Damn, Warner Bros. Discovery lost a lot of money last year
But CEO David Zaslav appears unfazed by reports that the company lost some $2.1 billion in the final quarter of 2022
Aux News Warner Bros
Warner Bros. Discovery CEO David Zaslav is famously a cost-cutting fiend. And also a content-cutting fiend, and a job-cutting fiend, something made readily apparent over the last several months of his tenure at the newly merged company—which have seen Zaslav take his beloved chainsaw to the company’s streaming libraries, its staffing rolls, and, occasionally, to fully completed films. But, in Zaslav’s defense, all that cost-cutting did pay off, as a quarterly earnings report today revealed that…Warner Bros. Discovery still lost $2.1 billion last quarter.
Which is the sort of thing that would have us—were we forced to cop to it—thrown in a hastily re-opened debtor’s prison, key then hurled comfortably away. But Zaslav seemed positively giddy about the news, which does, after all, come after Q3 and Q2 of 2022, where WBD lost $2.3 billion and $3.4 billion, respectively. So, hey: Improvement!
Admittedly, some of those losses are byproducts of the merger, which you’d think would dissuade people from doing these big, stupid mergers that lose literally billions of dollars. But it’s also the byproduct of releasing a bunch of movies that didn’t make any damn money; when Black Adam and Don’t Worry Darling are your two big box office tentpoles, your tent is going to develop some pretty serious, billion-dollar dips.
Anyway: Zaslav’s not sweating it apparently, his bloodlust momentarily sated. Here he is, talking up a bright future where his company hopefully only loses one billion dollars in three months, instead of two:
With the major restructuring decisions behind us, this year we are focused on building and growing our businesses for the future, and we’re off to a great start. We’re seeing strong momentum across the enterprise, including our exciting long-term plans for DC Studios, the historic success of our latest HBO series The Last of Us, the significant financial and operating gains in [Discovery tech arm] DTC, and the record sales of our newest game Hogwarts Legacy. And with our unparalleled portfolio of assets and IP, a growing roster of exceptional creative talent, and some of the buzziest storytelling in the industry, we believe we have repositioned our businesses to take full advantage of the many opportunities ahead.
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That’s chump change for a company that lost $99 billion back in 2002.
Yeah but they actually made things in 2002 instead of just cancelling everything.
I was thinking this HAD to be inaccurate, or some Hollywood accounting voodoo, given that they had a HP film and the James Gunn Scooby-Doo adaptation in 2002. Then I looked at the rest of their line up. GUH. Pluto Nash by itself would be bad enough, but they also had Ecks vs. Sever, Queen of the Damned, Showtime, Death to Smoochy, and Feardotcom. That seems like a decade worth of high-profile flops all in one year.
I got 99 billion problems, and actually all them have to with money.
Ah yes, AVClub under Spanfeller somehow has the opinion how bloodlust Executive run their company.Considering that previous WB loss a lot and somehow Zavlav manage to reduce $1 billion of that losses after 3 quartals prove that he’s on the right track. If he didn’t turn that as profit after Q3 this year, now that’s the real story.
“This is actually a success because he could have lost even MORE money!” This is not the winning argument you think it is.
Yes it is but since you don’t know what you’re talking about it’s no surprise you can’t understand it.
I’m a little confused about the snark here. Presumably reducing the degree of the company’s losses every quarter until they flip from the red into the black is their plan, so…it does sort of seem like a win?These large organizations strike me as having a great deal of inertia. It’s not surprising to me that they’re not able to flip billions in losses to billions in gains right away.
Its also a lot less damning than you think it is.First step in saving a bleeding victim is slow down the bleeding.
Stop the bleeding.
Company this big doesnt turn around on a dime. All the movie and content creation decisions coming to market right now were made under a different regime wiht different goals. Jason Kilar was a streaming true believer, and spent way too much on it and didnt really get a lot in return. He also created a problem for WB by not focusing as much on movies but on “potential” earnings of streaming.It hasnt really worked out. Disney is cutting projects right now for the same reason.
Well, in this case, the first step was to stab the victim (by saddling the company with even more debt through the buyout) before trying to stop the bleeding.
But companies do this successfully all the time.And pretending that him cutting the losses year over year in the 6 months he had control of the company is a BAD thing is nuts.Look he might fail at this. It is a LOT of debt, but its not like WB was being bought out for no reason. It was not in good shape long before Zaslov bought it.
Leveraged buyouts have killed a lot of companies that they were supposed to save. We’ll see how this all works out.
Oh I agree, it is WAY too soon to tell.But I think it is also way to soon to assume that it is a dead company with each up and down the company goes through. Its probably 3-5 years before we will know, and a lot comes down to the movie side of things, which is likely to be rocky for a while yet.
“Stabbings will continue until morale improves.”
I posted this upthread, but they generated $2.5 billion of cash earnings in Q3. The massive loss is entirely non-cash writeoffs of properties they don’t see adding future value and merger-related charges. The main loser here is the U.S. Treasury.
Now comes the really hard part of Zaslav’s job: what can he build to replace everything he cut out? So far, it doesn’t look promising.
Do you like lifestyle reality TV? Because you’re gonna get a lot more lifestyle reality TV.
Or as he calls it, “female skew”.
But my only interests are fruitlessly digging for treasure and unsuccessfully living off-grid in Alaska. When is someone going to make a reality show that caters to MY interests?
MILF Manor is, ahem, coming soon.
Again things are going to get worse before they get better. The company probably knew these hits were coming and thats Zaslav job to make sure they take the hit to live another day.
Cash flow for 3Q2022 was $2.5 billion. These losses are almost all paper.
You think that’s big, you should see the size of the couch they lost all that change in.
You joke, but this is their lobby.
Their mistake for having Gallagher do all their interior design.
From what I’ve learnt about business from the news, the way to be a business leader is to lose a lot of money and to say it’s a good thing.
They canceled, destroyed, and erased massive amounts of art, but it was all worth it because they also lost money! Don’t worry though, Zazlav was still paid $247 million to accomplish nothing.Capitalism’s working great, everybody!
So you want the whole company to die because that’s what your comment is implying since that would be the result if they did nothing and just kept on doing what they were originally doing.
they also wrote off a lot of that as a loss, and removed them from their streaming catalog, some of this is self inflicted write off debt for shows that could have just stayed on the streaming platform and not count against their losses.
For an incoming CEO after a big business combination, the math is pretty simple. If they don’t show the film they can write off the entire production cost. Is the tax benefit of that loss more than the additions to subscriber revenue that showing it would contribute? Almost certainly not. His reputation isn’t attached to any of those movies or shows, so off they go!
I was specifically pointing to shows that were finished had already been filmed, and had been showing for months if not years on the service that they have written off. Like Infinity Train and Final Space
https://www.cartoonbrew.com/streaming/hbo-max-removes-animated-series-warner-220212.html
The ones that had been made produced, and then not Released like Batgirl, I get, you get to write off all the cost.
IT would be like NBC writing off the Office at this point.
I don’t think those can be written off; I believe that is exclusive to films and shows that never saw the light of day.
But the AV Club has walked around the same sick anti-Disney dog in the last two days?“What’s wrong with Marvel? It’s third movie about an Ant guy made $240m in one weekend, but it FEELS off!”“Guys, is Andor too good?”
“But it’s also the byproduct of releasing a bunch of movies that didn’t make any damn money; when Black Adam and Don’t Worry Darling are your two big box office tentpoles, your tent is going to develop some pretty serious, billion-dollar dips.”Look, I know you folks were weirdly obsessed with Don’t Worry Darling(’s endless production drama), but no one expected it be some billion dollar blockbuster. Awards bait, sure, but definitely not a “tentpole.”
But how can Harry Styles and Florence Pugh have two roles in the MCU? I’m confused.
The big tentpole movie for Q4 was supposed to be Shazam! Fury of the Gods, in December.It actually shows how misguided WB was under the previous regime (which greenlit all three projects), when ATT was in charge. It would have opened close to Avatar: The Way of the Water. It would have been foolish, and they didn’t have the marketing muscle to spend on three major releases. Which is why they decided in August to push Shazam! to March.DWD cost something like $35M, and more or less broke even given the global box office.
DWD definitely at least break even ( including all the promotional cost ) as it made 87 millions worldwide.
It probably even made a few millions in profit, which isn’t bad at all for a 30-35 millions production budget.
The rule of thumb is that a film needs to make from two to three times its production budget in theatrical box office to break even. DWD got much more promo than the average $35M movie, provided by a studio that usually handles bigger films and isn’t really used to cheap or targeted marketing, which is why the breakeven point could be, in this particular case, closer to 3x.The important thing to remember is that it definitely wasn’t a flop, despite the wishful thinking of some people. It wasn’t a huge hit, but if WB lost money on it, it was a couple of millions at most, and it was before home video, streaming, etc., and it’s not in the vicinity of what they lost on Black Adam, which is in the red for at least $50M.
Aquaman 2 was also slated for December 2022 before being pushed back to March 2023 (the original made over $1 billion at the box office). Also, The Flash was scheduled for July 2022, but it’s The Flash, so the delay’s not surprising.Which makes 2023 interesting because all three big DC movies that WB had hopes for in 2022, is now slated for this year. Their box office results might give an inkling on how WB would have done in 2022 if they were not pushed back.
The point isnt that they were supposed to be tentpoles. The point is that they had no other major releases, which is largely on the previous management (and somewhat on them for moving the movies from 2022 to 2023).
Hmm, no, the point was that WB Discovery was “releasing a bunch of movies that didn’t make any damn money,” with the implication being that they expected both Black Adam and DWD to make a bunch of money and those movies failed to match expectations. I’d say “yes” to the former, but “no,” to the latter, which was always billed as festival circuit fodder. And I wouldn’t say that 2022 had “no other major releases” either, what with The Batman, a Fantastic Beasts, and Elvis all coming out last year.
Those all released in the first half of the year. And one of them was a bomb.In the second half of the year WB had very little going on. they had 6 movies TOTAL released in December and November of last year and I doubt anyone would be able to name ANY of them. And half of those were ONLY UK or Polish Distribution deals.August through Octoberber were even worse, with 5 movies total released and 3 of them were either UK only or Japan only. And none of them were planned as Tentpoles except Black Adam.In 2021 they had seven event level movies and a host of other money makers (Malignant,those type of things), and that was a year where they were still doign Day and Date releases due to covid. 2022 they had 4.
Wait so all that slashing was so they wasted 2.1 billion instead of 2.2. Jesus christ, how deep were they in debt? We’re never getting prestige television again are we?
Actually, HBO is mostly safer with the new guys.ATT was all about group integration and removing silos. They had bet it all on the streaming service, they put their own team in charge of every major division including HBO, and they fired HBO CEO Richard Plepler, who had worked there for three decades (he now has a development deal with Apple TV+). They asked HBO to dramatically increase their production of original content, mostly to provide exclusives for HBO Max, but even the new management at HBO turned down the request, forcing Warner Bros. to look elsewhere.With Discovery, there have been comparatively fewer cancellations at HBO compared to the bloodbath in other divisions. We lost El Espookys, which had seen its second season delayed for an eternity due to Covid, and the creative team is already working on new projects at HBO. Westworld was canceled, but the show didn’t generate much buzz anymore, and it was still extremely expensive. Demimonde was canceled, after spending four years in development hell with a budget that would have been $200M for a season. There were also The Nevers, which was doomed due to the behind the scenes stuff, and The Time Traveler’s Wife, which was poorly received. Given what happens at the non HBO side of HBO Max, all these cancellations felt like Zaslav cancelling everything, and the fact that some of these shows were also removed from the library isn’t reassuring at all, but most of the cancellations would have happened anyway under regular circumstances.I’m not saying at all that Zaslav is doing the right thing for Warner. Most of his decisions scream dick move, and they’ve been needlessly cruel to the creatives involved. But even he understands that HBO is basically the crown jewel of the group, that the company should be allowed to do its own thing and that it should be emphasized, by getting a dedicated section, rather than being melted in with the rest of the original programming at HBO Max.
Yeah I’m reading It’s Not TV now–a great history of HBO–and it’s clear that the AT&T people fundamentally didn’t understand why HBO was valuable for anything other than a platform for Content. Discovery seems to be banking on HBO’s prestige/cultural capital as a counterpoint to their normal reality/lifestyle stuff and they seem to have restored a bit of autonomy to them. We’ll see if that lasts.
A quick look at their earnings release reveals this:“Net loss available to Warner Bros. Discovery, Inc. was $(2,101) million, and included $1,850 million of pre-tax amortization from acquisition-related intangible assets and $1,198 million of pre-tax restructuring expenses.”So at least $1.85 of the $2.10 billion loss was non-cash. Moving on:“Q4 cash provided by operating activities increased to $2,846 million and reported free cash flow(4)(*) increased to $2,482 million.”So they generated $2.5 billion of cash in the quarter. That’s why Zazlav is in no danger whatsoever. He managed to turn $2.5 billion of cash earnings into a $2.1 billion loss, shielding them from a lot of future tax payments.
Warner Bros. Discovery – Financials – Quarterly Results (wbd.com) 2022.12.31-Exhibit 99.1 Press Release PPT (q4cdn.com)
Thank you. If you can push all your write-offs and write-downs into one quarter, you should. Then the tax loss carry forward can shield some future income from taxation. It’s usually preferable to cram all “bad news” like this into one quarter, to avoid the drip, drip, drip of negative news every quarter.
Seeing this headline sandwiched alongside the announcement of new LoTR movies says it all.
Zaslav is the Xerox of cost-cutting streaming bosses. He’s not the only one, but he’s the one everyone knows. SOMEONE had to rip the bandaid off and he had the guts to do it (I say this as someone who loathes every decision he’s made). Streaming literally doesn’t work as a business, mathematically, in its current form. No one wants to pay for it — therefore you have all these shared accounts. No one wants ads in their content, either, oddly.And entering a spending war with competitors may get you short-term gains in viewers but those viewers will abandon you if that one thing they liked gets canceled. It’s an impossible ask of a company seeking to be profitable or stable. The solution everyone is now landing on is — gasp — a range of ad-supported platforms that play stuff for free. A model that rhymes with basic cable. There will be a lot less new stuff being made going forward, but still a lot more than ever before (seriously, if you were alive in the 80s or 90s you realize just how vast even one streamer’s selection is).My only hope is that next they’ll “invent” the video store.
Link to IndieWire source doesn’t lead to source.