WBD wants to expand distribution for ‘underutilized’ IP, franchises: CFO

Warner Bros. Discovery is prepping for a strengthened content arm this year, including the upcoming launch of the combined HBO Max-Discovery+ service. But the company is also focused on distributing its content to the broadest audience.

Warner Bros. Discovery CFO Gunnar Wiedenfels told investors WBD is aiming to enhance distribution for IP and franchises that have been “underutilized and under monetized.” Meaning that content isn’t tied down to one platform.

“You have an 80/20 rule right? 20% of the content is driving 80% of the viewership,” Wiedenfels said at Wednesday’s Morgan Stanley Technology, Media & Telecom Conference. “So this idea of everything has to be exclusive on one platform financially is nonsense.”

WBD in the past year was primarily focused on a strategic content review. Just to name a few cost savings initiatives, WBD stopped producing HBO Max originals in some European countries and pulled shows such as “Westworld” and “The Nevers” from HBO Max. Those were likely to wind up on a FAST platform in the future, as TVREV’s Alan Wolk pointed out, and indeed "West World" was included in recent FAST distribution deals with Tubi and The Roku Channel

Commenting on the content write-offs, Wiedenfels said WBD has merely “shaved off that excess” and that it’s “committed” to continuing its content investment.

“We didn’t abandon anything that made sense strategically or financially,” he said. “At this point, I think a lot of our peers and others in the industry have made similar decisions.”

WBD in Q4 updated its long-term cost savings goal, as it’s now targeting at least $4 billion in savings largely achievable through 2024. The company also narrowed its direct-to-consumer EBTIDA losses to $257 million in the recent quarter.

“The way I look at it, this streaming exuberance over the past decade was fueled by zero-cost capital,” said Wiedenfels. “There’s a reason why for decades the entire industry has looked at a number of exploitation windows – adequately priced – to optimize the return on investment. And we’re returning to that.”

Another industry shift Wiedenfels flagged is a “positive notion” around the theatrical window, and how a film’s theatrical release is just as valuable as its exposure on streaming services.

Paramount’s “Top Gun: Maverick” is a notable example of a movie that benefited from an extended theatrical window. Netflix has also taken advantage of the box office, choosing to premiere the “Knives Out” sequel in theaters before it landed on the service.

“We’re sitting down and we’re talking about how a film is doing in theaters and whether it makes sense to leave it there for a couple of extra weeks…or whether we move it over to HBO Max earlier,” said Wiedenfels, noting that’s a flexibility the industry “didn’t have before Covid.”

As for upcoming films, Wiedenfels said WBD is looking at a slate of 12 theatrical releases in 2023, a number that’s double that of last year’s releases. Upcoming films include DC Studios-produced “Shazam! Fury of the Gods” and “The Flash.”

Wiedenfels briefly touched upon the company’s sports assets. He said WBD is satisfied with the rights portfolio it has with leagues such as the NBA, NHL, NCAA. One thing that’s not going to change is the company will continue to make “rational deals.”

“It’s not always black-and-white in terms of what the value is, but we do the work and we come up with a very solid view of what the value of a certain right is to the company,” he said. “You’re not going to see us do any vanity deals or buying performance, which happens a lot in the sports space.”