Warner Bros. Stock Beaten Down

An article about Warner Bros. Discovery Inc. (NASDAQ: WBD) CEO David Zaslav was pulled from GQ. It called him the “most hated man in Hollywood.” The GQ decision set off a PR scandal. Lost in the Zaslav controversy is that Wall Street has as big a problem with Warner Bros. Discovery as the media does.

Warner Bros. shares are down almost 10% in the past year, while the overall market is up 16%. A primary reason is that Zaslav’s attempt to repair the company is a whirlwind of decisions that appear to have little strategic purpose and are unlikely to affect financial results positively. And Warner Bros. is deeply in debt, a mistake Zaslav made when he agreed to merge Warner with Discovery. He assumed he could dig his way out of a terrible balance sheet. Investors do not think that will work. (These 19 executives pay themselves more than $150 million a year.)

One of Zaslav’s most visible decisions was to replace CNN CEO Chris Licht. Zaslav claimed Licht would be CNN’s perfect leader. Instead, its ratings plunged.

Zaslav also recently started a new streaming service called Max. Warner Bros. and Discovery’s separate streaming services ran well behind leaders Amazon and Netflix. Zaslav never adequately described why the rebranding would work.

Zaslav created a controversy when he removed some senior executives from the popular TCM channel. It was another sign he knew little about the consumers who watch the company’s video products and stations.

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Zaslav has moved many other key executives out of the company. It is not certain how this benefits Warner Bros.’s financial picture other than to save the money they were compensated.

If Zaslav has a vision for Warner Bros.’s future, it is muddy. And Wall Street has turned against him and his lack of a concrete plan.

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