David Zaslav Vows Warner Bros. Discovery ‘Will Not Overspend to Drive Subscriber Growth’

In the wake of big spender Netflix’s Q1 shocking subscriber loss news, David Zaslav made a point to say Warner Bros. Discovery “will not overspend to drive subscriber growth” during Discovery’s first-quarter earnings call Tuesday.

“As you’ve heard me say, we are not trying to win the direct-to-consumer spending war,” the WBD CEO said, instead promising that the newly combined WarnerMedia-Discovery company would “invest in scale smartly.”

Warner Bros. Discovery is the owner of streamers HBO Max and Discovery+, with the former having scoring a combined 76.8 million total combined subs with HBO at the end of Q1, and Discovery reaching 24 million streaming subs by that same point. HBO Max and Discovery+ will be combined as one streaming platform under Warner Bros. Discovery, though timing on that integration has yet to be determined.

The company’s combined 100 million streaming subscribers gives them “true optionality over time to drive our strategic decision-making,” Zaslav said. “Everything should be monetized,” Zaslav said, adding that “each and every decision will be made through the lens of analyzing asset value,” with a focus on “maximizing shareholder value, not just subs.”

Zaslav also raised the provocative suggestion that Warner Bros. Discovery might go back to selling content around the world, especially in markets where HBO Max won’t be available for some time, and that it would be pulling back slightly on theatrical windows. According to Zaslav, Warner Bros. Discovery has no “religion” when it comes to platforms.

Warner Bros. Discovery is looking to “rectify some of the drivers behind the business-case deviations” across the new company, CFO Gunnar Wiedenfels said, calling last week’s announcement the company would be shutting down the recently launched CNN+ “exhibit A.” Per Wiedenfels, WarnerMedia’s Q1 revenue under AT&T is around $500 million less than expected, and Discovery’s better than expected results help offset that. Gunnar gave $500 million as WBD’s new, lower profit projection for WarnerMedia for the year, noting that “2022 will undoubtedly be a messy year.”

Zaslav and Wiedenfels remarks during the WBD’s Q1 presentation — which was focused specifically on Discovery’s first-quarter earnings results, as AT&T still had control over WarnerMedia through the end of March — come amid Netflix’s major stock hit on its reveal it lost 200,000 subs in Q1 and very weak Q2 outlook that it will lose another 2 million subscribers. In response, Netflix chiefs Reed Hastings and Ted Sarandos said the company would focus on cracking down on password-sharing among subscribers, and finally explore launching a cheaper ad-supported option.

During Tuesday’s earnings call, Zaslav boasted that Discovery was “the ones out there early saying, ad-light looks very compelling.”

More to come…

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