Skip to main content

HBO Max and Warner Bros. Discovery seem to be on fire, and that’s on purpose

The plan is to make a lot of money as cheaply as possible

Share this story

Illustration by Alex Castro / The Verge

The last few weeks, Warner Bros. Discovery CEO David Zaslav has started to feel like a villain in a Real Housewives show. He isn’t here to make friends. He’s here to make money. Films have been canceled, TV shows have been yanked off HBO Max with zero preamble, execs have been let go, worsening the company’s already notable diversity problem, and the company has lost $20 billion off its market cap — all in an effort to get $3 billion in savings and hopefully reorient a ship Zaslav has disagreed with the course of.

Zaslav’s plan is to focus on making as much money as cheaply as possible. When he joined Discovery in 2006, it was a small collection of education-oriented cable channels. Zaslav turned it into the reality TV monster we know today. He’s made his money catering to audiences that don’t pay for streaming but, instead, flip the channel on the TV — and when they don’t find something to watch, pack up and head to the movie theater.

So while what we’re seeing could be the fumblings of an egoist with no grasp on the properties he’s purchased, what feels much more likely is that Zaslav just doesn’t care about the stuff a lot of us care about, such as “a big spread of readily available content that speaks to smaller groups often underrepresented in popular media all at a fairly affordable price.” Zaslav isn’t here to better enrich our entertainment landscape — he’s here to make money.

Zaslav’s plan is to focus on making as much money as cheaply as possible

That means he’s got to shift a company that’s spent two years focusing its energies elsewhere. In the years leading up to the Warner Bros. and Discovery merger, Warner Bros. underwent a pretty radical transformation. COVID altered the way people operated in 2020 (and in much of 2021 and even 2022), and Warner Bros. went all-in, deciding to focus on streaming at the cost of its other businesses.

As a person with a very nice home theater setup and a love of quick and easy access to content, this was very appealing to me — and I bet it was to you, too. Instead of risking illness to see the biggest movies in theaters, we could sit at home and watch King Kong body Mothra over Mexico or Paul Atreides whisper-talk his way into legend in Dune. As people’s concerns over COVID waned (though it’s still very much a pandemic, and you should be testing regularly and masking up indoors!), HBO Max maintained a steady stream of content designed to compete not with traditional Warner Bros. rivals like Disney and Universal but with Netflix, whose movies go straight to the streamer and only make pit stops in theaters for awards eligibility.

Theater owners, already devastated by COVID, were furious at the new Warner Bros. plan. They’re much happier now that Zaslav has reversed course, widening release windows and even moving some direct-to-streaming films into theaters. (Even if a marketing budget crunch means the next few years will see fewer Warner Bros. films hitting theaters... it’s the thought that counts.)

“Why,” I’m sure Zaslav says to himself, “should we throw away all that potential money just to boost the $15 a month subscriptions we sell for HBO Max?”

And Zaslav’s appeal to theaters is mutually beneficial. Direct to streaming makes a lot of sense for Netflix, a company with a very small distribution arm. Warner Bros. Discovery has a whole apparatus built up to make lots of money off films in theaters. “Why,” I’m sure Zaslav says to himself, “should we throw away all that potential money just to boost the $15 a month subscriptions we sell for HBO Max?” Instead, the company can put the movies in theaters and then move them to the streaming service and double-dip on us, the consumers.

I, personally, am not a fan of that! I don’t want to pay a billion times for the same content. But I’ve done it with books, software, movies, and TV for a while now. Zaslav knows there are plenty of rubes just like me probably willing to pay.

We don’t know how the shocking cancellation of Batgirl plays into Zaslav’s grand plan to reverse streaming courses and turn Warner Bros. Discovery into a much more traditional entertainment behemoth. Reports on the film have ranged from “it’s so bad it should never see the light of day” to “it wasn’t bad and had a really great message.” It might have been canceled because it looked a little too CW to appear after the Warner Bros. Discovery logo on the big screen. Or it might have been canceled to help eke out a few extra tax break dollars as Zaslav & Co. work to make the $3 billion in savings promised by the merger.

The move to cancel Batgirl for tax reasons was weird

When I spoke to Francine McKenna, a lecturer in accounting at The Wharton School and author of the newsletter, The Dig, she noted the move to cancel Batgirl for tax reasons was weird. “There are tax benefits to writing down the assets now if you are the kind of company who likes losses because they offset current or future tax liabilities,” she said via email. “WB is a loser to begin with so not sure why incremental losses based on trash canning finished films is that helpful.”

In its Q2 filings, Warner Bros. Discovery didn’t reference the cancellation specifically but did outline its overall plan in very accountant terms:

Content impairments for the three and six months ended June 30, 2022 of $496 million and $501 million, respectively, and content development write-offs of $329 million for the three and six months ended June 30, 2022 were due to the abandonment of certain content categories in connection with the strategic realignment of content following the Merger and are reflected in restructuring and other charges in the Studios, Networks and DTC segments.

All of the above is accountant speak for “WBD has a lot of content it doesn’t think makes sense for the new business and will get rid of it to write it off on the company’s taxes.”

Batgirl wasn’t the only thing to apparently fall victim to the accounting department’s very sharp pen. In the past few weeks, the company has quietly removed dozens of shows and films from HBO Max — often without even warning their creators. One showrunner The Verge spoke to only learned of their show’s removal from Twitter.

The reason for the culling seems to be that the content wasn’t hitting a big enough audience

The reason for the culling seems to be that the content wasn’t hitting a big enough audience, and much of the content catered to an audience the new Warner Bros. Discovery just has no interest in: kids. Sources told CNBC that “Warner Bros. Discovery has decided to move away from the category with its future investment budget.” Earlier this week The Daily Beast reported that much of this culling, including the layoffs of the divisions overseeing HBO Max’s unscripted, kids and family, and international content, was in part to reorient the service and the company to better pursue Zaslav’s real money cow: Middle America.

“If David Zaslav had his wish, he would just program Chip and Joanna all day long,” one unnamed executive told The Daily Beast. “There was just a massive, ‘We don’t need you. You’re not offering the things we’re focused on.’”

And that’s what he’s doing to Warner Bros. Discovery. But Zaslav’s goal, to craft a company that can make money hand over fist by catering to the largest possible audience with a predictable (and cheap) slate of content, isn’t really what any of the rest of us want.

The glut of content has, by its nature, produced a diversity of content

The last few years, we’ve enjoyed a renaissance of TV. So much TV has been made so quickly and for so much money that there’s now a shortage of qualified showrunners. So much TV has been made as every company scrambles to populate their new streaming services with stuff to watch that a wide variety of people who have rarely — if ever — had the opportunity to see their lives represented on TV have gotten that opportunity.

Ten years ago, lesbians frantically watched queerbaiting fare like Rizzoli & Isles for just the idea of two women being close enough kinds of friends that they might be romantic. Two weeks ago, Amazon Prime gave us A League of Their Own, a TV show featuring almost an entire cast of queer women and their stories. The glut of content has, by its nature, produced a diversity of content.

But at Warner Bros. Discovery, Zaslav is turning off the content spigot and reorienting the company into something much more fiscally (and potentially culturally) conservative. The company’s stock has been on a downward spiral, but this could very well be a great thing for investors in Warner Bros. Discovery. It just won’t be as great for the rest of us.

Today’s Storystream

Feed refreshed Two hours ago Striking out

Andrew WebsterTwo hours ago
Look at this Thing.

At its Tudum event today, Netflix showed off a new clip from the Tim Burton series Wednesday, which focused on a very important character: the sentient hand known as Thing. The full series starts streaming on November 23rd.

The Verge
Andrew WebsterTwo hours ago
Get ready for some Netflix news.

At 1PM ET today Netflix is streaming its second annual Tudum event, where you can expect to hear news about and see trailers from its biggest franchises, including The Witcher and Bridgerton. I’ll be covering the event live alongside my colleague Charles Pulliam-Moore, and you can also watch along at the link below. There will be lots of expected names during the stream, but I have my fingers crossed for a new season of Hemlock Grove.

Jay PetersSep 23
Twitch’s creators SVP is leaving the company.

Constance Knight, Twitch’s senior vice president of global creators, is leaving for a new opportunity, according to Bloomberg’s Cecilia D’Anastasio. Knight shared her departure with staff on the same day Twitch announced impending cuts to how much its biggest streamers will earn from subscriptions.

Tom WarrenSep 23
Has the Windows 11 2022 Update made your gaming PC stutter?

Nvidia GPU owners have been complaining of stuttering and poor frame rates with the latest Windows 11 update, but thankfully there’s a fix. Nvidia has identified an issue with its GeForce Experience overlay and the Windows 11 2022 Update (22H2). A fix is available in beta from Nvidia’s website.

External Link
If you’re using crash detection on the iPhone 14, invest in a really good phone mount.

Motorcycle owner Douglas Sonders has a cautionary tale in Jalopnik today about the iPhone 14’s new crash detection feature. He was riding his LiveWire One motorcycle down the West Side Highway at about 60 mph when he hit a bump, causing his iPhone 14 Pro Max to fly off its handlebar mount. Soon after, his girlfriend and parents received text messages that he had been in a horrible accident, causing several hours of panic. The phone even called the police, all because it fell off the handlebars. All thanks to crash detection.

Riding a motorcycle is very dangerous, and the last thing anyone needs is to think their loved one was in a horrible crash when they weren’t. This is obviously an edge case, but it makes me wonder what other sort of false positives we see as more phones adopt this technology.

External Link
Ford is running out of its own Blue Oval badges.

Running out of semiconductors is one thing, but running out of your own iconic nameplates is just downright brutal. The Wall Street Journal reports badge and nameplate shortages are impacting the automaker's popular F-series pickup lineup, delaying deliveries and causing general chaos.

Some executives are even proposing a 3D printing workaround, but they didn’t feel like the substitutes would clear the bar. All in all, it's been a dreadful summer of supply chain setbacks for Ford, leading the company to reorganize its org chart to bring some sort of relief.

Spain’s Transports Urbans de Sabadell has La Bussí.

Once again, the US has fallen behind in transportation — call it the Bussí gap. A hole in our infrastructure, if you will.

External Link
Jay PetersSep 23
Doing more with less (extravagant holiday parties).

Sundar Pichai addressed employees’ questions about Google’s spending changes at an all-hands this week, according to CNBC.

“Maybe you were planning on hiring six more people but maybe you are going to have to do with four and how are you going to make that happen?” Pichai sent a memo to workers in July about a hiring slowdown.

In the all-hands, Google’s head of finance also asked staff to try not to go “over the top” for holiday parties.

External Link
Insiders made the most money off of Helium’s “People’s Network.”

Remember Helium, which was touted by The New York Times in an article entitled “Maybe There’s a Use for Crypto After All?” Not only was the company misleading people about who used it — Salesforce and Lime weren’t using it, despite what Helium said on its site — Helium disproportionately enriched insiders, Forbes reports.