The chief executive says he’s focused on long-term quality, but then the company’s stock dropped 14%
After an uninspiring first earnings report that missed Wall Street analysts’ expectations by nearly $2 billion and caused the stock to drop as much as 14% after market close, Zaslav explained that he’s focused on long-term quality rather than short-term gain.
“We think that we could build a long-term, much stronger growth business out of DC,”During the earnings conference, Zaslav spoke. “And as part of that, we’re going to focus on quality.”
This was just a day after the studio had killed $90 million “Batgirl” movie at Zaslav’s behest, which the studio declared not good enough to be released.
“You look at Batman, Superman, Wonder Woman, Aquaman, these are brands that are known everywhere in the world,”Zaslav spoke to media analysts about the DC film universe. “And the ability to drive those all over the world with great story is a big opportunity for us. We have done a reset. We’ve restructured the business. We’re going to focus where there will be a team with a 10-year plan focusing just on DC.”
It could be that easy.
Killing “Batgirl” infuriated Tinseltown’s actors and directors, but is a brilliant tax write-off for investors. Collapsing HBO Max and combining it with Discovery+ saves cash, yet layoffs sever the studio’s ability to discover the next hitmakers. Zaslav had a decade-long strategy in place. “elevate”DC’s brand has had a string of hits that will bring in the studio cash, which only increases the uncertainty that has plagued DC for the last decade.
Zaslav can be a hero to Wall Street and a villain to Hollywood or the reverse, with each faction on opposite sides of Zaslav’s pledge to cut $3 billion in expenses at the studio.
Ironically, Discovery+ and HBO Max now have 92,000,000 subscribers. However, Zaslav said that the streaming service will not break even if it adds 40 million subscribers. This is likely to happen in 2024/25.
Hollywood has been agitated for the past two days by rumors about HBO Max’s demise.
“He’s tough on a tightrope,”One Warner Bros. insider, who is involved in the television business, said:
Executives teased on Thursday’s earnings call that they would have more to share on the upcoming amalgamation between streamer HBO Max and HBO closer to its launch. But, they revealed it will utilize Discovery+’s technology backbone while aiming to incorporate many of HBO Max’s well received user features.
No mention was made of layoffs or the exact amounts. However, Warner Discovery executives said that more layoffs were imminent, especially on the marketing, back office, and tech sides. And the reaction coming out of HBO’s offices in New York and Los Angeles were specific. “They are all freaking out,”According to a top Hollywood agent.
The hope is to cut down on each individual service’s shortcomings, such as Max’s performance and customer issues and Discovery+’s limited consumer features. Better content and personalized choices will be possible by picking out the best attributes of each streamer and looking for ways to improve them.
The need to address “Batgirl” decision, Zaslav said: We’re not going to release a film to make a quarter… the focus is gonna be how do we make each of these films, in general, as good as possible. But DC is something that we think we could make betterAnd we’re focused on it now.”
The CEO called out Dwayne Johnson’s upcoming “Black Adam” as a DC film he’s excited about, with the “Shazam!” and “Aquaman”There are also sequels. But Warner Bros. has struggled to keep up with Disney’s Marvel Cinematic Universe, soft-launching with 2013’s Superman reboot “Man of Steel”Before Zack Snyder was born, he managed an interconnected DC Cinematic Universe that failed to connect for audiences and critics.
Zaslav is determined to produce blockbuster movies of Marvel quality. He recently hired Disney veteran Alan Horn to help create a roadmap that will mirror Marvel’s success. “It’s very similar to the structure that Alan Horn and Bob Iger put together very effectively with Kevin Feige at Disney,” Zaslav said.
The new focus comes after years of similar pivots, un-pivots strategies and then reverses of those strategies. Warner Bros must feel dizzy just thinking about it. Discovery. For Zaslav, it’s all brand new.
