Warner Bros. Discovery CEO David Zaslav has confronted his share of controversial selections since taking over the duty of overhauling the newly merged firm in 2022.
These included shelving completed movies like Batgirl—an unheard-of transfer in Hollywood the place even the worst productions get launched; rebranding HBO Max as Max, and mixing the corporate’s status TV content material like The Sopranos with schlocky actuality tv on the identical streaming service. Because the merger, WBD laid off hundreds of employees in a number of rounds throughout a number of divisions, together with its cable channels and news network CNN, and shuttered the ill-fated streaming service CNN+ only a month after it launched.
“When we took over the company, we said, no sacred cows,” Zaslav informed Andrew Ross Sorkin onstage on the New York Occasions Dealbook Summit on Wednesday. “What would this business look like if we were going to start today?”
Zaslav known as these layoffs probably the most troublesome portion of his tenure as CEO. “Worst day on the job was the first day that we laid off a huge number of people—a lot of people I knew and worked with for many years, a lot of people I respected,” he informed Sorkin. However he defended them as crucial, saying, “The business had changed. It used to be that you could have 80–100 people at every cable channel, but now you have one marketing team running all of it.”
Zaslav argued that the “generational disruption” introduced on by streaming meant the media trade needed to reshape itself to maintain up. Previous to Discovery’s merger with Warner Bros., which Zaslav is credited with spearheading, the 2 firms weren’t correctly organized to satisfy these adjustments, he mentioned.
“Warner Bros. and Time Warner are companies that had never been restructured for the future,” Zaslav mentioned.
That future, in line with Zaslav, consists of a “healthy company” that now not loses cash on streaming content material and is choosier about what it produces. Previous to the merger, Warner was spending $36 billion on content material and shedding cash, Zaslav mentioned. He took difficulty with many media firms’ breathless pursuit of streaming subscribers, spurred by Netflix’s dominance. “We plan on being careful and judicious,” Mr. Zaslav told traders in February 2022, just a few months earlier than the merger closed. “Our goal is to compete with the leading streaming services, not to win the spending war.”
Debt an ‘existential threat’
Since helming the brand new firm, Zaslav, flanked by his trusty lieutenant and WBD chief monetary officer Gunnar Wiedenfels, has been centered on growing money flows with a view to pay down the $56 billion in debt WBD took on to tug off the merger. On stage, Zaslav mentioned the corporate had generated $5 billion in free money circulate over the past 12 months. To this point the corporate has paid down $12 billion of its debt, in line with a 3rd quarter earnings assertion.
“The existential issue for our company was to pay down the debt, get a solid balance sheet, and have a company that generates real free cash flow,” Zaslav mentioned. “If you look around the media business you have streaming services losing billions of dollars, companies losing money. The key for us, the artillery we needed that was existential, was we need a healthy company that makes real profitability and real free cash flow.”
The problem turned such a precedence for WBD the board even overhauled Zaslav’s and different executives’ compensation, linking performance bonuses to the corporate’s money circulate numbers quite than its inventory worth. Zaslav has lengthy loved beneficiant pay. In 2014, as the top of Discovery, then a standalone, medium-sized leisure firm specializing in unscripted programming, he was the highest-paid CEO within the nation. Extra lately, all through the twin actors’ and writers’ strikes, Zaslav’s multimillion-dollar wage was the goal of a lot criticism amongst actors and writers.
