David Zaslav admits defeat

Last month during the television upfronts in New York, Warner Bros. Discovery announced that they’re changing the name of their streaming platform—again—reverting back to the “HBO Max” label they dropped two years ago in favor of the no-name recognition “Max”. Now, that renaming of inarguably WBD’s most prestigious, marquee television brand looks like the advance warning of an even bigger change—Warner Bros. Discovery is splitting into two companies. Finally, David Zaslav admits defeat and acknowledges what we’ve been screaming all along, no one wants Warner Brothers/HBO stuff combined with Discovery stuff.

David Zaslav, King of Trash Mountain, actually thought Discovery’s slate of trashy reality and true crime shows would ADD value to Warner Brothers’ HBO imprint, but it didn’t. Despite being known as the prestige brand—which is industry speak for “niche”—tens of millions more viewers watched HBO original programming on the streaming platform than tuned into the populist Discovery programming (which includes 90 Day Fiancé, Deadliest Catch, Gold Rush, and MILF Manor). I’m not saying no one ever switched between HBO and Discovery programming on the app, but clearly, most people came to HBO Max for HBO, not Max. 

The plan is for Warner Bros. Discovery to split into two separate entities. One will retain the movie and TV studio, HBO and HBO Max, and a “games and experiences division”. Zaslav will remain top boss of that entity (hoo raaaay). The King of Trash Mountain found a way off the hill, but it won’t suddenly make people like him better. He’ll always be King of Trash Mountain whether he’s running Discovery or not. Trash Mountain is an idea, not a brand. 

The other entity will become the home of linear and non-HBO cable TV, Discovery+, and CNN. WBD CFO Gunnar Wiedenfels is taking over the television-focused entity, which honestly looks like a fool’s errand. Cable TV is declining faster than anticipated—streaming is supplanting it completely—and CNN has been a thorn in Zaslav’s side the whole time he’s run WBD. 

In a statement Zaslav said, “By operating as two distinct and optimized companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape.”

Translation: we can do mergers. That’s all this really is. WBD is too big and in too bad shape to be an attractive acquisition but taking all the shiny brands of Warners and putting them in one basket, separate from the failing traditional TV stuff, makes a more attractive target. Pursuant to that, almost all of WBD’s current $38 billion debt will be offloaded to the new TV entity. So they’re just fully expecting that business to fail.

About that debt. Back when AT&T sold Warner Brothers to Discovery, AT&T offloaded about $43 billion in debt onto Warners. (I still don’t know how it’s legal for companies to do that.) That left the newly formed Warner Bros. Discovery with $50 billion in debt, which means all of Zaslav’s tax write-offs, layoffs, and penny pinching has paid down about $12 billion of the company’s debt. It’s only been three years, so I guess that’s good? Given that entertainment is an industry built on collaboration, though, and Zaz has toasted several major talent relationships, maybe it’s a wash. He’s paid down some debt, but he’s also made Warners a less attractive partner for creatives.

Still, they’re pushing the remaining debt onto the already less attractive TV entity, leaving Warner Brothers a ripe target for acquisition when the separation completes in 2026. The question then becomes, who will buy it?

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