Before the end of the month Warner Bros. Discovery is launching a 24-7 live news stream CNN Max on its Max SVOD service, and WBD CEO David Zaslav said it’s one step in the company’s effort to make CNN news a long-term asset on every platform.
Throughout his presentation Wednesday at the Goldman Sachs Communacopia + Technology Conference Zaslav emphasized that WBD is focused on creating sustainable growth for shareholders, leveraging its portfolio of news, entertainment and sports.
Addressing the question of how CNN Max will differ from CNN+, Zaslav noted that CNN is a strong linear asset and the stream will be primarily live.
“When you’re on Max, not only are you in your own world where you might be watching White Lotus, or Succession or Fixer Upper, but you could also tune to live news. And if something is happening in the world, you’ll see it, so the product is alive.”
And similar to observations made by TVREV’s Alan Wolk about CNN Max targeting a different demographic than the traditional CNN pay TV demographic and therefore not cannibalizing existing audiences, Zaslav during the investor conference noted Max’s demo is about 30 years younger than those on linear TV.
“So there’s a whole different group of people that are on Max. And there a lot of people that are on Max that don’t have linear television,” he said. “So creating a 24-hour news product that’s geared more toward that generation, a younger generation, I think it’s compelling when you might have 70 million homes on linear in the U.S. and you add to that all the subscribers that we have for Max that we could reach.”
Zaslav also touted the recent hire of former New York Times and BBC chief Mark Thompson has chairman and CEO of CNN Worldwide.
The chief executive said the question is “how do we take CNN news and make it a product long-term for the future on every platform?”
One is to get it on Max, he said, which Thompson and team will be working to build up to create a compelling product, but WBD is also thinking about its digital news site that gets around 150 million visitors each month. Another focus for Thompson is how to take “that huge funnel,” alongside Bleacher Report and House of Highlights sports programming, which Zaslav said offers another 100 million or 150 million younger people with sports news, together with all of the other content WBD owns.
“And figure out how do we take CNN on linear, how do we take CNN on SVOD and then how do we take CNN digital as a brand and build that, whether it’s subscription, whether some of it is just a funnel.” He commented.
Sports coming to Max, won’t sacrifice company health for IP
Zaslav also reiterated plans to bring live sports to Max sooner than later, and cited a “very comprehensive strategic attack plan on sports.”
Zaslav noted WBD’s been experimenting with sports and news outside the U.S. for a while, including putting news on its platform in Poland where he said the moves helped to both reduce churn and grow the product. It also encouraged and helped the decision to put CNN on Max. In the UK it also experimented with sports where BT Sports merged with WBD’s Eurosport to create TNT Sports, which is now available on both linear and streaming and bundled with Discovery+ in the market.
Still Zaslav said it continues to spend a lot of money in linear, with its packages of sports and news still working very well but acknowledged rising costs for sports rights and for consumer in the U.S. WBD is more on the sidelines there, he said as its Turner asset doesn’t have any sports deals coming up until 2025. And in the U.S. WBD’s sports deals are long-term, including March Madness, NHL and MLB, which he said are very attractive as they have rights to put it on linear but also to put sports on digital channels for no incremental fee.
“As cable has declined, the ability to recapture audience on digital with no incremental cost of sports rights is quite attractive,” he commented.
One sports rights package that is coming up before 2025 is the NBA.
Zaslav said WBD likes the NBA a lot, including with shoulder programming that does well on social media and in ratings, but isn’t willing to break the bank for rights.
“I’d like to hold onto the NBA, but we’ve spent a lot of focus refocusing this company for the future and one of the key elements of having a sustainable growth company is free cash flow,” he continued, noting WBD will generate over $5 billion in free cash flow this year.
“In order to buy any piece of IP, we’re not going to sacrifice the health of the company,” he added, saying it wants to own content in a way the company can make money. “It’s not going to make sense to do a deal for anything and jeopardize the economic trend we have at this company in order to own another piece of IP.”
Believer in bundling
WBD believes it has an advantage, with live sports, live news “together with our bouquet of entertainment non-fiction library and movies,” Zaslav said – which now includes both premium HBO content and lifestyle programming like HGTV and others on Max. It's also looking at easing the consumer burden of having to switch between many different apps or distributors or search online for where to find content depending on what they want to watch.
“In the long term, it’s a not a great consumer experience. Consumers have adapted to it but in the long-term I’ve been a big advocate for bundling,” Zaslav said, adding basic cable was quite a good and nourishing experience for consumers. “I think one of the things that we’re going to see as we look into the future is bundling.”
That includes some in the content business pairing services together “as a way to create more value and create a better consumer experience.”
And Zaslav affirmed that view means having real conversations behind the scenes, “much more so in the last few months than it was in the last few years” about bundling, potentially even with competing services. He noted a recent experiment with AMC+ that puts popular content on Max for free for 60 days to see if it helps Max and to grow the AMC+ product.
Similarly, Paramount’s chief executive had said during Q2 earnings that bundling would be a growing part of the company’s streaming play. For a deeper dive on why streamers might consider bundles as a next strategic move read here.