When everyone else is going right, Warner Bros. Discovery’s CEO David Zaslav is going left. But so far, it’s a lot of promises made, with little execution to show.
Judging by the WBD stock’s 12% slump in the after-hours session Thursday, investors aren’t biting until there’s significant proof that Zaslav’s strategy of going back to tradition will pay off.
Zaslav and JB Perrette, WBD’s global streaming and interactive head, laid out additional direct-to-consumer strategy details. The company has new long-term DTC goals but no name or price yet for the combined Discovery+ and HBO Max service it plans for 2023. WBD also said it now projects this service will reach 130 million global paid subscribers by 2025.
In order to get there, Zaslav said WBD needs to go back to basics. Without naming him explicitly, Zaslav threw shade at previous WarnerMedia chief Jason Kilar for his strategy of making streaming the centerpiece as opposed to one slice of the multipronged pie. That’s not to say Zaslav believes HBO Max isn’t an important asset, as he said it was a matter of approach.
Zaslav emphasized his focus is to make sure the company continues to produce quality products, rather than go overboard with quantity, specifically calling out the success of HBO content chief Casey Bloys and his proclivity for constant involvement with creatives throughout development and production. Per Zaslav, making theatrical releases and linear TV less of a priority just isn’t the way to go, saying, “Launching expensive movies directly to streaming doesn’t make economic sense.”
But while theatrical releases like “The Batman” and traditional pay TV are cash cows that help keep the lights on, cord-cutting isn’t exactly slowing down, a reminder of the challenge Zaslav faces in scaling and consolidating streaming operations to rely on more traditional models of media distribution.
This is a seriously different approach than taken at WBD’s peers such as Disney, NBCUniversal, Paramount and of course Netflix, where streaming remains the priority. But even as Zaslav shed light on his strategy, streaming has continued to see plateauing growth anyway. Perhaps the only real move WBD can make is staying laser-focused on financials, making sure debt is actively being reduced to strengthen the company’s balance sheet, especially amid the macroeconomic uncertainty facing global markets.
In all fairness, we do need to cut Zaslav some slack. It’s only been four months since the merger became official, and there’s always an adjustment period before meaningful ROI.
But even if the product is good, the execution is what matters far more. It won’t be an easy task to strike a balance between keeping old-school businesses alive while pushing toward the future. To Zaslav’s credit, he’s not afraid to make bold moves, as big risks can often yield even bigger returns. But will those bets pay off? We’ll find out.