Warner Bros. Discovery stock is down more than 50% under his watch, and DTC losses of $634 million in the third quarter were second only to Disney, but that didn't keep WBD CEO David Zaslav from continuing to blame his predecessors for his company’s current struggles during an appearance at RBC’s Global TIMT Conference in New York Tuesday.
In keeping with a now all-too-familiar blame-game pattern, Zaslav made a somewhat apples-and-oranges comparison of the smaller pre-“Max” HBO, as it existed in 2019, vs. the expanded HBO Max of a year ago.
Also read: David Zaslav and the Great 'Course Correction’: Why Is He Betting on the Past? (Bloom)
In 2019, the standalone HBO spent $2.5 billion on content and made a profit of $2.5 billion. In 2021, with the global box office in ruins, HBO Max spent almost $7 billion on content and lost $3 billion.
“I don't know if I've ever seen anything like that,” Zaslav said, “all those direct-to-streaming movies just thrown right on top.”
Zaslav has sustained his misleading description of the "day-and-date" movie release strategy adopted by predecessor Jason Kilar, a one-year distribution mandate that only applied to the 2021 Warner Bros. movie slate, at a pandemic-era time when theaters were shut down. Zaslav has on numerous occasions incorrectly described this Kilar strategy as a permanent one that must be rolled back.
And listening to Zaslav whenever he speaks these days, it seems Kilar's broader strategy of charging hard into the Streaming Wars was a grave mistake.
“It’s messier than we thought, it’s much worse than we thought,” he added, inferring that Kilar left him said mess to clean up.
Of course, watching rival Disney incur direct-to-consumer losses of more than $1.38 billion in Q3, and suffer its own painful investor retreats, it could be argued that the only way out is through — investing in global scale in streaming services then improving monetization might be the only real path forward, given that retrenchment to failing linear businesses doesn’t look quite like the safe haven Zaslav has described in previous speaking engagements.
His Disney peer, Bob Chapek, has pledged to investors that a corner should be turned in 2024. Zaslav is telling his that a severely damaged global box office can be resuscitated with DC Comics movies, a broadcast TV business with fractional demo ratings in prime time is still a viable business, and there's still some life left in pay TV at a time when Comcast is losing nearly 11% of its X1 subscribers every 12 months.
We’ll see who’s right soon enough.
Then again, bold, forward-looking strategies never sell as well as meek ones do in times of recession … or perceived recession.
As he did during WBD’s third-quarter call two weeks ago, Zaslav made the case — supported by Wall Street — that his company is looking to be more of an “arms dealer” of content.
“Our whole library went on HBO Max,” he said. “We weren’t selling any of it. But it was all on there. We looked and we said, most of that is not being watched, or we don’t think anyone is subscribing because of this. We could sell it nonexclusively to someone else.”
Meanwhile, when he wasn't blaming his predecessors for his problems, Zaslav turned to the weather. The ad sales climate is pretty stormy right now -— the current market is even worse than it was at the height of the COVID-19 quarantine, he said. ■
