It's Much Worse for Warner Bros. Discovery Than Most People Realize

By Dustin Rowles | TV | August 13, 2024 |

By Dustin Rowles | TV | August 13, 2024 |

Three weeks ago, when Joe Biden dropped out of the race and Kamala Harris began to surge in the polls, I found myself in a place where I needed to hook a news drip straight into my veins. For the first time in years, I craved the sweet, sweet nectar of Rachel Maddow, Jake Tapper, Jen Psaki, Wolf Blitzer, and Morning Goddamn Joe. I wanted to watch those Kamala rallies live, and I wanted Nicolle Wallace and Ari Melber to tell me what they thought of them immediately.

There was just one problem: I didn’t have cable television. In fact, I hadn’t subscribed to cable — either traditional (Comcast, Spectrum) or streaming (YouTubeTV, HuluTV) — for a couple of years. Eventually, I caved and subscribed to the cheap Sling TV tier, primarily for access to MSNBC and CNN, telling myself I’d cancel after the election.

I doubt I’ll even keep it that long. It’s not just because even CNN and MSNBC often lag behind social media in breaking news coverage. The real issue is that in the three weeks since I’ve had Sling TV, I’ve only watched MSNBC and CNN. The rest of cable television has become a veritable wasteland, and $40 a month is a lot of money to spend time with Joe Scarborough.

But my experience led me to realize just how dire the situation has become for cable networks, particularly for media giants like Warner Bros. Discovery (WBD). The company’s recent financial moves have exposed a crisis that’s far worse than most people realize.

Last week, WBD took a staggering $9 billion write-down. CEO David Zaslav informed shareholders that the company’s cable networks — which historically provided most of its profit — were worth $9 billion less than previously estimated. As a result, WBD’s stock has plummeted to below $7 per share, and the company’s overall value has decreased by about 70% over the past two years.

The reason for this precipitous decline is clear: most of WBD’s revenue comes from cable networks like Discovery Channel, TLC, Animal Planet, OWN, Investigation Discovery, Food Network, HGTV, TBS, TNT, Cartoon Network, and others. However, the original content from these networks has been consolidated into the Max streaming service, and many of these channels are on the verge of being shut down. To make matters worse, Zaslav lost TNT’s valuable NBA broadcasting rights.

This leaves WBD in an incredibly precarious position. With $38 billion in debt and its most valuable assets being HBO and Warner Bros. IP, how can the company ever turn a profit again? How can a network like TNT generate revenue without NBA rights when its daily lineup consists of reruns of old shows like Cold Case, Charmed, and Supernatural, interspersed with dated Dad movies?

The gravity of WBD’s situation becomes even clearer when we look at the broader industry context. Paramount Global recently announced that their cable channels were worth $6 billion less than previously valued, and they’ve shut down their Paramount Television network, effective at the end of the week. While Paramount’s movie studio is performing well and Paramount+ has finally turned a profit, the company is still weighed down by its cable networks. However, Paramount has a lifeline: it’s set to be acquired by Skydance Media next year.

WBD, on the other hand, has no such savior on the horizon. Zaslav has made some shitty decisions, such as merging with Discovery just as cable was declining. Now, there seems to be no clear path forward without selling valuable assets like HBO and Warner Bros./DC, and potentially guiding the rest of the company through bankruptcy.

The extinction of cable television, once a cornerstone of American entertainment, could become a reality within the next year or two. As consumers completely cut the cord after the 2024 election, and with a streaming ESPN network on the horizon, there will be even less reason for anyone to maintain a cable subscription.

But while this shift will affect the entire industry, it’s WBD that stands to lose the most. The company is saddled with massive debt, declining assets, and no clear strategy for the streaming-dominated future under David Zaslav (seen above, as a 64-year-old man wearing a backwards cap). Unless drastic action is taken soon, we may be witnessing the slow-motion collapse of one of the largest media companies in the world. For David Zaslav and WBD, the clock is ticking. The rest of us might be saying goodbye to cable, but for WBD, it could mean saying goodbye to everything.