David Zaslav, President and CEO of Warner Bros. Discovery talks to the media as he arrives on the Sun Valley Resort for the Allen & Company Sun Valley Conference on July 05, 2022 in Sun Valley, Idaho.
Kevin Dietsch | Getty Images
The largest decision for any big media chief executive officer is how much to lean in to the longer term.
Warner Bros. Discovery Chief Executive Officer David Zaslav has chosen strategic limbo.
Unlike previous WarnerMedia CEO Jason Kilar, who centered the corporate around HBO Max, Zaslav is pulling back from a streaming-first mindset to maintain his company’s theatrical and traditional pay-TV businesses going so long as possible.
Zaslav on Thursday reiterated his stance that Warner Bros. Discovery is not going to approach the streaming wars as a race to win probably the most subscribers. His comments come as Netflix has lost greater than 60% of its value up to now 12 months after subscriber growth stopped for the primary time in a decade, causing media and entertainment firms to rethink their streaming strategies.
Warner Bros. Discovery formally announced it can release a combined HBO Max-Discovery+ product within the U.S. by mid-2023, and develop a free, ad-supported option for the service. The corporate set a goal of 130 million global subscribers by 2025. That is about 40 million more customers than subscribe to HBO Max and Discovery+ today, but still a far cry from the 221 million subscribers that pay for Netflix worldwide.
Zaslav made some extent to say he’s a believer in each movie show releases and the longevity of traditional TV as “a money generator and an important business for us for a few years to come back” during his company’s second-quarter earnings conference call on Thursday.
But he’s also committed to spending “significantly more” on HBO Max and adding Discovery programming to the streaming service.
Kilar made waves through the pandemic by deciding to place his entire 2021 film slate on HBO Max at the identical time movies hit theaters. While that turned out to be a brief move, Kilar later stood by the choice as simply the primary to shift.
“History is already taking a look at it quite favorably,” Kilar said in an April interview with Deadline. “It worked. We were the primary over the wall.”
Zaslav on Thursday, in stark contrast, made some extent to emphasise the importance of theatrical release for big-budget movies by scrapping “Batgirl” this week, which Kilar had ticketed to launch directly on HBO Max. Launching expensive movies on to streaming doesn’t make economic sense, Zaslav said. “Batgirl” cost $90 million to make.
“Our conclusion is dear direct-to-streaming movies, when it comes to how persons are consuming them on the platform, how often people buy a service for them, how they get nourished over time, isn’t any comparison to what happens if you launch a movie within the theaters,” Zaslav said. “This concept of costly movies going direct to streaming, we won’t find an economic value for it, and so we’re making a strategic shift.”
It is not Zaslav’s first reset during his tenure.
Kilar also pushed the launch of CNN+, a $300 million effort to offer CNN a digital streaming strategy. Much like “Batgirl,” Zaslav decided to kill the streaming service before it got a probability to prove itself as successful.
Zaslav said Thursday he believed the strength of live news is on traditional pay-TV fairly than streaming. That implies CNN live programming won’t be going to the HBO Max/Discovery+ product when it launches, or any time soon.
“We see live news as critical to the linear pay-TV service,” Zaslav said.
Selecting to push HBO Max while also attempting to slow the decline of box office and linear pay-TV is a juggling act. However it’s also the plight of the trendy media CEO. Moving too far into the longer term cannibalizes cash-flow positive businesses.
It will not be strategically clean. However it’s the hand Zaslav is selecting to play.
“I have been around a protracted time,” Zaslav said, adding that he “hung around” with former General Electric CEO Jack Welch when he ran NBCUniversal, where Zaslav worked. “Broadcast was dead within the ’90s, or that is what people said. But ultimately, that reach and the power to drive promoting product was what kept it alive. We’re big believers [in overall reach] and we expect that is going to assist us.”
WATCH: Paramount Global shares sink, Warner Bros. Discovery shelves ‘Batgirl’
Disclosure: CNBC is an element of NBCUniversal.