Zaz’s Law of Streaming

WBD C.E.O. David Zaslav won’t be in the clear until the company’s $45 billion of net debt gets whittled down considerably. Photo: Drew Angerer/Getty Images
Julia Alexander
August 9, 2022

David Zaslav has been the C.E.O. of Warner Bros Discovery since April, a period in which the fortunes of the streaming economy, once beloved by Wall Street, appear to have been entirely recast. Netflix, which has seen its subscriber growth essentially flatten, has seen its market cap drop by nearly 70 percent. A year ago, my colleague Dylan Byers reported that Disney was considering spinning out ESPN as it hoped to model itself as more of a Netflix-style pure play. Now, however, the company is not only firmly holding onto its profitable but declining linear assets, but it also recently decided not to break the bank to renew its subs-juicing but low-revenue partnership with the Indian Premier League.

In his four months running a combined WBD, Zaz has tried to navigate this new universe. He swiftly shuttered CNN+ and, more recently, shelved Batgirl because it was unlikely to generate the kind of customer acquisition that a $90 million streaming-only title should. Now, the full Zaz streaming strategy is coming into view. As he announced at last week’s earnings call, WBD is rolling out a combined HBO Max and Discovery+ service in mid-2023. Most importantly, he outlined a news playbook that A) walked back nearly every move made by WarnerMedia C.E.O. Jason Kilar; and B) declared that streaming is an important, growing channel of WBD’s business, but it is not the only one. After an era in which legacy media dreamed of pure plays, WBD is now a proud hybrid play.

The logic is pretty simple: There aren’t enough financial returns to justify outsized spending on streaming content while under-utilizing other windows and platforms, especially given WBD’s $55 billion-or-so debt load. Or, put simply, content should go where content can make the most money, even if that’s not necessarily what consumers want. (It’s here that I note consumers want everything available to them in the easiest manner for the cheapest fee, and we’ve trained them to expect that to an extent over the past several years.)