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Warner Bros. Discovery CEO David Zaslav, CFO Gunnar Wiedenfels and JB Perrette, head of streaming and games, faced down skeptical media analysts today after losing the NBA and reporting a second quarter mostly below Wall Street forecasts and with a massive write-down stemming, in great part, from what feels like a basketball debacle.
“The NBA is a profitable right,” said Wiedenfels. WBD recently lost the package to Amazon. It had matching rights it tried to assert, that the NBA rejected. Warner sued. Zaslav didn’t mount an especially impassioned defense of the company’s case.
“We’re in litigation. At this point, we have handed it off to our lawyers. We have confidence in our position. The judge will decide whether our matching right, which is 11 pages long, represents an offer where we matched or not. We’ll see. But we’re getting back to work. The lawyers will handle this, and the judge will decide and off we’ll go.”
He declined to get specific when one analyst wondered how WBD would approach carriage negotiations without the NBA in its arsenal.
“This is what we do for a living,” Zaslav asserted. “We’re in 200 countries. Aside from the excitement and drive that we have around Max and our studio business and being the biggest maker of TV content and our library business, we have free-to-air and cable channels all over the world and those channels are B-to-B businesses and have carriage agreements. We’ve been in that business for 40 years. We’ve been very effective in that business and it’s our job, whether it’s a food channel or an entertainment channel or a sports channel to make sure we have a very robust offering of content that nourishes and excites an audience.”
He said WBD has managed to secure “meaningful increases for our content.” Even without the NBA, he said, “We are the leader or one of the leaders in sports globally.”
Execs called the write-down the result of an industry in transition, meaning linear networks, where WBD is not seeing any improvement. The film studio has a few good movies comping up but needs more time. Max is expanding rather slowly to a some key European markets.
WBD shares are in the tank at under $7 bucks, down 70% since the merger. That’s led to speculation the company might split up or sell asset. Execs indicated today a split was unlikely since Discovery just acquired Warner Media, for better or worse, two and half years ago.
Assets sales, maybe. Games has been mentioned. Perrette called Warner’s game biz “subscale” but full of opportunity.
“We’re a public company and we’re very well aware of our responsibility to have a view on whatever strategic options are out there. The same applies to the board. We’re very clearly focused on evaluating everything beyond just running the operational business.”
“We feel very good about where we are,” added Zaslav. “We have to look at all, and consider all options, but the number one priority is to run this company as effectively as possible. And you will see as our studio begins to grow, and if our global direct-to-consumer business scales the way we believe it’s going to, then that’ll be very apparent to investors, and we expect that will create shareholder value.”
