Why Warner -Baas Zaslav should divide the media -empire he built

Copyright © HT Digital Streams Limit all rights reserved. Joe Flint, The Wall Street Journal 6 min Read 12 Jun 2025, 06:25 IST David Zaslav, CEO of Warner Bros. Discovery. (File photo: AFP) Summary The studio and cable conglomerate created by David Zaslav could not overcome outside forces and massive debt. David Zaslav, CEO of Warner Bros., loves the Humphrey Bogart classical “The Maltese Falcon” in 1941 about a group of unauthorized characters looking for an elusive statue of a golden jewel-decorated falcon. The Falcon is ‘the things of dreams are made’, “says Bogart’s character famously, and results in people doing just about everything to own it. The combination of Warner with Discovery was the Maltese Falcon of Zaslav. And like the protagonists of the film, Zaslav couldn’t secure it. The ambition of his Old World Entertainment Titan clashed about the realities of a media business in Onrus. Now, three years after concluding an agreement that merged his Discovery Cable TV networks with AT & T’s Warnermedia business, Zaslav divides it into two separate companies. The CEO, who has enjoyed the payments of the industry throughout the three-year turbulent marriage, will be on top of the company for Warner Movie and Television Studios and HBO Max Streaming Service. The second consists mainly of cable channels such as CNN, TNT and Food Network, and owns a 20% stake in the other. “We now have healthier, firmer companies that can be separated and grow and rise,” Zaslav said in an interview. Accelerated cord cuts, Streaming’s rise, labor attacks in Hollywood and the rapid development of AI reformed media and entertainment industries, while the merged company struggled with a solid debt tax and deep cost cuts. But the company was also plagued by Zaslav’s own bad bets and mistakes. The biggest problem: Zaslav has incurred more than $ 50 billion in debt to do the agreement. The company could not produce an amount that big. To pay it off, Zaslav cut $ 5 billion in costs. Warner has fired thousands of workers. It scraped high profile films and canceled television programs and the CNN+ stream service. The belt reinforcement has harmed the ability of the company to compete and grow. Morale sank. Workers were particularly angry with Zaslav’s lush lifestyle and $ 140 million for the past three years. “The merger of the companies was not notified because of the tremendous debt it needed to make it happen, and because the brands never fit as neatly as advertised,” said Emareter Vice President Paul Verna. Eventually, Zaslav’s “only option to undo much of what he designed with the merger of Discovery and Warner Media.” Warner’s fate sank. Last year, it took a $ 9.1 billion write -off on the value of its cable networks. Wall Street sour. Since the company’s creation in 2022, the share has lost 60% of its value. Under pressure from an activist, the company added a private equity veteran to the board earlier this year. The presentation of a protégé of the late Jack Welch, who was running General Electric when he owned NBC, did Zaslav as an advocate with the conglomerate to make transactions for his cable networks. He helped start CNBC and MSNBC and rose quickly in the industry. After being taken at the helm of the discovery in 2006, Zaslav doubled on the low-cost reality programs, rather than the low-rated educational rate on which the company was built, increasing the ratings and revenue and expanding worldwide. He also dismissed 20% of staff members. Zaslav built discovery through acquisitions, ending with the 2018 $ 12 billion agreement to buy Scripps Networks and its channels, including Food Network and HGTV. Yet he feared that Discovery was too small – and wanted to help film and television studios to build a global streaming service for the new era of television. When AT&T was looking for Warnermedia, he beat. The agreement has been through a long regulatory process. When the companies were combined, Warner staff members hoped that Zaslav would put an end to the restructuring of AT&T. more and more consumers cut the cord, hurt cable viewers and sank advertising revenue. The pandemic ruined the production, and was followed by strikes. Zaslav lost support in and out of Warner. Hollywood has snapped a large part of the Turner Classic Movies Network, who regarded the industry officials as a sacred cow. The decisions to cancel the film “Batgirl” and other projects were also unpopular. Company Insiders noted that Zaslav and his lieutenants talked about investment in the future, but that he had killed, although expensive, projects such as the CNN+ Streaming Service. Warner also initially struggled to execute his vision for his ‘maximum’ streaming service. Managers, launched in 2023, appointed the attraction of the service width of the offers, from Prestige TV in HBO to Harry Potter films and TV of Discovery Networks, including HGTV, Food Network and TLC. But after trying to catch up to greater opponents like Netflix, managers realized that they should focus more on different content than to be everything to everyone, and better utilize the HBO brand. It was renamed ‘HBO Max’ earlier this year. The streaming business increased its adjusted earnings before interest, tax, depreciation and amortization to $ 677 million last year from $ 103 million a year earlier. The company projects that it will rise to $ 1.3 billion for the current year. Then there was the National Basketball Association, a reliable source of viewers, which mentioned Warner’s TNT network for more than three decades. The league became irritated after Zaslav said at an operating conference at the end of 2022 that the company did not have to hold the NBA. Negotiations were difficult. Eventually, the NBA concluded a new agreement with Disney’s ESPN and brought in NBCUniversal and Amazon Prime video as new partners. Furious staff Some Warner staff became dissatisfied with Zaslav’s leadership. Early, he challenged drivers about the light of a Clint Eastwood-oriented film that was a disappointment in the box office. ‘Alto Knights’, a mob film with Robert de Niro and written by his Hamptons neighbor and ‘Goodfellas’ writer Nicholas Pileggi who advocated Zaslav was a commercial and critical flop. Part of the CEO of the CEO is based on free cash flow, which rose when the company cuts the costs. In particular, many department heads have envisaged the production and marketing budgets to pay off the debt and increase the free cash flow. Warner employees struggled with the optics of Zaslav seating New York Knicks and Los Angeles Lakers games, next to friends such as John Mcenroe, David Geffen and Dustin Hoffman, while staff lost their jobs. Some of Zaslav’s strategic movements can pay off in the long run. The retention of the NBA would mean that the average annual real fees of $ 1.2 billion more than doubled, money it has used for other sports rights ever since. Despite the loss of the NBA, Warner was able to negotiate new long -term distribution agreements for TNT and his other cable networks against increased fees with major cable operators Comcast and Charter. This will help position the cable networks for the future. After a difficult start of the year, the Warner Movie Studio is on a warm line from late thanks to hits “sinners” and “minecraft.” The company is also releasing a very expected new ‘Superman’ movie this summer. The company’s debt was cut by $ 19 billion, and most of the remaining $ 34 billion will sit on the Global Networks Company, led by Warner’s current financing chief Gunnar Wiedenfels. The Global Networks Company may benefit from the cash-generating channels, but a good part of advertising revenue will pay the debt. The studio and streaming business, meanwhile, can be prosperous for hits such as HBO’s “The Last of US” and box office successes, and if HBO Max continues to add subscribers. Yet most officials and industry analysts expect that Zaslav’s end game will be acquired for each. Write to Joe Flint at [email protected], catch all the corporate news and updates on live currency. Download the Mint News app to get daily market updates and live business news. More Topics #Warner Multimedia Read Next Story