Warner Bros. Discovery Not Worried About Netflix’s Problems

By Bill Bradley 

Warner Bros. Discovery is not here for your subscriber wars.

Following its $43 billion merger, which closed on April 8, Warner Bros. Discovery held its first-quarter earnings call Tuesday. David Zaslav, president and CEO of the new company, made his intentions clear. The company intends to approach every decision through a “lens of enhancing asset value against the set of financial returns.”

“Our goal is to maximize long-term shareholder value and asset value, not just subs. We will not overspend to drive subscriber growth,” Zaslav said.


However, subscriber growth doesn’t appear to be an issue.

The company ended the first quarter of 2022 with 24 million global direct-to-consumer subscribers, which includes subscribers across Discovery+ and other platforms. That’s an increase of 2 million since the fourth quarter. The company also clarified that it only counts a subscription if it is on a paying status and excludes users on free trials. However, the quarterly subscriber count includes Ukraine subscribers, who temporarily receive Discovery+ for free.

Zaslav noted that, along with HBO and HBO Max, which reach 76.8 million subscribers, Warner Bros. Discovery now has more than 100 million collective global subscribers. And though Netflix recently announced its first loss in total global subscribers since 2011, Zaslav believes Discovery is uniquely positioned with its Ad-Lite model to succeed in its own lane in the streaming market.

“You take a look at what Netflix has done over the last several years and what Disney has done. They’ve plowed a path, and behaviorally people have gotten acclimated to buying content. They’ve got acclimated to watching content on different devices, how to move content around. And here comes this new company with this lane, and the middle lane is wide open for us to accelerate with the broadest and most compelling IP in the world,” Zaslav said.

The CEO believes Discovery+ and HBO Max create a “combustible” combination.

“People are spending hours a day with Discovery+. We have content, a huge library, about as big as Netflix. You put that together with the shock and awe of HBO Max. And the first question for us is that looks like a pretty combustible, compelling broad offering,” he said.

During the Warner Bros. Discovery earnings call, Zaslav emphasized how the company is already in place to succeed in AVOD, recognizing consumers wanted a lower-priced opportunity with an ad lite option.

He added, “We’re in the business of selling advertising, which gives us a great advantage. So as others, and I expect they will over the next couple of years, get into the streaming ad lite business, many will not have the infrastructure of teams locally on the ground or the ability to package all the channels or free-to-air channels and markets across Europe, together with that type of inventory.”

During Netflix’s earnings call last week, the company indicated it might add an advertising tier in the future. However, Netflix provided no timeline or details about the rollout. The company also blamed password sharing for its lower subscriber numbers, estimating it was in 100 million more homes than its 221.6 million subscriber total indicated.

Warner Bros. Discovery downplayed any impact of password sharing on its subscriber numbers, believing it wasn’t a significant issue.