What the Heck is Going on at Warner Bros. Discovery?!
When Brand Pivots Go Sideways

The Warner brand has had a rough going of it lately. Sold to AT&T in 2018 and sold again to Discovery, Inc. just four months ago, Warner has struggled to make the most of its considerable intellectual assets. While Disney pumps out billion-dollar Marvel movie after billion-dollar Marvel movie, picks up mega-properties like Star Wars and The Simpsons, Warner finds itself endlessly trolled by circumstances: neither AT&T nor Discovery seemed to know what to do with some of the most powerful brands on the planet, and the telecom giant quickly came to regard Warner Bros. itself as something of an albatross around its neck.

Warner Bros. — the folks who own HBO, including megahit Game of Thrones and its spinoff House of the Dragon, cultural touchstones like Curb Your Enthusiasm, Children’s programming titan Cartoon Network and its decades-long library of iconic characters, literally Sesame Street, and Batman — somehow couldn’t be mined profitably. And now, the combined company has started pulling the plug on some of its most critically-acclaimed (and popular) projects. For reasons many can only speculate about, the last few weeks have been a cavalcade of cancellations and cullings. Much of that content was aimed at younger audiences and women: the Batgirl movie, which was almost entirely shot; The Not-Too-Late Show with Elmo; the LGBT-focused Generation. HBO Max’s unscripted division has been gutted. Shows are vanishing from the service.

The stated rationale, according to CEO and current most-hated-man-on-the-internet David Zaslav, is cutting costs, especially regarding residuals, and a clearly planned combination of HBO Max with Discovery+ into a single service with a tighter focus that has both fewer offerings and higher prices that explicitly goes after adult male demos; in contrast, Disney (which I think we can all agree is pretty much nailing the business end of things, anyway) has kept Hulu, Disney+, and ESPN+ separate in order to cultivate a wider range of audiences with lower-priced offerings. So WBD’s approach here is honestly just baffling to me.

I’ve seen companies double down on alienating people before, and it never ends well. This is a particularly confusing example: HBO Max is already one of the most expensive streamers out there and consistently the highest rated. The people who pay for HBO Max like HBO Max. The app is stable, easy to navigate, brimming with a wide range of offerings organized into brand-centric hubs. It’s a popular service that, much like Netflix once upon a time, strove to have something for everyone. It was a strategy that worked. Perhaps it’s just a consequence of the tightening of the streaming market that makes growth a harder metric to satisfy, leading to a return to more traditional viewership numbers, but surely, in the age of streaming where the channel itself is subscription-based and commercial free, sheer numbers can’t tell the whole story of what justifies a show’s existence.

Meanwhile, WBD is making a lot of creatives jumpy; why would you want to go to a network that’s building a reputation for sudden, capricious cancellations? The same thing happened to Netflix, too; a history of giving shows two seasons and dropping the ax slowed the steady stream of top talent signing exclusive deals, especially in animation, and that’s a niche that HBO Max has since filled admirably. It all strikes the casual observer as shooting yourself in the foot simply because you’ve got a new gun; something works, there is no reason to change it, but we’ll change it anyway because we can. The conventional explanation is that the cancellations are primarily a way to write down the debt WBD accrued in the process of forming (writing down is a little trick where it gets to cancel out existing obligations rather than paying what was contractually owed, thus taking red numbers off the chart without actually making or doing anything), which is a fabulous way to tell creatives that their work has no value beyond being “content,” the stuff people pay to access; the work itself is arbitrary and is just as valuable dead as alive. Maybe even moreso.

Perhaps all will go according to plan, and HBO Discovery Max+ or whatever they end up calling it will be a lean, mean, ROI-generating machine, but even then it will come at a cost: damaging brand loyalty and trust, throwing goodwill out with the trash, and driving business away from a core offering because it can make a few more quick bucks by not serving current customers. It is, in the most direct, basic sense, the cold logic of capitalism: investors come first, always and forever, no matter what you have to kill to feed them. In this case, it seems WBD isn’t concerned about what happens when customers walk away. I’d ask what the heck was going on at WBD, but it’s obvious to see: it’s choosing short-term profitability over its employees, its creatives, and its viewers. What could go wrong?Warner

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Eric Yaverbaum

New York Times Bestselling author of seven books. CEO of Ericho Communications