Since WarnerMedia and Discovery merged earlier this year to become Warner Bros. Discovery (WBD +0.89%), the entertainment company has actively been trimming expenses as part of a plan to save at least $3 billion per year. Under President and CEO David Zaslav, Warner Bros. Discovery shuttered streaming service CNN+ mere weeks after it launched and subsequently ended production on multiple HBO Max Originals in Europe. Most recently, Zaslav axed HBO Max movies Scoob!, Holiday Haunt, and Batgirl, with the executive suggesting such projects do not significantly incentivize customers to sign up for the service.
Zaslav has a history of running a tight ship. Before heading up Warner Bros. Discovery, he spent a decade and a half at the helm of Discovery -- a company that was perhaps best known for its slate of unscripted programming, including Man vs. Wild and Deadliest Catch. By their very nature, such shows are cheaper to produce than HBO Max scripted content, like Westworld and Succession. With Zaslav determined to save at least $3 billion a year at Warner Bros. Discovery, there are signs HBO Max's output will start to look more like the former than the latter.
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HBO Max is pulling original movies
As well as shelving content before release, Warner Bros. Discovery has recently removed a handful of movies that were produced specifically for HBO Max. Both the Seth Rogen comedy American Pickle and the Anne Hathaway vehicle The Witches arrived on the streamer in 2020 but have since been pulled from the library.
Warner Bros. Discovery has not addressed the removal of the films, but it has previously outlined a plan to remove content from HBO Max so that it can be licensed to other media companies. While American Pickle and The Witches are both available to rent and purchase from platforms such as Apple's iTunes and Alphabet's Google Play, it's unclear if there are any other distribution deals in place. Regardless, for investors, Warner Bros. Discovery finding new ways to monetize older content is surely a positive.
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Speculation over HBO Max's future is rife
As reported by industry publication The Wrap, there is widespread speculation in Hollywood that Zaslav will soon cut multiple creative roles at HBO Max. Should this happen, then it's logical that the streamer will pare down its output going forward. That might sound risky for HBO Max, but Warner Bros. Discovery is already thinking about a future where the brand doesn't exist in its current form.
HBO Max and Discovery+ will unify next year
As things stand, HBO Max and Discovery+ operate as individual streaming services, each with its own content offerings. However, at some point in summer 2023, the streamers will combine to become a single entity. At the time of writing, Warner Bros. Discovery has not disclosed the name for the new entity, but the HBO Max part of the equation is already being downplayed.
During Warner Bros. Discovery's Q2 earnings call, Zaslav suggested HBO Max's technology was not good enough to support the unified streamer. "HBO Max has a competitive feature set," the CEO explained. "But it has had performance and customer issues." Instead, Zaslav noted, the system that underpins Discovery+ will power the new service.
While Zaslav has yet to discuss what a combined HBO Max and Discovery+ will look like from a content standpoint, based on how he has run Warner Bros. Discovery since its inception, all signs point to less high-cost scripted content and more unscripted programming. For stakeholders, that might sound like a smart strategy, especially amid rising inflation and growing concerns about a possible recession.
For market watchers, it's worth keeping an eye on whether Warner Bros. Discovery does indeed go on a firing spree at HBO Max. If that happens, then Warner Bros. Discovery's reshaped streaming offerings could ultimately be more Man vs Wild than Man of Steel.
