Churn high at HBO, but Warner Bros. Discovery bullish on streaming prospects

David Zaslav

Warner Bros. Discovery has shed some light on the newly-merged company’s imminent plans for its streaming business.

The company, which completed its US$43 billion merger earlier this month, has already made significant changes to the DTC business, including the appointment of JB Perette to head its streaming efforts and shuttering CNN+ after less than a month of operating.

Speaking during the company’s earnings call, CFO Gunnar Wiedenfels said “The priority is to rally behind the integrated product and be very thoughtful about our spend.” Warner Bros. Discovery last month confirmed long-term plans to merge subscription streamers HBO Max and discovery+ into a single entity, though it is yet to reveal when this relaunch will happen or whether it will undergo a rebrand.

On the topic of this merged entity, CEO David Zaslav said that it would have a content library “about as big as Netflix” and said that it “looks like a pretty combustible compelling broad offering.”

Zaslav also revealed a high level of churn at HBO Max, which AT&T previously said ended Q1 at 77 million subscribers. He said: “There’s meaningful churn on HBO Max, much higher than the churn that we have seen. And so, the ability for us to come together is part of one of the thesis here that managing churn, and we’ve seen this because we’ve been added in Europe for eight years, as we begin to manage churn in a meaningful way, that provides a real meaningful growth.”

The exec would go on to repeatedly praise Discovery’s streamers for their low level of churn, with services such as discovery+ and GolfTV ending Q1 with 24 million subscribers. This was up from 22 million at the end of FY21.

On the topic of the ill-fated CNN+, Wiedenfels said: “Right or wrong, management has made a decision to invest a lot of the incoming funds into a number of investment initiatives. As I’m looking under the hood here, again CNN+ is just one example, and I don’t want to go through a list of specific examples, but there’s a lot of chunky investments that are lacking for what I would view as a solid analytical financial foundation and meeting the ROI hurdles that I would like to see for major investments.”