Warner Bros Discovery plans fresh cost cuts

Firm also raising subscription prices to meet its target

“Warner Bros plans to consolidate some of the marketing and technology teams working on its streaming services.”

Sources

NEW YORK: Warner Bros Discovery Inc chief executive officer David Zaslav has ordered his lieutenants to find additional opportunities for cost-cutting in order to hit financial targets for the next couple years, according to sources.

They include the possibility of more layoffs at the company, which has eliminated more than 2,000 positions over the past year, said the sources.

The streaming operation alone could bear hundreds of millions of dollars in budget cuts, mostly in marketing and technology.

The company, the parent of CNN, HBO and the Warner Bros studios, has also decided to raise subscription prices as it seeks to reach Us$1bil in earnings from the Max and Discovery+ streaming services next year, the sources said. The Max streaming service costs US$15.99 a month for its lowest-priced ad-free plan.

Warner Bros declined to comment on any specific plans for cost cutting or price increases, but said in a statement: “The company is focused on the long-term growth of the business overall, including Max, which has been a priority across WBD to expand the original content offerings for our streaming audiences including news originals from CNN, NCAA Men’s March Madness and NBA playoffs from sports, local language content from international, and a new distribution deal with A24.”

The business was formed in 2022 by the merger of AT&T Inc’s Warnermedia and Discovery Inc, the cable-tv programmer led by Zaslav.

The deal created a company with more than Us$50bil in debt at a time when cable TV, its largest business, was hemorrhaging viewers and advertising dollars.

Under the weight of that debt, Zaslav was among the first in Hollywood to undertake staff and production cuts, including the decision to fold CNN+, an online news service, and shelve movies like the nearly completed Us$90mil Batgirl.

While those cuts have enabled Zaslav to reduce debt by more than Us$13bil over the past two years, they have aggravated filmmakers and business partners in Hollywood. They have also failed – so far at least – to impress investors, who have sent the Warner Bros shares to all-time lows.

The accelerating decline of cable TV has forced major Hollywood companies, including Warner Bros, Paramount Global and Walt Disney Co to slash costs after years of investment in streaming services. Those services have attracted millions of subscribers but also cost billions of dollars to build out and programme.

“Warner Bros plans to consolidate some of the marketing and technology teams working on its streaming services,” said the sources.

The company unveiled the Max streaming service last year, combining the best of HBO Max with the more niche Discovery+. It also still operates HBO Go in Asia and is working with Disney and Fox Corp on a sports streaming service.

Almost every major streaming service is raising prices to improve its financial performance. Peacock, Disney+ and Netflix Inc have all increased prices in recent months.

Zaslav will soon have to decide whether to outbid Comcast Corp to keep TV rights to the NBA, a huge source of viewers for the company’s TNT network.

The cost of NBA rights is expected to double in this next package to about Us$2.5bil annually.

Warner Bros is scheduled to report first-quarter financial results. Analysts predict sales will decline by about 4%, a reflection of shrinking cable TV advertising and subscriber revenue.