David Zaslav didn’t expect it to be so difficult.
Two and a half years ago, the TV veteran was brimming with confidence and pride that a kid from Brooklyn, who made his way in entertainment through the not-so-glamorous side of negotiating cable distribution deals, handed him the keys to the “best brands”. “in entertainment.
But since the April 2022 merger that gave birth to Warner Bros. Discovery, its flagship brands (HBO, CNN, TNT, Food Network, and film and television studio Warner Bros. ) have lost their reach and ambition. The most recent blow came this week when the National Basketball Association officially rejected Warner Bros. ‘ latest effort. Discovery to stay in the game.
After 35 years broadcasting basketball, the company’s TNT channel is on the bench. Instead, the NBA chose ESPN, NBCUniversal and Walt Disney Co. ‘s Amazon Prime Video as its streaming partners, with the 2025 season.
“The NBA is one of the crown jewels, anything you explain to TNT,” said Stephen Galloway, dean of Chapman University’s Dodge College of Film and Media Arts. “It’s a defining moment when you lose something like that. “
Warner Bros. Discovery reacted angrily after the league rejected its efforts to accommodate Amazon’s package.
In a statement, TNT Sports accused the NBA of “dismissing the many enthusiasts who continue to show their unwavering will for our best-in-class coverage. ” The existing agreement allows TNT to adapt to its competitors’ offers, he said, adding: “We will take appropriate measures. “
Warner Bros. Discovery sued the NBA on Friday, alleging that it violated their existing agreement by allegedly refusing to honor Turner’s rights to accommodate Amazon’s offer.
The NBA dispute adds to the growing scrutiny Zaslav has faced since taking the reins of the prominent Hollywood studio and prestigious television properties.
Warner Bros. Discovery’s inventory has lost two-thirds of its value since the April 2022 merger, leading some on Wall Street to call for it to be broken up. The company, whose profits fell 4% to $41 billion in 2023, posted a net loss of $966 million. in the first quarter of this year.
Executives have spent the past two years getting discounts to pay off debt incurred to buy the stake from the previous owner, AT.
Zaslav declined an interview request for this article.
Warner Bros. Discovery laid off about 1,000 employees this month, the latest among thousands of job cuts since the merger.
In a symbolic downgrade, HBO, a longtime TV trendsetter, earned an unusual third place in this year’s Emmy nominations with 91, Netflix and FX. Walt Disney Co. ‘s HBOThey attributed its broadcast to the slow pullback of prestige dramas after last year. Hollywood strikes.
“It’s a company with assets, but it’s just not growing, and that’s the problem,” said Jessica Reif Ehrlich, a media analyst at Bank of America Securities. “It’s simply unsustainable for those assets to be at this inventory price. . . They can’t continue like this. “
In a way, Zaslav and his team suffered a bad moment.
When they finalized the acquisition of AT
“David Zaslav has inherited a very complicated situation. . . right after the AT leadership
Those close to Zaslav acknowledge that the difficulties were greater than the company expected when negotiating the merger in early 2021, a deal that has saddled the combined company with roughly $55 billion in debt.
Since then, the company has paid off about $16 billion of debt “naturally through its biological money and not through the sale of assets, which is to its credit,” said Steven Tian, director of studies at the School of Administration at Yale University. Zaslav] has committed $3 billion in spending. . . His goal is up to $5 billion. “
To get there, Zaslav scoured every corner for discounts, alienating TV and Hollywood chops enthusiasts who saw the cuts as hemorrhaging the company’s franchises.
The company removed TV episodes and added “Sesame Street” from its Max streamer. The near-finished “Batgirl” movie that cost $90 million was scrapped and a live-action animated film, “Coyote vs. Acme,” about Wile E. Coyote, the accident-prone character of the Looney Tunes, was archived. Executives canceled skill contracts and streaming shows, adding the pirate comedy “Our Flag Means Death. “
Fans denounced this resolution on the X platform (formerly Twitter), spreading the hashtag #FireDavidZaslav. The slogan emerged Wednesday amid the NBA’s troubles.
Even the beloved little Turner Classic Movies channel was not spared. Last summer, the company fired and then temporarily rehired the channel’s senior vice president of programming after fan backlash, adding more level-headed managers Steven Spielberg, Paul Thomas Anderson and Martin Scorsese.
“In Hollywood, brands are driven by people,” Galloway said. “They don’t make devices or cars [and] those executives bring to light risky entertainment projects based on their connections and artistic judgment. “
First, Hollywood welcomed Zaslav’s arrival, even though it knew he lacked the experience of running a major Hollywood film and television studio.
Zaslav, a lawyer who joined NBC in 1989 to help grow its cable business and CNBC, is a protégé of Jack Welch, the former head of General Electric, nicknamed “Neutron Jack” for his cost-cutting and ruthless layoffs. .
During his 15 years at the helm of Discovery, Zaslav has witnessed the power of truly cheap television, such as “Shark Week” and “90 Day Fiancé. “The 2018 acquisition of Scripps Networks, owner of HGTV and Food Network, boosted Discovery with ready-food shows, adding “Property Brothers” and “Fixer Upper,” starring Joanna and Chip Gaines.
“He wears Patagonian vests. He doesn’t care about height,” Spielberg said in a glowing 2021 Vanity Fair profile, “All That Zaz. “
Zaslav, 64, has long been one of the highest-paid executives in the United States. He relished the role of movie mogul, buying the Beverly Hills mansion of former “Chinatown” maker Robert Evans and moving into founder Jack Warner’s gilded Art Deco home on the Warner Bros. lot.
It was interested in absorbing Warner’s assets when it identified that Discovery Channels and its Discovery streaming service were not big enough to compete with Netflix. And the move to streaming would cause disruption for corporations like hers that depend on cable channels.
CEO acted temporarily to dismantle technical assistance initiatives
But CNN, already reeling from falling ratings and the loss of its longtime leader Jeff Zucker, was plunged into chaos.
Anchor Don Lemon, who helped CNN reach peak ratings during the George Floyd protests in 2020, was moved from CNN’s primetime to morning shows and later ousted.
Zaslav retained his first pick to lead CNN, Chris Licht, after an embarrassing profile in the Atlantic.
The arrival of this year’s first presidential debate has given a boost to CNN’s beleaguered team. Instead, President Biden’s faltering functionality dominated the news cycle for weeks, and the network’s anchors were criticized for failing to respond to former President Trump’s falsehoods. Since the debate, CNN has revealed one hundred layoffs.
CNN’s primetime ratings are down 61% since 2020, the last presidential election year (even though that year included a COVID-19 media policy). The network has made progress in recent weeks as the race has become tumultuous. CNN averaged more than a million viewers in prime time, according to Nielsen figures, or a third of Fox News’ audience.
Despite cable visitor defections, the company’s programming attracted 7. 4% of all viewers in June, according to Nielsen data. Warner Bros. Discovery Channels, along with its streamer Max, are the sixth most popular destination for viewers, behind Disney, YouTube, NBCUniversal, Netflix and Supreme Global.
The loss of the NBA contract – a relic of the Ted Turner era – could hurt cable networks.
“It’s a shame,” said Scott Robson, senior analyst at S’s Kagan Group.
Analysts and investors have spent months wondering about the company’s strategy in the NBA. In late 2022, Zaslav said his company “didn’t want the NBA,” and then this spring failed to reach a deal in TNT’s exclusive negotiation era when prices skyrocketed.
Basketball legend Charles Barkley, longtime co-host of TNT’s fan-favorite show “Inside the NBA,” became enraged and called his bosses on a radio show in May “clowns” and “suckers. “
But others said TNT might no longer pay the NBA’s exorbitant fees, arguing that the projected monetary losses would have outweighed any benefits.
The deal signed through NBCUniversal will bring the NBA $2. 5 billion a year, double the amount paid recently through TNT.
“A lot of chains are reaching that tipping point,” Robson said.
Some insiders tried to forget about the NBA’s loss, saying the money could simply be used to expand movies, TV shows and games.
Warner Bros. Discovery spends $20 billion a year on programming, about 60% of the money generated by content, said an expert source who was not legally authorized to comment.
Increasing streaming subscribers has been a complicated task. Last year, the company dropped HBO from the name in an effort to broaden the service’s appeal, calling it simply Max, but that didn’t change things. Instead, the rebranding sparked court cases in Hollywood claiming that HBO’s high-quality programming had been lost in the shuffle.
Zaslav also shook up the Warner Bros. film crew. The Burbank-based studio unveiled some big hits, adding last year’s “Barbie” (the highest-grossing blockbuster of 2023), “Wonka” and “Dune: Part Two. “But it also had some notable setbacks, such as “Furiosa: A Mad Max Saga” and “The Flash. “DC’s superhero movie unit is in reboot mode as James Gunn and Peter Safran prepare to kick-start the franchise next year with Superman’s return to the big screen.
One of Zaslav’s difficult situations is convincing investors that Warner Bros. Discovery can still recover.
The company deserves a sale, merger or “asset sale” because the existing setup “doesn’t work,” Reif Ehrlich wrote last week.
Zaslav has taken some steps to collaborate with other programming companies. Warner Bros. Discovery is part of a streaming joint venture, called Venu Sports, with Disney and Fox Corp. , which is scheduled to launch this fall. And starting Thursday, consumers will have to subscribe to a bundle that includes Max and the most popular entertainment services from Disney, Disney and Hulu. An ad-supported edition costs $16. 99 per month; or $29. 99 for an ad-free edition.
It has reached out to competitors, adding potential new Paramount Global owners, to mix Max with its products, according to legal sources to comment.
Certainly, many of Warner Bros. Discovery’s problems are felt on a grand scale.
“Pay TV has collapsed much and faster than even the most pessimistic estimates,” Ehrlich said. But, he added, some of the injuries were self-inflicted.
The analyst pointed out a misstep last year, when Zaslav praised a problematic DC movie, “The Flash,” as “the superhero movie I’ve ever seen. ” But the film, with an announced budget of $200 million, stumbled.
“If you set unrealistic expectations and don’t meet them, that’s where it starts,” Ehrlich said.
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