Warner Bros. Discovery's David Zaslav said Thursday that he expects the incoming Trump administration to create a more friendly environment for deal-making, opening the door to industry consolidation.
“That will provide a real positive acceleration effect that is needed in this industry,” Zaslav told investors on a conference call after the company announced its quarterly results. He was referring to Donald Trump's election as president on Wednesday. The Republican defeated Democratic candidate Kamala Harris.
Strict antitrust policies under the Biden administration have weighed on deals across all industries in recent years, limiting options for media companies.
Zaslav told investors that the entertainment and broadcasting industry is ripe for consolidation. The integration will improve the consumer streaming experience by consolidating different services into a more consistent service.
Shares of parent company CNN rose 11% in midday trading. The stock has lost about a quarter of its value since the beginning of the year.
“Generally speaking, Trump supports deregulation,” said Ross Venez, a TV streaming analyst at eMarketer. “That would increase the likelihood of further M&A. However, most major media M&A deals in recent history have had bad outcomes for employees and investors.”
Warner Bros. Discovery and its peers face a decline in their lucrative TV business as millions of consumers migrate to streaming video services, in what Zaslav described as a “generational disruption.” I am overcoming the situation.
New regulatory filings reveal that Mr. Zaslav was in merger talks with Paramount Global in December, but a deal never materialized. The company also considered plans to separate its streaming and studio businesses from its television networks.
In August, Warner Bros. Discovery wrote down the value of its television assets by $9 billion. Paramount Global followed suit, filing a $5.98 billion bill for its television network that same month. Just last month, Comcast announced it was considering spinning off its cable network into a separate company, a strategy Walt Disney evaluated and rejected earlier this year.
Streaming accelerates with Olympics
Earlier, Warner Bros. Discovery on Thursday reported a surprising quarterly profit as cost controls and record streaming subscriber growth from the Olympics offset a lack of major box office revenue from its studios.
The company's Max streaming platform expanded into Europe and added subscribers in the weeks before the Paris Olympics with exclusive rights to stream showcase sporting events.
Max also benefited from the platform's bundle with Disney+ and Hulu, as well as the strong first season of “Penguin,” a crime drama series based on the popular DC Comics villain that was released in September.
Warner Bros.' Discovery streaming business, which offers Max and Discovery+ services, added 7.2 million direct-to-consumer subscribers in the third quarter, up from an expected 6.28 million increase, according to data compiled by Visible Alpha. exceeded.
Zaslav said Max achieved its best quarterly subscriber growth since the platform's launch, marking the end of two years of building the service and reversing millions of dollars in losses. “It was a moment,” he said.
Streaming's earnings before interest, taxes, depreciation and amortization more than doubled from a year ago to $289 million, supported by lower content costs.
WBD also made progress in its cost control efforts, with expenses decreasing 5.5% in the quarter ended September 30. This allowed the company to report a surprise profit of 5 cents per share. Analysts had expected a loss of 9 cents, according to data compiled by LSEG.
Revenue for the TV Networks segment, which includes Discovery Channel, Animal Planet and Food Network, rose 3% to $5.01 billion, driven by the sublicense of Olympic sports broadcast rights to regional broadcast networks across Europe.
WBD's studio division revenue fell 17%, with total revenue of $9.62 billion, below expectations of $9.8 billion.
With films such as “Beetlejuice” set to be released in the July-September period, WBD's studio division is struggling to repeat the success of last year's “Barbie,” which had the highest box office revenue of 2023. .
