The Yanking of “Westworld” and “Love Life” From Streamers Is Designed to Please Wall Street, Not Consumers, Says an Expert
“The question is how do we create enterprise value in HBO Max? So far, it’s been that we ship all our stuff there,” Rosenberg said. “Maybe Anchor’s stuff is siloed like DC movies … but for less important properties, the maximum value for that company may mean sealing it from within rather than licensing it in the market.”
While Zaslav’s content trimming has drawn criticism from both Hollywood creators and consumers in recent months, Rosenberg believes the effort will ultimately “clean up the inconsistencies and better position the company to make better investments in the pipeline.” focused on bringing
“They are now taking a lot of difficult decisions which the previous government could not do overnight,” he said. “Going forward, they don’t want to put good money behind a bad strategy. So the 2023 investment can’t double down on a strategy the new government doesn’t believe in.”
Morning Consult entertainment and media analyst Kevin Tran said there is a financial benefit to “unbloating” HBO Max’s content catalog. In addition to saving the company on residual payments to producers and stars upon offloading shows, the purge also “reduces the money that sinks into titles that aren’t valuable to them.”
Warner Bros Discovery, which reported an adjusted earnings loss of $634 million in its direct-to-consumer division for the third quarter of 2022 and is undergoing a restructuring target of up to $3.5 billion in cost savings, said in a revised filing The US Securities and Exchange Commission said on Wednesday it estimates up to $5.3 billion in total pre-tax restructuring charges — including between $2.8 billion and $3.5 billion in material write-offs. That’s more than the $1 billion in cost savings from content write-offs that the company had estimated just two months ago.
But Tran also pointed out that there are huge risks associated with shutting down so many movies and TV shows.
“They may offend fans of shows pulled from HBO Max,” he warned. “Additionally, from a talent perspective, showrunners and actors may be more hesitant to work with a company they perceive to be too eager to ax or decline shows from their streaming platforms.”
Pulling the show from HBO Max doesn’t sound too good to Hollywood types, argued Brian Frons, former president of ABC Daytime and professor at UCLA’s Anderson School of Management, not the audience Zaslav is primarily focused on pleasing. Moment.
“He’s watching Wall Street. He’s $50 billion in debt and so his audience isn’t so much interested in what he spends as in what he doesn’t spend,” Frons told TheWrap. “If you If you think about what he’s doing from a non-Hollywood perspective and a Wall Street perspective, what he’s trying to do is keep as much revenue as he can while reducing his programming expenses, in principle. In, provides a better bottom line. ,
Frons said that in addition to cutting programming costs, Zaslav may examine marketing costs and overall headcount to improve the bottom line.
“The rest of the streaming industry is seeing the exact same issues, you know, with maybe the exception of Netflix, because everyone in the streaming business is at Warner Bros. Discovery’s position where they are either trying to grow or get to profitability in their streaming business,” he said. “And they’re trying to juggle those two issues with maximizing their library revenue or content licensing revenue.”
While Warner Bros. Discovery aims to license some of its content to competitors, the company also plans to offer its own Fast service in the US in the spring of 2023, which will include content from both HBO Max and Discovery+, including Some may be involved. These are the most recently pulled shows. The addition of an ad-supported streaming service could help Warner meet the $1 billion revenue target set by Zaslav for its streaming business by 2025.
“Profitability, not outright subcomputation, is our benchmark for success,” he said on the company’s Nov. 3 earnings call. “While we have much work to do, and some difficult decisions still ahead, we are confident in the opportunity before us.”
