We explain to you where the economic crises of Warner Bros come from and why their premieres have become chaos
In recent weeks, news about the restructuring of Warner Bros Discovery They have not stopped and continue to add. What started with the cancellation of batgirl in its post-production stage, continued with the disappearance of hundreds of hours of shows on HBO Max and the firing of 70 people from HBO, which represented the 14% of your entire team.
Furthermore, it has just been confirmed that the reasons behind the further delays in Aquaman and Shazam is because the new CEO of the company, David Zaslav, has just announced that in its efforts to save operating money they only have budget to brand new two films in 2022: Black Adam Y Don’t Worry Darling.
What exactly is going on with Warner Bros. Discovery? Why do they have so many economic crises? Could it be close to bankruptcy? We explain here!
How did this mess start?
When the purchase of Warner Bros by Discovery, it was announced that the company had 55 billion dollars in debt. This stems from the efforts of AT&T to turn it into a media conglomerate, which caused the studio lost 75% of its market value, so they had to sell the company for 43 billion dollars, when in 2016 the telecommunications company spent 85 billion to acquire the Warner Group.
That’s why when Discovery merged with Warner, David Zaslav had to pay all those debts and continue to compete with giants like Netflix and Disney, so from the beginning he promised to save more than 3 billion dollars. At first, analysts assured that Zaslav had a more focused mind in traditional film production and he knew how to negotiate with great talent, so they hoped he could defuse the controversies and tensions that executives created Jason Killar and Ann Sarnoff, who were at the head of warnermedia and that they decided to prioritize streaming content over movie premieres, thing that made Christopher Nolan I turned my back on the studio.
The transition before the merger was completed seemed like it was finally going to stabilize Warner Bros. Peacemaker and The Batman predicted that the properties of DC Comics They were starting to go down the right path. And decisions like selling the channel The CW and cancel series like Batwoman, the Fantastic Twins series and Naomi, although painful for many fans, they were understandable from a financial point of view.
In addition, Zaslav detailed a plan where assured that it would restructure Warner Bros into three main verticals would have a structure similar to that Disney has with Lucasfilm and Marvel, where they behave as independent companies but respond to executives who manage the conglomerates. Practices seemed slow and confusing, but he seemed to be on the right track.
Except it never really was, and the cancellation of Batgirl only exposed the financial crisis that Warner Bros.
Could you go bankrupt?
According to the site CompaniesMarketCap.com, that uses financial data from Reuters, NASDAQ, Yahoo Finance, Forbes and more, ensures that Warner Bros currently valid, on August 25, 2022, $20 billion less than it was worth in April of the same year, so now the company is worth 31 billion dollars, still less than what it cost David Zaslav just a year ago.
How can this happen if they are supposed to be removing content to cut costs? The answer lies behind same operating costs. In accordance with Variety had to spend at least billion dollars to solidify the merger between Warner Bros and Discovery. And last year, just before the purchase was finalized, David Zaslav was confirmed to have received $246 million in salary.
Many Wall Street analysts have called Zaslav one of the “Most Overpaid Executives in Hollywood”. In addition, the alleged “tax relief” they received for the cancellation of batgirl report that they barely saved between 15 and 20 million dollars. But according to the presentation of its latest income statement, the company lost between April and August of this year more than 3.4 billion dollars.
There’s really no telling how much money the company as a whole has saved, but if we look at the drop in its market value and the heartbreak of creatives and staff alike, we can sense that these reliefs are not really having the impact they expected to reduce costs. And the high salaries of executives close to Zaslav do cast doubt the strategies they are following to better manage the finances of Warner Bros.
And things are gonna get worse
After announcing that their delays have to do with the fact that the budget has been completed, it has just been confirmed that HBO Max fired 29 top executives in Europe, as they prepare to transition to the new model of streaming that Zaslav proposed for allegedly “eliminate redundancies”.
This means that surely many workers and artists will continue to be laid off around the world. And the uncertainty regarding premieres, cancellations, delays and reshoots is damaging the relationship with important talent within Hollywood and the company, since many artists will surely prefer to work with a studio that has better established plans.
And it seems that this will get even worse, since it is said that David Zaslav looks to control very carefully all the financial details of the company, and reveals that he does not see cinema as art, but as content whose value is defined on Wall Street. It is sad to see how one of the conglomerates that helped build Hollywood as the largest movie house in the world, it is lost simply because it fell into the hands of executives who do not know how to manage their finances and do not find a middle ground with their creators.
But at the rate we’re going, we could see how Warner Bros is filing for bankruptcy soon, as announced Regal Cinemas recently precisely to mitigate your debt amount and restructure your company. Or maybe it will pass into other more capable hands, but either way, everything indicates that we are getting closer at the end of an era in Hollywood.