“I don’t really care what the number is,” David Zaslav said on his highly anticipated earnings call earlier this week. The now-embattled-ish Warner Bros. Discovery chief was referring to subscriber numbers for what will soon be, as has long been rumored, a unified HBO Max-Discovery+ streaming service (official name T.B.D.). A year ago, such a statement uttered from the lips of a Hollywood executive would have been blasphemous as Disney and then WarnerMedia and even Paramount+ vied to compete in the subscriber-measuring contest that Netflix routinized for Wall Street. Analysts’ obsession with Netflix, in particular, and top line subscriber growth, in general, had turned the metric into the holy grail. In fact, WBD had put forward a target—130 million by 2025—but Zaz, in a rather dispassionate and cold-hearted fashion, seemed to be disregarding it in order to get back to brass tacks: “We are not in the business of trying to pick up every sub,” he said. “We want to make sure we get paid.”
The number Zaz does care about is EBITDA, which he described as “our financial North Star.” He and his longtime deputy, J.B. Perrette, now hope to see their streaming segment break even in 2024 and generate $1 billion in EBITDA by 2025. “The number on the corner of J.B.’s desk and mine is the breakeven and the $1 billion,” Zaz reiterated later in the call. This is presumably the right note to signal to investors and analysts, who are indeed most interested in knowing how the company intends to get out of the red and push the share price back up. Zaz said all the right things on Thursday, even if he reforecast downward the company’s projected 2023 EBITDA to $12 billion. But setting a target and establishing a coherent strategy for achieving it are, of course, two different things. WBD’s long-anemic stock fell another 17 percent on Friday.
The challenge for Zaz & Co., current and former Hollywood executives told me in the wake of the earnings call, is that there are really only two ways for WBD to get to profitability, and they may end up being in direct conflict with one another. The first is cutting costs, which is something Zaz and his C.F.O. hatchet man Gunnar Wiedenfels do very well, and have done mercilessly and aggressively since taking over the new company. On Friday, WBD disclosed an $825 million writedown on content they’ve axed since the merger. And that doesn’t include this week’s shocking and controversial decision to kill off the $90 million, straight-to-streaming DC flick Batgirl, which my colleague Matt Belloni wrote about insightfully this week. (If Disney C.E.O. Bob Chapek scrapped a nearly-finished Marvel film, Matt notes, he’d “be beaten to a pulp by crazed fans with Thor hammers.” Perhaps it’s less surprising when it comes from a cable guy.)