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WarnerBros Could Cut Costs By Cutting A Deal With Foxtel

WarnerBros whose shares took a nosedive this morning, after they announced weaker than expected results, has two choices in Australia, cut a deal with Foxtel long term, and use the News Corp marketing machine to market their content, or come in direct with their new combined HBO Max and Discovery+ service and be forced to spend millions on marketing.

CEO David Zaslav says recently merged group will adopt ‘sensible’ approach after it reported a $4.8bn quarterly loss.

Earlier today in the USA Warner’s executive team outlined plans to establish a combined streaming service bringing together HBO Max and Discovery Plus, but pointedly described the platform as only “one part” of a broader approach.

Mocking the “spend, spend, spend and charge very little” approach taken in recent years as media groups fixated on streaming growth, Zaslav said Warner would in future adopt a “more sensible” approach to budgets and pricing.

A deal with Foxtel could save them millions in marketing dollars trying to compete with Stan, Disney + Amazon Prime and Paramount+ as well as Foxtel and Binge.

Foxtel currently has the rights to Warner and HBO content and if comments coming out of Warners overnight briefing is anything to go by the big US content house is looking to cut costs and that includes cutting back on marketing costs associated with their movies and TV shows.

They do intend to spend millions in the USA, Europe marketing their new combined streaming service.

Foxtel secured a content deal with US entertainment giant WarnerMedia in 2020 after a battle for the rights against Nine Entertainment Co’s streaming service Stan included was HBO programs Game of Thrones, Succession and Big Little Lies and Warner Bros shows such as The Big Bang Theory and Friends.

Overnight Warner announced that they were merging their HBOMax + and Discovery streaming services.

The recent results were the first since merging to combine the properties of Discovery and WarnerMedia — which include HBO, CNN, Warner Bros., HGTV and TLC.

Shares tumbled nearly 10% in after-hours trading.

Earlier in the week the business scrapped the already completed $200M+ “Batgirl” movie citing the high cost of marketing a movie that they doubted to deliver a profitable return.

Zaslav said that the team “could not find” an economic model that supports expensive direct-to-consumer movies like Batgirl, which the company killed after principal photography was completed.

WBD CEO David Zaslav also announced that more layoffs will be announced shortly.

The newly merged global streaming service will launch in the U.S. in summer 2023, with other markets to follow the Company said.

Zaslav also said that, after its new service gains a foothold, the company also plans to launch a free, ad-supported streaming service with some of its content, part of a “diversified approach” to streaming.

“Our streaming strategy has evolved over the last year, and reflects the importance of, rather than the dependence on [streaming],” Zaslav said on the company’s earnings call, adding that the company will roll out its free or “FAST” service, “once our SVOD service is firmly established in the market.”

The streaming service that reported a $2.15 billion dollar loss for the quarter last night, is targeting profitability in the U.S. by 2024, and 130 million subscribers by 2025, up from 92 million as of today.

The content Company said that going forward there will be one service, under one brand, name which is still to be determined.

The U.S. launch will be summer 2023, with Latin America to follow later that year, and Europe and other markets following in 2024, there was no mention of the Australian market.

In the USA the new streaming service will launch with a “big, noisy” marketing campaign meant to highlight the enormous library of content.



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