Warner Bros. Discovery’s David Zaslav foresees a more deal-friendly environment under the incoming Trump administration, opening the door for industry consolidation, he said Thursday.
“This would provide a real positive and accelerated impact in this industry that is needed,” Zaslav told investors on a conference call after the company released quarterly earnings. He was referring to the election of Donald Trump as president on Wednesday. The Republican defeated Democratic candidate Kamala Harris.
Strict antitrust policies under the Biden administration have affected dealmaking across industries in recent years, limiting options for media companies.
Zaslav told investors that the entertainment and streaming industry was ripe for consolidation, which would improve consumers’ streaming experiences as disparate services are combined into more coherent offerings.
Shares of parent CNN rose 11% in midday trading. The stock has lost about a quarter of its value so far this year.
“Overall, Trump favors deregulation,” said eMarketer television and broadcast analyst Ross Benes. “This will increase the chances of more M&A. But most of the big media M&A deals in recent history have turned out badly for employees and investors.”
Warner Bros. Discovery and its peers are navigating what Zaslav described as a “generational divide,” facing an erosion of its profitable TV business as millions of consumers migrate to streaming video services.
A new regulatory filing reveals that Zaslav had engaged in merger discussions with Paramount Global last December, though a deal never materialized. The company also explored a plan to separate its broadcast and studio businesses from its television networks.
In August, Warner Bros. Discovery valued its television assets at $9 billion. Paramount Global followed suit, taking a $5.98 billion fee for its television networks that same month. As recently as last month, Comcast said it was weighing spinning off its cable networks into a separate company, a strategy that Walt Disney earlier this year praised and rejected.
Olympics increase broadcasting
Earlier on Thursday, Warner Bros. Discovery reported a surprise quarterly profit on Thursday as cost controls and a record Olympics-driven increase in streaming subscribers helped offset a lack of major hits from its studio.
The company’s Max streaming platform expanded into Europe weeks before the Paris Olympics with exclusive rights to broadcast the showpiece sporting event, boosting subscribers.
Max has also benefited from the platform’s merger with Disney+ and Hulu, as well as a strong first season of “The Penguin” – a crime drama series released in September and based on a popular DC Comics villain.
Warner Bros.’s streaming business Discovery, home of the Max and Discovery+ services, added 7.2 million direct-to-consumer subscribers in the third quarter, beating estimates for 6.28 million additions, according to data compiled by Visible Alpha.
Max delivered its strongest quarterly subscriber gain since the platform’s launch, Zaslav said, calling it “a meaningful moment” that capped two years of building the service and reversing millions of dollars in losses.
The broadcast unit’s adjusted earnings before interest, taxes, depreciation and amortization doubled from a year earlier to $289 million, helped by lower content expenses.
WBD also made progress in its efforts to control costs, with expenses falling 5.5% in the quarter ended September 30. That helped it report a surprise profit of 5 cents per share. Analysts had expected a loss of 9 cents, according to data compiled by LSEG.
Revenue at the TV networks division, which includes Discovery Channel, Animal Planet and Food Network, rose 3% to $5.01 billion, boosted by the sub-licensing of Olympic sports rights to regional broadcast networks across Europe.
Revenue in WBD’s studio segment fell 17%, pulling in total revenue of $9.62 billion below estimates of $9.80 billion.
With shows such as “Beetlejuice Beetlejuice” in the July-September quarter, WBD’s studio division has struggled to repeat last year’s success of “Barbie,” the top-grossing film of 2023.
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