David Zaslav was once among America’s highest-paid chief executive officers. The success of the media company he ran, Discovery, earned him $246.6 million in 2021. More recently, he has presided over one of the greatest M&A failures of the past decade. And he is 24/7 Wall St.’s “Worst CEO of 2022.”
This week, 24/7 Wall St. picked four candidates for the Worst CEO of 2022 title. Among the yardsticks were stock price, strategic blunders and whether these chief executives have volunteered to resign or take large cuts in compensation when they dismiss workers. Other than Zaslav, the nominees were Mark Zuckerberg of Meta Platforms, Andy Jassy of Amazon and Ernest Garcia III of Carvana.
Zaslav was the architect of the merger of Discovery and WarnerMedia, which included the media assets of AT&T. The name of the company created by this marriage was Warner Bros. Discovery. This public corporation was officially formed on April 8, 2022. The new company’s stock has dropped 37% in the past six months to $10.74. Even battered Disney shares are off only 14% in the same period.
As it became clear that Warner Bros. Discovery was in trouble. Zaslav blamed AT&T. CNBC reports that when he looked at the newly created company, he found severe problems. According to a report about Zaslav by the network, “AT&T mismanaged WarnerMedia through neglect and profligate spending, he’d decided, according to people familiar with his discussions.” This comes as a shock. Zaslav, supposedly among the media’s savviest executives, had exercised poor judgment as he reviewed the new assets he would run. He has bungled what he was thought to be best at.
The merged company came with about $50 billion in debt, which it will struggle to pay down.
Wall Street realized how flawed the merger was when Warner Bros. Discovery released its earnings for the quarter that ended in September. The new company lost $2.3 billion on $9.8 billion. Cash flow from operations was a tiny $124 million.
One of Zaslav’s plans for improvements was to cut people. He already has begun to do that aggressively.
Zaslav made another strategic error. As he brought the company’s streaming assets together and drew upon the huge and growing combined video library, he thought it would help ramp up overall revenue. It appears he will brand this service “Max.” The plan faces two huge headwinds. The first is the existence of larger competitors: Netflix, Amazon Prime Video and Disney+. Add to these Apple TV+, which combines Apple’s huge device distribution as a platform to market to with its massive cash pool that can be used for new product and service launches.
Additionally, the market for streaming is threatened by content costs that are too high and subscription prices that are too low.
Zaslav seems to think he got damaged goods among those he acquired with WarnerMedia. He should have known better and should skip the excuses now.
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