Despite announcing streaming profitability during Q1, there’s plenty of room for improvement at Warner Bros. Discovery. The company saw a major decline in television and it faces competition in the sports space. Does CEO David Zaslav have what it takes to course correct? What’s up with the company’s streaming partnership with Disney? Kim Masters and Matt Belloni explore.
A competitive TV market? With stiff competition from tech companies in the TV marketplace, traditional studios continue to struggle in the field. “The tech powerhouses like Google and Meta are adding to the bottom line with advertising and going through the roof in their ad sales,” Belloni explains. “The traditional companies, it just hasn't come back and it's probably not going to come back. And that's why they're suffering.”
Stunted growth at WBD? While the Warner Bros. Discovery CEO is known for cost savings, a lack of vision appears to be holding the company back. “Zaslav has not articulated a growth strategy. He has cut a lot of costs. He has managed free cash flow, but he has not articulated a growth strategy yet. And that is what matters, ultimately, to Wall Street,” Belloni says.
Desperate to bundle? With the recently-announced streaming package that bundles Disney+, Hulu, and Max, a potential lack of ownership may hold back revenue for Warner Bros. Discovery. “There's been some reporting that Disney is going to handle the direct-to-consumer sales on this product. And Warner is simply a passive participant and would get a revenue share. If so, that's not great for Warner Discovery because they don't own the customer relationship there. And it may be a sign that they are particularly desperate for any revenue from their service in any growth,” Belloni speculates.