David Zaslav Compares Rebuilding Warner Bros. Discovery To Painting A Mural: ‘It’s Messy’

Warner Bros. Discovery Stock (wbd) fell slightly in afternoon trading on Tuesday after CEO David Zaslav commented in the future from the struggling media giant, likening the challenges of the company merger to painting a mural.

“We’re painting a mural on the side of a building, and all kinds of things are falling off,” Zaslav said in an interview with RBC Capital Markets analyst Kutgun Maral on Tuesday. “It looks messy, and it’s messy. It’s really hard and it’s really challenging.”

The executive described the economy as “weak” and the advertising market as “very weak”, while acknowledging the uncertainty facing 2023.

“I can’t predict what’s going to happen, but we’re in the process of really restructuring how we’re doing: the cost structure of our business, the efficiency of our business, how we operate in this new environment,” he said, reiterating the $1 earnings forecast. 12 billion from the company by 2023.

while heading recent headlines From slashed production budgets and shuttered projects, along with the removal of several titles from the HBO Max platform, Zaslav revealed that HBO lost $3 billion last year after spending nearly $7 billion on content during the same time period. .

“We have the best intellectual property in the world,” he said. “We need the best structure and we have to spend money where it works.”

Zaslav doubled down on maintaining a content strategy that focuses on quality over quantity, referencing popular tentpoles from Batman and Superman to Harry Potter and Game of Thrones.

“It’s really not about how much, it’s about how good,” he said, adding that the company’s diversified role in the space has helped boost operations, calling the business an “arms dealer” in the industry.

“There are a lot of bidders for the content,” he said, citing Warner Bros. Discovery-produced shows like Apple TV+’s “Ted Lasso” and ABC’s “Abbott Elementary.”

“It’s the diversity of this company that makes us strong…Optionality and the ability to move content to drive free cash flow and EBITDA is one of the things that I think is the biggest opportunity in this company” Zaslav explained. .

NEW YORK, NEW YORK - SEPTEMBER 20: Warner Bros. Discovery CEO David Zaslav attends NRDC's

Warner Bros. Discovery CEO David Zaslav attends NRDC’s ‘Night of Comedy’ Honoring Anna Scott Carter at Casa Cipriani on September 20, 2022 in New York City. (Photo by Santiago Felipe/Getty Images)

‘Drive like hell out of DC’

Zaslav revealed that filmmaker James Gunn and producer Peter Safran are close to finalizing a “bible” when it comes to the future of the DC franchise.

“Part of our strategy is to get out of DC,” the executive revealed, adding: “It’s one of the biggest opportunities in this company.”

The executive went on to explain that Gunn and Safran will “focus on our strategic advantage — the great content that we have that everyone knows about — and they’ll focus on telling those stories.”

He added that “in the next few years, you’ll see a lot of growth and opportunity at DC. There won’t be 4 Batman.”

Part of that strategic vision will include exclusive theatrical windows, instead of direct-to-stream offers – something the CEO is vehemently against.

“There is an ecosystem of economic return when you open something in theaters,” he said. “That direct streaming idea was just a way of trying to attract subscribers to boost the stock price. We’re not going to do that.”

Actor Dwayne Johnson poses for photographers as he arrives at the world premiere of the film 'Black Adam.'  in Times Square in New York City, New York, U.S., October 12, 2022. REUTERS/Mike Segar

Actor Dwayne Johnson poses for photographers as he arrives for the world premiere of the film ‘Black Adam’ in Times Square in New York City, New York, U.S., October 12, 2022. REUTERS/Mike Segar

‘The ad market right now is very weak’

Zaslav took a bearish tone when it came to advertising, describing the market as “weaker than during COVID” before adding: “That could change pretty quickly. Right now this is a huge loss of the entire holiday season.” .

Many media companies have turned to live sports to offset the challenges, but Zaslav said Warner Bros. Discovery will be “very disciplined” amid the rising cost of sports media rights.

“You will see us being very, very disciplined in the sport,” he said. “We already have enough without making a new deal with anyone. I would like to make a deal with the NBA, but [it] It has to be a deal for the future. It can’t be a deal for the past.”

Warner Bros. Discovery’s current deal with the NBA costs about $1.2 billion per year and will expire after the 2024-25 season. Zaslav suggested the company doesn’t necessarily need to renew the contract, calling sports a “difficult” business.

Artist Sono Kuwayama paints a mural on the take-out window of a boarded-up restaurant as part of a neighborhood project in the Bowery neighborhood of Manhattan in New York City, New York, U.S., June 17, 2020. Picture taken June 17, 2020 REUTERS/Brendan McDermid

Artist Sono Kuwayama paints a mural on the take-out window of a boarded-up restaurant as part of a neighborhood project in the Bowery neighborhood of Manhattan in New York City, U.S., June 17, 2020. Photo taken on June 17, 2020. REUTERS/Brendan McDermid

“With the sport, we are a tenant, that is not a good deal,” he said. “We don’t have to have the NBA. And if we do a deal in the NBA, it will look very different.”

In addition to the NBA (the company’s most expensive contract), Warner Bros. Discovery also splits NCAA games with CBS, as well as holding deals with the NHL and playoff baseball, costing $200 million and $470 million. , respectively.

On Tuesday, the company fired about 70 employees who work in sports at brands like Turner Sports, Bleacher Report, and studio operations in Atlanta.

“Our reality is that we must evolve to position WBD and our sports division for long-term success in an environment that includes a challenging macroeconomic outlook, as well as headwinds from accelerating changes in our media industry and business model. said Luis, CEO of WBD Sports. Silberwasser wrote in an email to the staff.

Alexandra is a Senior Media and Entertainment Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]

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