IN WHAT is quickly becoming a pattern, Warner Bros Discovery is making headlines for taking a mulligan. Less than a month after reversing its inexplicable 2023 decision to drop the valuable HBO branding from its streaming service, HBO Max, the entertainment conglomerate is following up on its three-year-old merger of two separate companies by…splitting them into two separate companies.
The specifics of this and similar recent shake-ups make clear a troubling trend: Media giants attempt to be every kind of entertainment company at once, and then struggle to do much of it particularly well. Ultimately, the audience is left with the short end of the stick.
To be fair, the split isn’t quite a full-blown reversal like the HBO Max to Max back to HBO Max branding backflip. The 2022 merger brought together WarnerMedia’s assets (including Warner Bros, DC Entertainment HBO, CNN and TNT) with Discovery’s holdings (Discovery Channel, TLC, Discovery+ to name a few). The new proposal will separate Warner Bros Discovery’s offerings into two companies: one for its streaming assets and film studios, and another for its legacy cable TV channels.
Or at least that’s one way to delineate the divergence of its holdings. Another, more blunt, version would be: For the most part, the company has put its profitable pieces (streaming and film) in one pile and the non-profitable pieces (the TV networks) in another.
Few who were paying attention to the 2022 deal would be surprised by its ultimate failure. Warner has a long and chequered history of ill-advised mergers. Its previous ownership, AT&T, is a noteworthy example. As part of the deal with Discovery, AT&T spun off WarnerMedia with tens of billions of dollars in debt, which Warner Bros Discovery then assumed. The resulting company has managed to pay down about US$20 billion, which would be impressive were it not for the remaining US$34 billion still owed (plus an estimated US$40 billion in lost value).
Still, we’re not talking about some fly-by-night operation – Warner Bros recently celebrated its 100th anniversary and has become shorthand for excellence in film and television.
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Within that century, it released 1927’s The Jazz Singer, an industry disrupter that was the starter pistol for the “talkies” revolution. The studio was praised for its gritty, socially conscious Depression-era dramas and crime pictures and released legitimately iconic movies such as Casablanca, Rebel Without a Cause, Bonnie & Clyde, The Exorcist, Goodfellas, The Shawshank Redemption, the Harry Potter franchise and (of course) the Looney Tunes shorts and features. And let’s not forget Warner Bros produced smash TV shows such as Friends and ER.
All of which prompts the question: If a company with that kind of pedigree can’t stay afloat in a media landscape that’s perpetually hungry for entertainment (or, to put it less artfully, “content”), who can?
The bleak current outlook of the industry indicates that perhaps the answer is “no one”. Even the Walt Disney Co, which has managed to couple a keen eye for valuable properties with a cultural influence and brand recognition that most other studios can only dream of, may not be infallible. Between the decreased dominance of the Marvel Cinematic Universe and the chinks in the armour of its Disney+ streaming service, it’s seen better days.
Universal Studios, America’s oldest surviving film studio (founded in 1912) and still the go-to image of motion picture production thanks to its popular tours, is in the midst of its own sorting-and-separating process. Its parent company, Comcast, announced plans last year to split the oversized NBCUniversal into two groups. Like Warner Bros Discovery, it separated into profitable assets (such as NBC, Bravo, Peacock and theme parks) and less profitable ones (the likes of USA, Syfy, E!, Oxygen, MSNBC and CNBC).
Only time will tell if the less lucrative group can survive on its own. The uncertainty is an unfortunate symptom of a fractured media landscape that has been saturated with more viewing options than audiences can (or want to) keep track of.
One thing that is not a mystery is that if executives want to compete in a crowded field, they have to be willing to think outside the boxes they’ve so carefully constructed. Warner Bros did that in a big way at the end of the 1940s. When profits had fallen by more than 50 per cent (due to multiple factors, including the Paramount Decrees and the looming threat of television), Jack Warner tightened belts at the studio. He ended long-term contracts with several of its most expensive stars. It was painful and difficult, but it kept the doors open and the lights on, and the studio reconfigured how they made movies for the changing times and trickier landscape.
One could argue that these spin-off solutions are roughly equivalent to Warner’s cuts, but solving contemporary problems requires executives to fixate on more than mere numbers as measures of success. As in past moments when audience attention has wavered (in the face of such threats as radio, television and home video), the best solution lies not in bookkeeping but in creativity – empowering filmmakers, showrunners, writers and actors to produce entertainment that genuinely excites audiences and compels them to seek it out. BLOOMBERG
The writer is a film critic and historian whose work has appeared in The New York Times, Vulture, The Playlist, Slate and Rolling Stone. He is the author, most recently, of Gandolfini: Jim, Tony, and the Life of a Legend.
