News Warner Bros. Discovery Lost $20 Billion in Market Cap Trying to Cut $3 Billion in Costs

[The Elemental O]

Since completing its April 8th merger, Warner Bros. Discovery has been on a cost-cutting frenzy, with an announced goal of finding $3 billion in savings. The process began when WBD axed CNN+ on April 21st, and since then the company has shelved Batgirl, removed over 200 classic episodes of Sesame Street, and iced dozens of upcoming projects — with a result that WBD has lost a total of $20 billion in market cap and counting.

Importantly, this isn’t an apples-to-apples comparison. WBD is trying to save $3 billion in cash, while market cap is the stock market’s estimate of a company’s total value, found by taking the amount of stock in circulation and multiplying that by the stock’s price. And there are several other factors dragging down the stock, especially WBD’s $55 billion in debt, which has concerned analysts since the merger. But the debt has been stable, and the fact remains that no matter which project WBD puts out to pasture, the stock is only going in one direction: down.

On April 22nd, the day after WBD subtracted CNN+, the company had a market cap of approximately $49.51 billion according to CompaniesMarketCap.com, which uses data from Reuters, NASDAQ, Yahoo Finance, and more. Today, August 22nd, the same company is estimated to be worth $31 billion. If the market’s estimate is accurate — and that’s a big if — WBD is worth about $20 billion less than when they started cutting costs. You can’t even blame market volatility for the plunge; the Dow Jones has barely budged since April, and the S&P 500 is down about 4% on the year, even as WBD has been unable to stop the bleeding. In the eyes of investors, the company has done nothing but hurt its brand for four months running.

Much of the blame will be laid at the feet of CEO David Zaslav, who was paid $246 million ahead of the merger. His plan to combine HBO Max and Discovery+ has been widely derided, and everyone from Kevin Smith to John Oliver has criticized his decision to kill content for tax write-offs. Fortune named him one of the 10 most overpaid CEOs in the Fortune 500, and it’s not hard to understand why. Even if you think he’s a genius, surely any Vice President at WBD could do at least 80% as good of a job for 10% of the cost.

For now, expect the cuts to keep coming. Just today, WBD pulled the plug on an animated Batman series from Matt Reeves and J.J. Abrams. As a spoonful of sugar to help the bleach go down, HBO Max is offering 30% discounts on annual subscriptions.

https://www.yahoo.com/entertainment/warner-bros-discovery-lost-20-200742971.html

 

[Fedorgasm]

I bought stock when he killed CNN+. I bought more when he killed Batgirl.

Now that I know he cancelled a JJ Abrams project I may just throw my life savings into it.

Sounds like they finally have a good CEO.

 

[syct23]

Who?

 

[Law Talkin’ Guy]

This Zaslav guy is who I was referring to in the House of the Dragons thread when I said I didn’t want to get into the show in case this dude gave it the axe.

 

[Pliny Pete]

They should get into politics

 

[Fedorgasm]

This Zaslav guy is who I was referring to in the House of the Dragons thread when I said I didn’t want to get into the show in case this dude gave it the axe.

So far he's only axed things that were ridiculously stupid and/or expensive.

HBO max is the best streaming service and he hasn't cut anything there.

I don't know who paid for that shitty hit piece of an article... Short seller maybe?

 

[Orgasmo]

It's actually quite common. Corporations trying to save a bit of money only to pay out of their asses later from the consequences.

The VP of operations in my old job decided to lay off a bunch of people when COVID first hit, thinking he'll get his promotion by cutting cost. That created a severe shortage of staff not to mention customers being furious with us due to delays and quality problems. At the end, the company spent more money on overtime trying to cover the gaps than if he retained the full staff, and we lost several major contracts which cut our division's revenue by half.

He "retired" 6 months after that, after the company executives had a closed door meeting with him.

 

[Law Talkin’ Guy]

So far he's only axed things that were ridiculously stupid and/or expensive.

HBO max is the best streaming service and he hasn't cut anything there.

I don't know who paid for that shitty hit piece of an article... Short seller maybe?

Isnt House of the Dragon their most expensive show, by like a lot?

Also, aren’t they folding HBO Max into Discovery+ or something?

 

[BJ@LW&WW]

what a nonsense title.

 

[The Elemental O]

So far he's only axed things that were ridiculously stupid and/or expensive.

HBO max is the best streaming service and he hasn't cut anything there.

I don't know who paid for that shitty hit piece of an article... Short seller maybe?

There were also a lot of projects that people liked and were successful he canceled or removed from HBO Max. Infinity Train was one of their most watched titles on HBO Max and they removed it completely, even removed the pilot from Cartoon Network's Youtube channel despite it being one of their most popular videos on the channel. A lot of people were looking forward to that Amazing World of Gumball movie on HBO Max, since it was going to serve as a proper finale for that show.

Also they didn't cancel the JJ Abrams Batman project (that's also run by Bruce Timm and Matt Reeves), it's just not going to play on HBO Max.

Also, House of the Dragon, which he didn't axe is far more expensive than the majority of projects that were canceled.

 

[Fluffernutter]

They should get into politics

https://www.opensecrets.org/industries/indus.php?ind=b02