A new report has shed light on the merger between Warner Brothers and Discovery and why it might mean bad news for AEW.
Earlier this year, WarnerMedia – which owns TBS and TNT – merged with Discovery to make a new media behemoth. The New York Post previously reported that new CEO David Zaslav is expected to “take a scalpel” to the new company which will be known as Warner Bros. Discovery.
Billionaire media mogul John Malone, who is a longtime stakeholder in Discovery previously commented that “cost synergies” – read “cuts” – for the newly merged company should be expected to “easily go past” $3 billion to $4 billion a year.
Now writing in the Wrestling Observer Newsletter Dave Meltzer has reported why initial reports of cuts costing $3 billion will be surpassed handily and why it won’t be a good thing for AEW:
“The belief now is that the WBD [Warner Brothers Discovery] cuts will be well above the first announced $3 billion mark. All the WBD business news from the last week does not appear to be a good thing for AEW getting a major increase in renewal rights. In the end, if they view it as sports that does good ratings (and this week they don’t, next week they could) they’re better off than it being viewed as regular programming. And that’s up to the people in charge. But massive layoffs are expected in the company.”
“They claim they will be spending more on HBO Max, but are dumping producing movies for streaming, claiming that can’t be economically justified. John Malone, who is on the Board of Directors, has talked about $4 billion in cuts and Deadline said high-level insiders are talking closer to $5 billion. Sales, marketing distribution and engineering look to be the most impacted.”
“One senior Executive at Warner told Deadline, “I don’t think I’ve ever seen someone come in and look to just outright gut a company like this.” The stock price is also down 38 percent since April, with heavy cuts in TBS, TNT, and truTV, both in management and cutting shows scheduled to start and others in developmental, as well as ending shows like Chad, Snowpiercer, and Kill the Orange Bear. WBD also canceled the completion and release of the DC movie Batgirl.”
Meltzer also touches on the merged company’s plan to combine their major streaming services and breaks down why AEW fits in perfectly with the company and how their programming is still well within the budget but when costs are being slashed, anything could happen:
“[…] The big news was HBO Max and Discovery + would merge, but that was always known. For now, the two services will share content until they merge next summer. David Zaslav said it made no economic sense for direct-to-streaming movies and that for movies, the emphasis going forward would be on theater releases. It’s pretty much unheard of to write off this much for a movie in losses without releasing it.”
“AEW did come up in a graphic as far as the highest rated debut shows of the year across all networks (the debut episode of Dynamite on TBS in January). They are looking at doing more cheaper reality shows for TNT, which had been considered a prestige high-level station. Discovery programming is usually budgeted at $400,000 to $500,000 per hour.”
“Wrestling fits into that parameter because right now they are paying roughly $321,000 per hour for one of the top-rated shows on cable and a second show on Friday; while USA pays $1,743,000 per hour for Raw and FOX pays $1,971,000 for Smackdown.”
“As compared to Raw, Dynamite is an incredible bargain, but that doesn’t mean WBD will see it that way and they aren’t looking at whatever ratings and expense comparisons with WWE on a different station add up. Those numbers would on paper make Dynamite a strong performer and ripe for a renewal at a much higher rate, but in an era of cost-cutting, what offer they’ll make is the big question.”