Good morning,

Thanks for reading The Backstory, your weekly review of the best new work at Puck.

It was a fabulous week: Matt Belloni heralded David Zaslav’s cable-pocalypse; Dylan Byers parsed the latest musical chairs in the TV news racket; Lauren Sherman investigated Tom Ford’s mini-me and Melinda French Gates’s glow-up; Tara Palmeri broke the news that Kellyanne Conway is considering a return to Mar-a-Lago; Eriq Gardner analyzed the record industry’s full-blown legal war against A.I.; John Heilemann delineated Kamala Harris’s campaign punch list while Bill Cohan spoke to her money guys on Wall Street. Meanwhile, Julia Ioffe dug into Putin’s prisoner swap politics, and John Ourand revealed the next shoe to drop in the NBA media wars.

Check out these stories, and others, via the links below. And stick around for the backstory on how it all came together.

ART MARKET:
Marion Maneker details Jeffrey “The Bond King” Gundlach’s path from art collector to museum builder.

HOLLYWOOD:
Matt Belloni wonders if Zaz can clean up his big mess at WBD.
and…
Scott Mendelson runs the numbers on a promising late summer box office revival.

WALL STREET:
Bill Cohan chats with Charles Phillips and Rufus Gifford about the Harris fundraising machine.

MEDIA:
Dylan Byers analyzes the latest executive switcheroos at ABC and CBS.
and…
John Ourand identifies the next theater of war for NBC.
and…
Eriq Gardner assesses a major legal battle in the music industry.

WASHINGTON:
John Heilemann foreshadows Kamala’s next three months while Peter Hamby articulates her most significant vulnerabilities.
and…
Tara Palmeri captures the Kellyanne convos inside Mar-a-Lago.
meanwhile…
Julia Ioffe examines Putin’s prisoner swap political strategy.

PODCASTS:
MSNBC host and former G.O.P. campaign star Nicolle Wallace joins Heilemann on Impolitic.
and…
Matt and the Times’ Brooks Barnes parse Disney’s earnings on The Town.
and…
Democratic strategist Doug Sosnik and Tara feel the Walzmentum on Somebody’s Gotta Win.
and…
The Journal’s Jacob Gallagher and Lauren wade into the Nike vibe shift on Fashion People.
and…
Julia and Peter discuss the unfolding Middle East situation on The Powers That Be.

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C.E.O. David Zaslav, after all, is not only a starring player in the veritable and growing Puck cinematic universe; he’s also an avatar of a larger transformation in the media business, in particular, and the culture, more broadly. More than three years ago, Zaz announced that his far smaller Discovery Communications would ingest the WarnerMedia behemoth and its sizable $55 billion debt load via a $43 billion merger. (The enterprise value of the combined entities was around $100 billion.)

It was a fascinating gambit: Given the profound, tectonic shake-up in the entertainment industry, Zaz had decided that he didn’t want to let Discovery devolve into a mere content provider with a subscale streaming service, like AMC. A cable visionary, weaned by Jack Welch, Zaz wanted to take a crack at incorporating Warner’s historic assets (HBO, the movie studio, etcetera) and numerous virtues (its nascent streaming service, TNT’s copious sports rights) with Discovery’s portfolio of popular lifestyle cable channels.

Zaz had burnished a reputation as a ruthless operator, and it seemed like his ostensible thesis was simple: He believed he and his team could manage these toys a lot more profitably than the squares at AT&T. Coming out of Covid, a deal of this magnitude was exciting. Everyone knew that the WarnerMedia assets, which had traded hands only years earlier after a Trump-prompted D.O.J. moratorium, were languishing under the Dallas phone guys. In some ways, this combination seemed to presage the creation of a legacy player that might one day rival Netflix. That was the idea, anyway.

Loyal Puck readers know a thing or two about the soap opera that ensued. After a year spent wooing Hollywood while the deal closed, Zaz quickly lived up to his reputation for spreadsheet artistry. He made a series of unsentimental decisions—killing projects, offing CNN+, licensing I.P. to other platforms, removing HBO’s brand from the Max product, slashing budgets—that suggested he would not tolerate unmitigated investment in streaming on his watch. He caught a fair amount of grief for this, particularly as these decisions were juxtaposed against his generous salary and decision to buy Bob Evans’s Beverly Hills estate.

My partner Bill Cohan has wisely and frequently suggested that WBD is really a public leveraged buyout. Zaz’s promise to Wall Street analysts was that he could continually pay down the debt, overachieve on EBITDA targets, and then, voila, the stock would pop. And while Zaz and C.F.O. Gunnar Wiedenfels have significantly reduced WBD’s (very good) debt to less than $40 billion, the company has fallen considerably short of its revenue expectations. And that was the leitmotif of the company’s Q2 earnings. WBD missed on revenues by about $300 million. Worse, the company took a $9.1 billion impairment charge on account of its cable business, its bread and butter, which pushed down the stock even further. Its market capitalization, which has halved in the past year, is now about $17 billion. (The enterprise value hovers around $55 billion.) Netflix’s market cap, in case you were wondering, is $272 billion.

I was busy doing a final read of Lauren Sherman’s excellent newsletter, Line Sheet, when the investor relations message hit my inbox. But I couldn’t help myself and I quickly clicked on the email and blocked out the noise around me. As I scanned the results, of course, I knew that this disastrous quarter was going to inspire my partners in meaningful and important ways to figure out what exactly was going on inside WBD and how it would impact the wider industry.

The fate of Zaz and WBD, after all, is truly one of the great plotlines of our era: It’s the tale of a big but not big enough company trying to compete with trillion-dollar market cap tech giants, all while rebuilding its once steady and reliable business model to survive a far more expensive and uncertain future. I’ve argued in these digital pages before that CNN is an avatar for the future of the news businesses. WBD is really a harbinger for all legacy media.

My partners attacked this story with characteristic authority and wisdom. In The Zaz Squeeze & CBS’s New Hydra, Dylan Byers explained the new vulnerabilities that WBD countenances without NBA rights. In Hollywood Finally Faces the Cable-pocalypse, Matt Belloni detailed how the coming linear TV reckoning is playing out in the industry. And in NBC Prepares for Those NBA Economics, John Ourand identified the next shoes to drop for Zaz in the distribution wars. (Bill will have more on the Zazscape tomorrow in his brilliant Dry Powder private email. Sign up here.)

Yes, yes, we become obsessed with certain topics here at Puck. But the scrutiny of the Zaz conundrum is really rooted in a larger fascination with the future of the increasingly thorny media business, which now seems like it may one day become a shingle of the tech industry. I’m not sure that’s an outcome that anyone is prepared to fully contemplate, but I also don’t know if it’s enough to persuade the largest traditional companies to ally with one another in material ways, beyond ephemeral joint ventures—at least not yet. My hypothesis, however, is that Zaz may be the most motivated executive to figure out what a sustainable future really looks like—he’s certainly compensated with that incentive in mind—and, clearly, time is of the essence. That race, of course, is one of the most extraordinary stories of our times, and precisely what you should expect to read about in Puck.

Have a great weekend,
Jon