Discovery Warner Bros layoffs, spurious decisions loom as earnings loom — deadline

The Warner Bros. discovery heads into a very important week. The company, whose system has just crossed the 100-day in-office mark, reported second-quarter earnings Thursday, when CEO David Zaslav and his team are expected to make more concrete plans for the combined entity than they did on its first-quarter earnings call. , which was held just two weeks after the completion of the $43 billion Discovery-Warner Media merger. This could include further details of how the two companies’ streaming services, HBO Max and Discovery+, will be combined, and under what name; About the company’s strategy in theatrical cinema broadcasting; And how will $3 billion in promised savings be achieved (a number that many expect to rise).

It has long been rumored that August is the month of mass layoffs, with the first wave expected as early as next week as the new regime’s honeymoon draws to a close. Next Monday also marks the start of the WBD’s three-day-a-week back-to-office mandate, which became one of the first major tests of the new driving; The comeback plan was met with strong resistance by WarnerMedia employees when it was announced shortly after the merger was completed.

HBO Max, which has positioned itself as a top-tier broadcaster after two years of operation, has found itself at the center of all manner of wild speculation over the past couple of months — from the supposed shutdown and folding of Discovery+ to the purchase freeze and dramatic culling of its evolution slate.

While the streaming device has paused the lively new Kids and Family programming as well as unrecorded content, most of the rumors haven’t been proven as HBO Max prepares for one of its biggest launches ever with… Game of thrones prefix Dragon House. Further amalgamation of HBO and HBO Max operations written under the direction of Casey Bloys is expected, and the future of the unrecorded HBO Max division is in question given the pending merger with realism-focused Discovery+.

HBO Max’s WBD movie strategy is also believed to be under scrutiny, as the films are expected to receive a theatrical distribution before moving forward with live broadcasting. Also under discussion is a possible unifying title for a combined WBD streaming platform that would combine the coastal/urban appeal of HBO Max with the Central American pull of Discovery+. He thought Zaslav was eager to change the broadcaster’s name when he first discussed the deal but now believes he has a more open mind.

There have been quite a few layoffs so far – along with high-profile executive departures such as the Warner Bros. CEO. Ann Sarnoff and Warner Bros. Head of Global Kids, Young Adults and Classic Tom Ascheim – In the first three months since the Discovery-WarnerMedia merger was completed, the majority of the cuts are expected to begin in August and end by Thanksgiving. Thousands of workers are expected to be affected as the company deals with a “bigger chaos” than initially anticipated.

With the division’s recent reports about layoff targets said to take place last Friday, the trigger could be pulled at any moment. Lately there have been rumors of mid-August, but now there is talk of a possible first batch arriving next week. After that first wave, a second wave is expected in September. In general, the hope is that the majority of layoffs will take place during the summer, and the goal is for the cuts to end before the holiday season begins.

Since the deal was first proposed in May 2021, $3 billion has been repeatedly cited as a target for the amount of expenses that can be taken out of the new operation. John Malone, a media billionaire and influential member of the board of directors for the new company, has indicated that $4 billion is a feasible goal. High-level insiders tell Deadline that the number could be close to $5 billion. In a research note to her clients in April, Bank of America analyst Jessica Reeve-Erlich described the $3 billion goal as “highly achievable, if not conservative, given several areas of repeat expenditures (for example, technology, advertising/distribution sales force). real estate, etc.).

WBD has already made cuts in the sales division, led by John Steinloff, with about 1,000 jobs cut, or 30% of that workforce. Sales remain a primary target for cutbacks, with marketing, distribution and engineering also rumored to be among the areas most affected as the company looks to eliminate redundancy. While most of the departures after the merger so far have been employees of WarnerMedia, rumor has it that layoffs by Discovery may come first this time.

The word is that division leaders have not been given a hit count, but have been told to provide a strategic view of how their operations can operate more efficiently. Unlike WarnerMedia’s post-acquisition cuts by AT&T, WBD has not implemented voluntary acquisitions as a way to reduce its workforce, and layoffs are expected to be largely performance dependent.

“People are looking back a little wistfully at the AT&T era,” a recently senior executive who left the company this year told Deadline. “They were a phone company, but they got it and they tended mostly to stay out of our business.”

WarnerMedia’s major restructuring was a defining moment in AT&T’s troubled stewardship of the company. The tall silos between departments were removed and a large list of seasoned executives walked out the door. Joining two media companies in WarnerMedia and Discovery, each with cable TV portfolios, production operations and streaming platform, created different challenges.

“I don’t think I’ve ever seen someone come and look at a company like this,” a longtime Warner senior vet told Deadline.

This pattern is familiar to those who worked with Zaslav during his 15-year administration overseeing Discovery. “The cuts were going on,” said a veteran of those years. “And they were very undercover – 20 here, 30 here, not a huge number to attract attention or require a cross-out. It became a joke to come on Monday and everyone would say, ‘Okay, my safety badge is still working!'”

The pending cuts may satisfy longtime skeptical investors as WBD, like many media companies, faces economic headwinds and a challenging financial environment, which are likely to be reflected in earnings. Shares of Discovery and AT&T’s former parent company WarnerMedia lost significant ground during the 10 months when the deal was pending. WBD stock is down 38% since it began trading on April 11 and closed Friday at just $15 a share. Times have been tough for most stocks lately, but the decline has been more steep than those in Disney, Comcast and Paramount in the same time period.

When they come, cuts to content teams are likely to be among the most popular.

Turner’s Linear Networks was the first major target and has already gone through a slew of changes including the departure of Brett Weitz, Managing Director of TNT, TBS & truTV; SVP; original programming; Adrienne O’Riain; and unwritten president Cory Henson. The combined network group, led by Nancy Daniels led by Kathleen Finch, has cut a number of unrecorded series such as The Big Dweeks before its premiere, leaving a number of big development runs as well as canceling/deleting most scripted series such as Chad, Snowpiercer And the Kill the orange bear.

It is believed that over time, a new programming strategy will be developed that includes cheaper realistic fare and potentially new written series.

On the unscripted front, there have been persistent rumors that the company will be making big cuts on the HBO Max alternative team led by Jennifer O’Connell, who also runs the live-action/family programming genres, an area the operator has already pulled out of. .

Unscripted is a major source of synergy as it is the area where there is the greatest crossover between WarnerMedia units and Discovery teams. However, from a buying standpoint, HBO Max and Turner Networks spend a lot more on programming, on average, than Discovery. For example, a show like the HBO Max reality series FBoy Island It costs between $1.5 million – $2 million per hour, compared to a typical hour of Discovery programming that ranges between $400,000 and $500,000.

There has been quite a bit of noise around Mike Darnell’s unrecorded production lineup, suggesting that studio divisions – which include Warner Bros. Unscripted Television. Telepictures Productions and Warner Horizon Unscripted Television may continue – as is, aided by the fact that Discovery hasn’t produced many of its own shows.

Notable scrap for J.J. Abrams’ HBO . series Dimond Last month raised the question of how the merged business would deal with top-tier talent.

The Lost Content Builder Bad Robot signed a massive five-year film and television contract with the studio in 2019 in a competitive setting. Senior WBD executives have been scrutinizing Bad Robot production thus far, and there is a sense that the relationship may have been “poorly managed,” with the new company’s leadership keen to move some projects through the agreement. That includes shows in the works on HBO Max, which are believed to be moving despite rumors over the past week to the contrary.

Overall, outside of a potential additional merger with HBO Max, HBO will likely continue to operate as usual. Zaslav is a die-hard fan of what HBO and HBO Max Chief Content Officer have accomplished, Blues and his team, as evidenced by his signing of a new five-year contract. Zaslav was also front and center in this week’s catchy premiere of HBO’s Dragon Housewhich is expected to get one of the biggest marketing campaigns ever – and perhaps the biggest – for the HBO/HBO Max series.

The sport is expected to be an ongoing focus for Turner Networks, which sees the NBA, NHL, Major League Baseball and Marsh Machines college basketball as a mainstay for the networks. WBD currently pays $1.2 billion annually for NBA games. This deal expires at the end of the 2024-25 season, adding another big decision to the new company’s growing roster.

Elsewhere, IP will be a huge distinguishing factor in the future. at Warner Bros. Discovery is the libraries of DC Comics, Harry Potter, Hanna Barbera, and Looney Tunes, a collection that only matches Disney with Marvel, Lucasfilm’s Star Wars, and Pixar.

Proper management of the big franchises is a top priority, with finding a DC boss who can revitalize the comic book world the way Kevin Feige did with the all-important Marvel. There has been a lot of talk about the new Harry Potter expansions, including the TV series, and it is understandable that Zaslav recently met his creator J.K. Rowling.

The film’s strategy will likely remain focused on the stage. Zaslav isn’t believed to be a huge fan of streaming movies, believing that the ROI is low and doesn’t help the transition through HBO Max. He recently brought in former Disney CEO Alan Horne, a heavyweight, who will help consult on feature strategy, working with former MGM directors Michael De Luca and Pamela Abdi, who recently acquired a larger portion of the portfolio he oversaw Previously on it, Toby Emmerich.

As he immerses himself in areas where he has no hands-on experience, such as movies and TV scripts, Zaslav relied on the advice of industry veterans. In addition to bringing Horn on board, he reportedly sought advice from a number of other former senior executives including Peter Roth, who led the Warner Bros. television group for many years.

With WBD closing the book in its first 100 days, the next 100 might give us an idea of ​​what the company’s future really looks like. We may get our first glimpse of that on Thursday’s WBD earnings call.

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