I’ve taken more than a few jabs at the actions, decisions and attitude taken by Warner Brothers Discovery’s czar David Zaslav since he ascended to this throne two Aprils ago. While to Hollywood he was an outsider, he did help build an empire of profitable, distinct and popular linear networks in the relatively less glitzy environs of Silver Spring, Maryland and then, apparently tired of the Acela quiet car, moving the likes of TLC and Animal Planet to New York. At the time of his ascension, he claimed to be a big fan of content and history and yearned for the chance to be housed on a lot. Years earlier, I made a similar move, albeit with a few less incentives that he did.
So I was willing to give him the benefit of the doubt, particularly since he was inheriting damaged goods that the inherently cheap management of AT&T and the overly futuristic vision of Jason Kilar had accelerated in the first post-COVID months where their game plan was instituted. Zaslav was clearly relishing being the new sheriff, so it prompted me to give him the alter ego “Yosemite Zas”. It’s apparently struck a nerve, even with a few of his employees, so I’m told.
But from the moment he started, it became even clearer that much like the buffonish cartoon character that to me was his managerial doppleganger he was ultimately misfiring every time his trigger finger got itchy. His first press conference where he placed the value and importance of the 90 DAY FIANCE franchise om the same plateau as HARRY POTTER and DC. The infamous comments about not needing the NBA that have stuck with its commissioner Adam Silver. The immediate reversal of the pivot of CNN to digital mere days into its relaunch, and then choosing an executive who most recently had been worried about beating out the Jimmies for ratings into a competition for linear news viewership with prioritized polarizing entities where a distinct voice, for good or bad, keeps their respective audiences entrenched.
Yesterday was perhaps the culmination of all of his collected efforts coming home to roost. As the NEW YORK TIMES’ Benjamin Mullin reported:
Warner Bros. Discovery, the parent company of CNN, HBO and TNT, said on Wednesday that it was writing down the value of its TV networks by $9.1 billion, the latest sign of the continued free fall of traditional cable.
David Zaslav, the company’s chief executive, said on an earnings call that the write-down was an acknowledgment of the headwinds faced by legacy media companies.
“It’s fair to say that even two years ago, market valuations and prevailing conditions for legacy media companies were quite different than they are today,” Mr. Zaslav said. “This impairment acknowledges this and better aligns our carrying values with our future outlook.”
And as DEADLINE’s Jill Goldsmith added in her reporting from yesterday afternoon:
WBD also reported another $2.1 billion of “pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses” but didn’t elaborate.
It’s a complicated moment for WBD with the stock down about 70% from the merger and investors calling for action like breaking the company up again, which is immensely complicated. The company may be considering asset sales, including of its games business, according to the FT.
Some paragraphs that caught the eagle eye and astute probing of TOO MUCH TV’s Rick Ellis in his newsletter last night:
Based on the phrasing, I can parse out a couple of likely issues. “Pre-tax acquisition-related amortization of intangibles,” refers to the timing of tax deductions for intangibles that are considered worthless. The amount of the deduction is determined by amortizing the adjusted basis of the intangible ratably over the 15-year period beginning with the month in which the intangible was acquired. So this appears to be an issue related to how quickly some assets have essentially lost all value.
And Ellis further observed:
(I)t‘s not just problems at TNT. The linear TV market is continuing to collapse and while the old Discovery/Scripps Network channels had held up better than most in the industry, even those old stalwarts are showing their weakness.
Yes, the very assets that helped make Zaslav rich enough to put down a down payment on Bob Evans’ mansion, the ones he supposedly nurtured and grew, have now also been screwed up under his watch.
All of these were points not lost on CNN’s in-house media observer Oliver Darcy in his RELIABLE SOURCES piece from yesterday:
David Zaslav had a particularly tough day.
Speaking candidly to investors on the company’s earnings call Wednesday, Zaslav acknowledged the dire reality of the television business.
Zaslav did talk up other parts of the WBD business, describing the company’s Max streaming platform as “doing very, very well” with “tremendous upside.” But even as he offered the warm sentiment, Zaslav conceded the cold reality of “tough conditions in the legacy business.”
The hole WBD now finds itself in has led to enormous chatter that the company will be forced to sell off some of its assets. During Wednesday’s earnings call, chief financial officer Gunnar Wiedenfels said management is “very well aware” of its “responsibility to have a view on whatever strategic options are out there.”
“We’re very clearly focused on evaluating beyond just running the operational business,” Wiedenfels said. “So we’ve said before, you shouldn’t be surprised to see us engaging in whatever M&A processes are going on out there. You shouldn’t be surprised to see us engaging in partnership discussions.”
That said, WBD has shown a reluctance to sell any of its major assets. And whether it can get out of the corner it finds itself in without taking such a step may prove to be difficult.
Nothing that Darcy wrote was either inaccurate or not echoed elsewhere. But it might just have ticked off Yosemite a tad for it to be coming from one of his remaining employees. Was it mere coincidence that it turned out to be the last words Darcy wrote in such a role? Here’s how he made news early this morning, per THE WRAP’s Natalie Korach:
Oliver Darcy, CNN’s senior media reporter, is exiting the network and launching an independent media newsletter which was announced on Thursday.
The newsletter called Status was rolled out on Thursday morning, with Darcy explaining the endeavor as a “definitive nightly briefing that informs readers about what is really happening in the corridors of media power. The first issue is set to appear on Monday.
As the cartoon Yosemite was known to utter, “What a co-inky-dink”.
If real lives of real people who are less concerned with lavish mansions and yachts weren’t involved, not to mention the frivolity of filing lawsuits in the pious hope of extracting some additional cash along with what could be generated from those now-prioritized “strategic partnerships” championed as some sort of groundbreaking strategy, I’d still be in a mindset to laugh at Yosemite Zas and his flailing, grasping-at-straws “strategies”. But they are, and I’m not. And I strongly suspect those of you who once worked for any of the WBD entities, or perhaps those of you who still have stock options, would have even stronger opinions. It’s pretty clear how Wall Street as a whole feels. I honestly wonder how unbiased board members might be feeling this morning.
In many other companies, any CEO with this sort of track record, with seemingly no clue or desire on how to actually build businesses, and who is apparently so thin-skinned that constructive criticism results in parting of waves, would be up for a vote of no confidence. There is no question that should be the path what’s left of WBD should embark upon.
And for my part I think I’ll try to minimize the Yosemite Zas references for a while, since it’s gone far beyond a laughing matter. At least I know when to stop beating a dead horse.
Until next time…