Everything is like in the old days on HBO – a lot of intrigue, betrayal, bloodshed.
Ouch! And this is also on the screen: Dragon Housebetter known as The ‘Game of Thrones’ sequel is really a prequel, but whatever it is, it’ll work better, will debut this Sunday. I saw the first episode, and without breaking any taboos, I can tell you that there is at least one dragon in it.
But it’s the behind-the-scenes drama at HBO and Warner Brothers Discovery, the company that owns the programmer, as well as CNN and Warner Bros., that people in the media are talking about. What exactly is going on with some of the world’s most legendary media brands? And for the rest of us, it all matters too: what will happen to all the stuff we love to watch on our screens?
We got a new chapter earlier this week when HBOMax – the streaming service that includes HBO as well as a host of other programs – laid off 70 people. That’s 14 percent of its workforce, and it’s the first of several layoffs at Warner Brothers Discovery that sources tell me will last until the fall. And comes after several moves – like kill CNN+ days after launch preservation of finished Bat Girl movie before showing it to the public, and make movies made for HBOMax like Seth Rogen movies american pickle and Anne Hathaway Witches off HBOMax — this indicates that the company formerly known as WarnerMedia, once one of the most influential media companies in the world, is now trying to shrink in order to survive.
It’s almost a complete reversal of the script that previous WarnerMedia owners used, and we can go over the details in a minute. But the big picture is this: Remember the “Netflix Freeze” I told you about earlier this year, Hollywood’s unsettling fear that the problems that brought Netflix to a standstill will resurface in the rest of the media world? It’s officially happening.
And this means that the endless stream of movies and TV shows that we are used to will not continue forever. Streaming won’t go away – as some executives would like – but the endless budget that the big media throw at it eventually appears to have an end. Case in point: Demimondsci-fi series The Big Deal from JJ Abrams – the producer/director who gave you Lost and last round star Wars reboots and a lot of other things you like and Hollywood values - it was supposed to be an HBO show. But now it’s not because HBO doesn’t want to pay for a stated budget of “an average of $200 million”.
Brief historical lesson: The underlying idea behind AT&T’s acquisition of what was then Warner Media, which was first announced in 2016 but not completed until 2018, was that the phone company could turn HBO into its own Netflix while Wall Street will reward AT&T for owning its own Netflix. So in 2021, when it became clear that investors couldn’t care less about AT&T’s media forays, the company flipped the switch and turned over its entertainment assets to Discovery, the cable TV programmer best known for reality shows like 90 day fiancee.
But now Discovery has a lot of problems. For starters, he’s $53 billion in debt, most of which comes from his Warner deal. This means that instead of spending money aggressively to compete with Netflix and Disney, the company should look for change under the cushions, and David Zaslav, CEO of the newly merged company, promised Wall Street that he would find $3 billion in cost savings. . . somewhere.
But the bigger problem is what everyone in the streaming business, including Netflix, is currently struggling with: Wall Street doesn’t like Netflix anymore. Shares of Netflix, which surged to $700 last fall, are now down 50 percent because Netflix’s 10-year record run seems to be over: during the first six months of this year, it actually lost subscribers. So now Wall Street, which has been encouraging media companies to adopt Netflix’s growth-first, profit-driven strategy, wants them to change course. (One major exception: Amazon and Apple are media tech companies, so they can spend whatever they want on programming: see below). Amazons Rings of Power – million dollars Lord of the Rings prequel it looks a lot like amazon Game of Thrones. It is no coincidence that he will debut a couple of weeks after Dragon House.)
At Netflix, that means layoffs, an unprecedented move to add ads to a cheaper tier of its service, and an end to ever-increasing content budgets.
And for Warner Brothers Discovery, that means cuts everywhere — primarily jobs, but also expensive bets like CNN+, the streaming service that Discovery canceled just weeks after launch.
It also means that Discovery is winding down other projects undertaken by previous Warner management. Remember during the pandemic, Warner put all of their films on HBOMax on the day they debuted in theaters, and then, after the pandemic, announced that some films would still air immediately, while others would arrive in 45 days? This is no more: Zaslav said that if Warner makes films, they should be shown in theaters – and Elviswhich already aired on the previous 45-day plan is still missing from HBOMax.
Equally important, at least in the eyes of former Warner executives, under Zaslav, the company is gearing up for launch. sell HBOMax through Amazon again Reversing the previous regime’s deal to stop working with Amazon, which it viewed as a competitor, which would ultimately undermine the company’s ability to sell directly to consumers.
The vitriol over this between new and old Warners management amuses professional media watchers like myself. But it’s not just for industry gossip, because it represents two very different ideas about how to run a media company: Discovery CEO David Zaslav and his team went out of their way to portray their predecessors, led by former WarnerMedia CEO Jason Kilar, as stellar. big-eyed technologists who caught the streaming bug and couldn’t think of anything else. And the ex-Warners I’ve talked to think the Discovery guys (yes, mostly the guys) only know how to bundle and downsize and hope someone else buys them sooner rather than later, not how to grow the business. in the long run.
True, probably a little of both. “We have to be a little crazy,” admits a former WarnerMedia executive. “But we knew we wouldn’t be doing this forever. I really think the right thing to do now is to step back a bit.”
Or, as HBO programming boss Casey Bloys diplomatically told me this week: “We live in a time where [you have] the cable package, which is still a good business but is in decline, and the streaming business, which is growing but people aren’t making much money from it. So you’re trying to find a balance.”
As well as despite what you may have read or heard, The new HBO owners aren’t drastically downsizing HBO, says Bloys, the chief executive who brought you all the HBO shows you’ve loved over the past few years and who, not coincidentally, recently renewed his contract with them. “Our budget will continue to grow,” he said.
But Blois – and everyone else running the business at Warner – will be asked to make fewer things and hope that what he’s doing really breaks through – hence the increased rates. Dragon House. HBO’s first attempt to develop its Game of Thrones Success will go a long way under any circumstances. But now? It’s going to be a really big deal, even as Bloys tries to live up to expectations.
And yes, Discovery plans to merge its streaming service with HBO Max next year. This means that at some point you will have the option to subscribe to something that includes both Dragon House as well as Dr. Pimple Popper, the Discovery reality show you’re thinking of. You can turn your back on this pair—or you can admit that it’s very much like TV when, in order to subscribe to HBO, you also had to get a bundle of cable channels that had nothing to do with HBO. Streaming isn’t going anywhere, but the cable TV model is here to stay for a while.