The company to be created by the merger of Discovery and AT&T’s WarnerMedia will focus on profitable growth in streaming, Discovery CEO David Zaslav said Thursday, with his CFO Gunnar Wiedenfels vowing a “conservative approach” to content spending.
Entering the final stages before the deal close in a strong financial position, Zaslav told analysts on the firm’s fourth-quarter earnings conference call that “we plan on being careful and judicious,” also highlighting that the call it could be the last before the deal closes. “Our goal is to compete with the leading streaming services, not to win the spending war.”
Zaslav argued that the companies’ combined content spending wouldn’t necessarily have to increase “significantly” after the deal close, emphasizing the company will focus on being “measured” and “smart” in spending when and where it makes sense to accelerate growth and better serve users, rather than spending for spending’s sake. That would ensure “sustainable growth,” the executive emphasized. His comments came at a time when Wall Street has increasingly focused on expanding streaming content budgets and when Hollywood giants’ streaming bets will turn profitable.
“We want to compete against Disney and Netflix, but we are a very different company,” Zaslav explained at the conclusion of the call. “Those are two great companies. Disney has a group of people around the world that absolutely loves their product, and they are doing very well. Netflix has a very broad-appeal product” and is doing “a wonderful job building out that brand.” But Warner Bros. Discovery will rely on “very identifiable IP [intellectual property], and we are much broader than Disney,” Zaslav said. Pointing at HBO, he noted that it has “Euphoria right now, it just had Succession, [it] has The Gilded Age going right now — would HBO be doing a lot better if it had three more really successful scripted series…