Why does Warner Bros. continue? Discovery catches up on shows from HBO Max

On one level, Monday was a great day for HBO and HBO Max. Ratings data shown white lotus It ended its second season with record high ratings, and the platform enjoyed a glowing 14 Golden Globe nominations. However, as has happened several times this year, the harsh cost-cutting of parent company Warner Bros. Discovery Steal some of those lights. Word leaked that several HBO and HBO Max series were on the verge of disappearing from Max, including the very successful series westworld. Obviously, the timing wasn’t intentional, but again, folks in Hollywood wondered, What the hell is going on?

The short answer, based on conversations with sources familiar with the situation, is a complement to The story we saw earlier this year. Programs like minx And the westworld It is being shelved as WBD benefits – for the last time – from special circumstances related to the merger of the former WarnerMedia and Discovery Networks. In short, there are legal rules and regulations that allow a company like WBD to write down costs incurred as part of a post-merger restructuring – but only for a short period. Take offers like minx or westworld of HBO Max, and more importantly, the WBD library will apparently help the giant It makes their future budgets look a lot better. Not only does it save you a few thousand dollars on leftover checks or licensing costs; It is about taking note of the millions in depreciation costs these titles would have incurred in the years to come. A show that’s gone here, a show that’s gone there, and soon you’re talking about a meaningful impact on WBD’s overall earnings report — or so the company hopes.

What’s weird about this week is that a few months ago, WBD should have looked through its books and found all the potential merger-related cost savings. Where westworld And the minx No new episodes have aired since the first round of cuts ended, so why not simply delete them from the HBO Max vault over the summer? Nobody’s talking, but it’s hard not to conclude that WBD CEO David Zaslav chose to pull out his cost-cutting ax yet again because his company’s financial situation has worsened in the past few months.

Indeed, the refrain from several media CEOs in recent weeks indicates that the advertising market has grown cooler with no signs of improvement. In fact, just last month, Zaslav at the investor conference It will be “difficult” to meet revenue expectations unless things improve on the advertising front. Referring to the overall state of WBD, Zaslav made Debbie Downer sound optimistic: “It’s a lot messier than we thought, it’s a lot worse than we thought.” So, in addition to the debt issue and Wall Street’s overall attitude toward streaming, WBD found itself dealing with broader economic winds this fall. Results? Another round of giving away WBD content.

If there’s any good news, it’s that many more titles could pop up elsewhere next year. HBO Max has given full rights to minx Returning to Lionsgate Productions, the indie studio said it plans to find a new home for the show’s first season and an unaired second season yet. (If necessary, Lionsgate could decide to put the series on its own platform, Starz.) At the same time, titles produced in-house by WBD studios may end up on free, ad-supported streaming software like Roku Channel or Amazon’s Freevee, sources say. While there have been reports that these shows will end up on an ad-supported streamer owned by WBD, sources tell me it’s unlikely. Since they are being put on hold as part of the “restructuring” savings, these shows don’t really make big money for the company anymore. However, any revenue earned by selling to an external FAST platform would be relatively small so that seems to be quite a bit.

The past six months have been, as Zaslav himself said, incredibly chaotic for WBD — and by extension, HBO Max. A streaming device that looked set to start at the start of 2022, with buzzing displays and an improved user interface, has had thousands of small cuts (and a few large ones) from its owners. It is entirely possible that more pain is yet to come if the advertising market continues to deteriorate. And on December 14, HBO Max said some titles we didn’t know about earlier in the week — including The time traveler’s wife And the Find Magic Mike – He will disappear in the coming days as part of the same elimination round he claimed minx And the westworld.

On the other hand, a source tells me that the main reason HBO Max’s library is increasingly shrinking — post-merger restructuring rules — won’t be an issue in 2023. Those particular rules made a purge in 2022 possible and won’t apply in the new year. As a result, any shows removed in the future will make far less money than WBD, and while Zaslav never made a budget cut he didn’t like, it seems unlikely that we’ll see as many — or even any — drama catalogue. The Purge of 2023. Of course, when did WBD decide to sell itself to Comcast, Apple, or Amazon in 2024? Well, all bets are off.

This story has been updated with additional information.