90 day fiancé.” †
Warner Bros. Discovery Chief Financial Officer Gunnar Wiedenfels said he would be scrutinizing the content and marketing budgets of the new company as part of its announced plan to capture $3 billion in cost savings from the combination. Warner Bros. Discovery is also more than $55 billion in debt.
Mr. Wiedenfels said the combined company will spend $23 billion on content and another $5 billion on marketing, and he wants to make sure there’s a return on investment for those spending.
“We intend to encourage the highest level of financial discipline here,” said Mr. Wiedenfels. He said he isn’t necessarily looking to cut spending, but to be “more efficient and consistent”.
Mr. Wiedenfels cut the new company’s 2022 profit forecast by $500 million. He also said a similar approach to the decision to close CNN+ would be taken with other “major investments” that “miss a solid financial foundation.” He didn’t work out.
The comments were made when the company announced Discovery’s first quarter results. The results did not include the Warner Bros. operations, which were acquired on April 8. AT&T reported WarnerMedia’s results in its quarterly update last week.
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Discovery’s first quarter revenue increased 13% to $3.16 billion, and net profit more than tripled to $456 million, helped in part by the settlement of interest rate derivative contracts related to the AT&T deal.
In the US, ad revenue grew 5%, helped by higher prices. Distribution revenues were up 11%, mainly driven by Discovery+ growth. The company ended the quarter with 24 million direct-to-consumer subscribers, an increase of 2 million subscribers since the end of the fourth quarter.
Mr Zaslav has hinted at company meetings that there are likely to be layoffs as well. There are many overlapping areas in the new business, including administrative and legal operations, as well as across the various businesses, such as cable networks, advertising sales and distribution.
The shutdown of CNN+ so soon after launch sent a shockwave through the news organization. CNN and then-parent company WarnerMedia put a lot of thought into preparing the platform and had continuously invested over the next few years to build what they believed to be the future delivery platform for the global news item.
However, the new leadership questioned the strategy ahead of the closing of the merger to combine WarnerMedia with Discovery, said those familiar with their thinking.
Mr. Zaslav had telegraphed his thoughts on CNN+ earlier this month at a Warner Bros. town hall. Discovery, where he said he wanted to bring all content activities under one umbrella rather than several standalone services. He said Discovery learned that lesson after launching a series of niche services that eventually combined.
“We don’t want to go to eight places. We want to go to one place and we want to see everything we want to see,” Mr Zaslav, according to a person who attended the meeting, told Discovery at the time. “When we brought everything together, we were much more successful.”
CNN will take on new leadership next week, when Chris Licht will officially begin as the network’s chairman and chief executive. Mr. Light is a veteran of news and entertainment who has held senior positions with MSNBC and CBS News and most recently served as an executive producer on the CBS evening show hosted by Stephen Colbert.
In addition to restoring staff confidence after the removal of CNN+, Mr. Slightly several challenges to tackle, including determining how to schedule 9 p.m. from CNN, which has not had a full-time host since Chris Cuomo was fired last year.
During the interview with analysts, Zaslav praised CNN, saying: “During critical moments, the world turns to CNN”, and it is “the country’s main news channel”.
write to Joe Flint at email@example.com
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