In the eight months since AT&T completed its spin-off of Warner Media and merger with Discovery, the media giant has fundamentally altered its spending practices to create new movies and streaming programs.
AT&T CEO John Stankey and WarnerMedia head Jason Kilar were united in their commitment to invest heavily to create a stream of new content to showcase on the company’s HBO Max streaming service. This commitment included a controversial decision to release Warner Bros.’s entire lineup of new movies in 2021 simultaneously to theatres and on HBO Max.
On the one hand, their “streaming-first” strategy did entice millions of pandemic-bound consumers to sign up for HBO Max, which has a current install base of 73.8 million subscribers. On the other hand, this achievement has come at a steep price, with the company incurring massive losses and debts from the investment and upsetting key talent and production partners who were invested emotionally and financially in the theatrical success of their work.
WBD found itself in open conflict with some of its most important, long-time partners, including Village Roadshow and Legendary Entertainment production houses and renowned filmmaker Christopher Nolan.
Since the new company was formed, CEO David Zaslav has taken a “cost-conscious” approach, laying off staff and canceling multiple projects in its streaming divisions. In August, the company shocked the industry by canceling the release of the BATGIRL movie, despite it being virtually complete and ready for its scheduled premiere on HBO Max. More recently, the company also announced the cancellation of the WESTWORLD and MINX original series after several successful seasons of each on HBO Max.
One reason for the burst of cancellations is that it allows the company to write off the costs of these projects from the current financial period. Zaslav may also be hedging against a possible downturn in advertising revenues from the company’s news and streaming divisions due to a cutback in marketing spending from consumer brands.
Zaslav has also reinforced his commitment to release more Warner Bros. movies to theatres in order to build the awareness and appeal of certain key movie franchises and characters.