After scrapping CNN+ and 'Batgirl,' Warner Bros. Discovery continues to cut costs
DAVID GURA, HOST:
A little pop quiz now. What do "Batgirl" and "Reliable Sources" have in common? Well, they both got scrapped, canceled in pretty spectacular fashion recently by the media company behind both that DC superhero movie and that CNN talk show. It's part of an emerging pattern of business moves by that company, Warner Bros. Discovery, which controls a lot of beloved creative content. Matthew Belloni covers Hollywood for Puck news, and he joins us now.
MATTHEW BELLONI: Hi there.
GURA: So I called Warner Bros. Discovery giant. How big is it?
BELLONI: It's pretty big. I mean, it's not on the level of a Disney where it's got the theme parks and, you know, all of that apparatus. But it's got huge film and television assets. You're talking HBO and HBO Max. You're talking CNN, the Turner Networks, plus the gigantic Warner Bros. Studio, which is film and television and gaming.
GURA: It's this conglomeration of all those names that we know, these legacy companies. But Warner Bros. Discovery is not even a year old. Is that right?
BELLONI: It's not. And when I said those assets, I didn't even include the Discovery side of the equation. Discovery has, you know, 10 or 12 key cable television assets and a streaming service that they've now mashed all together into one company.
GURA: The man behind that merger who's now calling the shots is CEO David Zaslav. He's driving these decisions. What does he want to do differently?
BELLONI: Well, he's under tremendous pressure to cut costs. I mean, this is a company saddled with 50-something billion dollars in debt. So when you come into this company, you look at that daunting number. You say, OK, what can I do? There are the typical things. You can do the corporate America, you know, redundancy cost cutting. But he's trying to strategically look at what they do and focus it in a way that will be cheaper to manage and also grow their business, which is very, very difficult to do. And that's when you end up with something like the "Batgirl" situation.
GURA: Matt, you look at what he's done so far. And how big of a dent has he made, how much work is there yet to do beyond what he's done so far?
BELLONI: Well, the layoffs have started. HBO and HBO Max cut about 14% of its workforce. They are going to continue layoffs throughout the fall. They cut CNN Plus, the streaming service. That saved about a billion dollars right off the bat. They are doing less development. And things like "Batgirl," which is a $90 million movie - that doesn't seem like much, but they do get a big tax break if they do that because of a complicated series of events where if you take over a company, you can write down some assets. So they are doing a lot, but there is a lot more to be done. And that's where it's really going to start to hurt. And I think we're going to start to notice it as consumers.
GURA: We've talked about what David Zaslav has to do here. I want to ask you about his vision. I know that he's an East Coast guy, who has, shall we say, a reverence for old Hollywood. How is that shaping what he's doing with the company?
BELLONI: Well, it's shaping it in two ways. I mean, he knows that in order for the company to reverse its stock price decline, he's got to grow subscribers at the streaming service. So what does that mean? It means HBO Max, or whatever they end up calling it when they merge with Discovery+, needs to be a global service and have a gigantic footprint that can compete with Netflix. And on the studio side, he believes there's a big business to be had in theatrical movies, movies in movie theaters, which is a big change at Warner Bros. Discovery, which believed that you just threw everything on the streaming service and hoped for subscriber growth and that the stock market would benefit. So we're going to see more Warner Bros. movies in theaters first for exclusive runs. And that's a change.
GURA: How is all of this playing out in the entertainment industry broadly? How are other studio executives reacting to what this company is doing?
BELLONI: I think in Hollywood, there's a big nervousness right now, anxiety over what this is going to mean for the creative output of the industry. This is a guy that's coming in as a cost cutter from the cable television world, doesn't really understand the world of scripted film and television, where it's really a talent business. You know, you can't treat Charlize Theron and Michael B. Jordan the same way you treat Dr. Pimple Popper. You just can't.
BELLONI: So he's learning right now, and I don't think they realized the extent to which this "Batgirl" decision would reverberate throughout the community. People are really upset, and they're saying so. They had what were called funeral screenings on the lot the other day, where they screened the movie so people could come and watch it before it gets destroyed. I mean, that's just a debilitating thing for the creative community to have to deal with. But that said, David Zaslav doesn't really care. He cares about the stock price. He cares about his investors. And if he is going to be deemed successful, that stock price has to increase.
GURA: Matthew Belloni writes for Puck News. He hosts the podcast "The Town." Matt, thank you very much.
BELLONI: Thank you.
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