Warner Bros. Discovery Is America's Worst-Run Company

Media management superhero David Zaslav thought he could engineer a mishmash merger between two large media companies. In the process, he took on crippling debt. Zaslav has ruined whatever success Warner Bros. Discovery Inc. (NASDAQ: WBD) might have had. He has poorly mismanaged all the pieces he put together. Earnings cratered due to that, as did the company’s stock. Warner Bros. Discovery is the worst run among large American media public corporations and American companies in general. (Click here for the biggest movie flops in Hollywood history.)

Revenue for the quarter was $11 billion, much below Wall Street estimates. An $0.83 loss per share was well under the consensus forecast and totaled a loss of $2.1 billion. Zaslav said he believes things will be better in the second half. That is a guess, and the company has such trouble that it is unprepared for success.

Zaslav has played one of the oldest cards in the deck. This is to cut a company’s expenses to find profitability. Eventually, it is cut to the bone and not enough skilled people are left for a turnaround.

Zaslav made sure the company was hog-tied financially. It has $45.5 billion in debt on its balance sheet and $3.9 billion in cash. Any extensive losses will mean a difficult refinancing or a sale of assets.

Revenue in the company’s critical movie business, Warner Bros. Discovery’s crown jewel, dropped 23% to $8.3 billion. If this does not recover, the company cannot return to a growth track. It faces extraordinary challenges from other traditional studios and studios run by Amazon, Apple and Netflix, to name a few.

Warner Bros. Discovery’s streaming business is too small to compete with giants Netflix, Amazon and Disney. Research shows that people will subscribe to an average of 3.6 streaming services. Warner Bros. Discovery’s subscription total is 96.1 billion, up only 1.1 million from the previous quarter. That means the space for Warner Bros. Paramount to squeeze into is small. Average revenue per user is also $7.58, which is far too low to be profitable.

Zaslav has a reputation as one of the highest-paid CEOs in America. He has done such a remarkably poor job with Warner Bros. Discovery, he should not be CEO at all.

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