Mumbai: Speaking to analysts to announce his company’s third quarter results, Warner Bros Discovery CEO David Zaslav said that the company is going to have a real focus on movie franchises.
When asked about how he would characterise the content strategy now and what the difference is going to be, he said, “We haven’t had a Superman movie in 13 years. We haven’t done a Harry Potter movie in 15 years. The DC movies and Harry Potter movies provided a lot of the profits of Warner Brothers Motion Pictures over the last 25 years. So focus on the franchise. One of the big advantages that we have, House of the Dragon is an example of that, Game of Thrones, taking advantage of Sex in the City, Lord of the Rings, we still have the right to do Lord of the Rings movies. What are the movies that have brands that are understood and loved everywhere in the world?”
He added, “Outside of the US most in the aggregate Europe, Latin America, Asia, it’s about 40 per cent of the theatres that we have here in the US, and there’s local content. So, when you have a franchise film, you can frequently make twice as much money as you would in the US because you get a slot and a focus on the big movies that are loved, that are tentpoles, that people will leave home, leave early from dinner to see, and we have a lot of them: Batman, Superman, Aquaman. What are we doing with Game of Thrones if we can’t do anything with JK Rowling’s Harry Potter or Lord of the Rings? What are we doing with a lot of the big franchises that we have? We’re focused on franchises.”
The company has learned what doesn’t work. Movies must be released in theatres. “And this is what doesn’t work for us based on everything that we’ve seen, and we’ve looked at it hard. One is direct to streaming movies. So spending a billion dollars or collapsing a motion picture window into a streaming service does not work too well for us. The movies that we launch in the theatre do significantly better, and launching a two-hour or an hour and 40 minute movie direct to streaming has done almost nothing for HBO Max in terms of viewership, retention, or love of the service. The other is that the entire library, or almost the entire library, shouldn’t be on HBO Max and paid for by HBO Max,” he stated.
He said, “We have an extraordinary library, Friends, Big Bang Theory, Two and a Half Men. There are 15 or 20 series that are loved and used and nourish the audience on a regular basis. However, there are a large number of series and films that are not being used at all. If none of it’s being used, why aren’t we putting it on an AVoD, where it will be used?”
“We’ve looked at what people are watching on Pluto and on Tubi, it’s very different. They love Rawhide and Bonanza. They are not watching that. They are not watching old series like Dynasty on Macs. And so there is a platform where people have expectations and what they want to watch, and we’ve been able to get a real vision into what people are consuming, and ultimately, that gives us a roadmap,” Zaslav added.
“So what library is really beneficial to us, and then, and a lot of that stuff, we might keep on there, but it doesn’t have to be exclusive. It could also be on AVoD. We could sell it to someone else because no one is subscribing to or staying on a particular one of our services even though it’s there. And so, I think what we’re really trying to understand is what has worked on the platform and what hasn’t, and then based on that, we’ll determine how to operate going forward,” he stated.
He said that he is pleased with all that the company has accomplished in the first six months as a combined company. “We have had to work through a number of really tough issues, some anticipated, some unexpected, and we continue to make the difficult decisions that we know are necessary to position our company for long-term growth and success.
“As you would expect with a deal of this magnitude, a significant amount of change is required in a dynamic and changing industry and amidst the more challenging economic environment,” Zaslav added. In fact, we see this as presenting a meaningful opportunity, one that we have seized wholeheartedly. This is an opportunity to look inside each one of our businesses and really determine what’s working and what’s not. Is it structured properly? Does it have the right assets, people, and resources to be effective and the best of class in the environment we face today?”
“None of this is easy, and nothing happens overnight. That said, we are fully committed and laser-focused. I believe we have the strongest hand in the industry in terms of the completeness and quality of our portfolio of assets and our IP across sports, news, nonfiction, and entertainment, in virtually every region of the globe and in every language,” he pointed out.
“Six months in, we now have a full, strong, and energising leadership team in place, and we are confident we have the right strategy and are making the structural and strategic changes to successfully achieve our goal of becoming the greatest media and entertainment company in the world capable of generating significantly higher earnings and free cash flow than we are today and creating real long-term sustainable shareholder value,” he stated.
He went on to elucidate, “Last quarter we laid out three strategic priorities that serve as our guiding principles and influence our decision making, strategically, operationally, and financially. Starting with content, content is the heart of everything we do, and we are investing at historic levels in the highest quality storytelling, sports, and news. All the hard work we are doing now will allow us to continue making meaningful investments in content to support our plans going forward.”
Zaslav added that the portfolio is led by the strongest content among the creative executives in the business. And he stressed that one of the things that differentiates these leaders is that they do more than just pick shows and write checks. “They support and nurture our creativity and talent and help them bring their bold visions to life on screens large and small. They are doers who have spent time in the control room developing films and TV shows, writing scripts, and working closely with talent and creatives.
“They know their crafts inside and out; they know what it takes to create compelling, unforgettable experiences for fans worldwide. And they know how to replicate that success and storytelling over and over,” he said.
Warner Bros. Discovery CEO & president global streaming and interactive Jean-Briac Perrette said that the audience will tell you what they love; they’ll spend time with it. “They’ll watch it and rewatch it, and you can see it in terms of ratings on cable and free-to-air, and you can see it on — we can see it on Max in terms of seeing exactly what people spend time with.” And we look at it, and we look at it hard. If we have a scripted show, that’s $7.5 million. And if it gets a 0.43, it means that some have written that we’re not committed to scripted on TNT. We’re very committed to scripting, but we want to measure what people are watching and what they’re not. If a repeat of Two and a Half Men or Big Bang Theory gets three times the reading of a brand new show that we greenlit for another season, that’s a show that costs us $7.6 million. We’re going to cancel that show.”
“And we’re going to try and get another scripted series that has a chance to really deliver, delight, and engage an audience. But we are being deliberate about measuring how the shows are doing. As I said, let me be very clear: we did not get rid of any show that is helping us. And we got rid of those shows so we could focus on producing new content and using everything we learned on each platform to make new choices.”
“It’s a business of failure,” he said, “but we’d rather take that money and spend it again and have a chance of having a show that engages in delight on either our traditional platforms or our subscription platforms.”
