Too Much TV: Your TV Talking Points For Thursday, August 3rd, 2023

Conventional wisdom is often just the lies we all agree make us feel better.

Here's everything you need to know about the world of television for Thursday, August 3rd, 2023. 

WARNER BROS. DISCOVERY QUARTERLY NUMBERS
By this point today, if you're interested in a deep dive into Warner Bros. Discovery quarterly earnings, you've probably seen it elsewhere already.

I'll just make a couple of general observations.

* WBD reported it lost 1.8 million direct-to-consumer paid subscribers globally in the the second quarter, after the somewhat combining of the HBO Max and Discovery+ subscription streaming platforms. A lot of the reporting is attributing that change to the bulk of the reason why subscriber numbers dropped. But we don't know. The company didn't break out specific numbers for the new Max and Discovery+, nor do we know how much of this drop was due to weakness in other regions. For instance, the version of Discovery+ available in Europe looks very different than it does in the U.S., and it includes live sports programming. If a significant number of those subscribers have left in the most recent quarter, that would have a big significance.

WBD does report that it lost 1.3 million total subscribers in the U.S and Canada for the quarter and 500,000 internationally. But it doesn't report out on a country or regional basis. So we don't really have a sense of how the APAC markets are doing in comparison to the U.S. or Europe. 

But it's also important to have more specific breakouts for other reasons. In my household, we have a subscription to both Max and Discovery+. Under WBD's guidance to investors, we would be considered two subscribers. So even the shifts in the U.S. reflect numbers that are a bit mushy.

And then there is the question of all the subscribers who aren't included in these numbers. Here is the way the presentation to investors describes the issue:

The reported number of “subscribers” included herein and the definition of "DTC Subscription" as used herein excludes: (i) individuals who subscribe to DTC products, other than discovery+, HBO, HBO Max, and Max, that may be offered by us or by certain joint venture partners or affiliated parties from time to time; (ii) a limited number of international discovery+ subscribers that are part of non-strategic partnerships or short-term arrangements as may be identified by the Company from time to time; (iii) domestic and international Cinemax subscribers, and international basic HBO subscribers; and (iv) users on free trials except for those users on free trial that convert to a DTC Subscription within the first seven days of the next month as noted above.

That removes what I suspect are some of more volatile parts of the streaming business from the over DTC reported totals. And there is so much I'd like know. How many domestic and international Cinemax subscribers are there? International basic HBO subscribers? And how many international Discovery+ subscribers fall into the category of "non-strategic partnerships?"

The company is touting its global average revenue per user (ARPU) rose slightly quarter-over-quarter from $7.48 to $7.71. 

But even the company's explanation of ARPU seems to be leaving a lot of assets off the table. My guess would be these are ones which are performing badly or whose revenue volatility would skew the reported numbers more heavily than management would prefer:

Excluded from the ARPU calculation are: (i) Max/HBO Hotel and Bulk Institution subscription revenue and subscribers (i.e., subscribers billed on a bulk basis); (ii) Cinemax subscription revenue and subscribers; (iii) HBO Basic subscription revenue and subscribers (International-only); (iv) Non-discovery+ DTC revenue and subscribers; and (v) Non-Core discovery+ revenue and subscribers, and (vi) users on free trials who convert to a subscription for which we have recognized subscription revenue within the first seven days of the calendar month.

Every major media company offers up a lot fuzzy numbers at times. But I have a lot of questions about the direction of some of its non-core businesses.

* I have seen some reporting arguing the most current results make the case for David Zazlav's stated desire to draw down the overall Warner Bros. Discovery debt. He is certainly doing that and if your metric for success is someone paying off debt originating in large part from the merger they pushed through, then I suppose he is a success.

To be fair, Warner Brothers already had a substantial amount of pre-existing debt before the merger. But combining with Discovery added to that total and the efforts to pay it down have led to extensive layoffs, a sizeable cut in content spend and a reorganization seemingly mostly designed to make the company easier to split into pieces if it's sold off.

Imagine what WBD would look like if it hadn't have worked so hard to pay down debt. In he most recent quarter, the Company retired $1.6 billion of debt - repaid $1.1 billion of its April 2025 term loan, purchased $460 million of its 2024 Floating Rate Notes, and purchased $88 million of its other senior notes. And today, it launched a debt tender offer for up to $2.7 billion. That's money that could go to the business of creating, distributing and marketing content. That thing that built both Warner Brothers and Discovery in the first place.

ODDS AND SODS
* Season nine of Southern Charm premieres Thursday, September 14th on Bravo.

* All six episodes of the original docuseries, God. Family. Football premieres Friday, September 1st on Freevee. It follows the story of "former pro football player, legendary high school football coach, and pastor Denny Duron, as he comes out of a 30-year retirement from head coaching to lead the football program he founded at Evangel Christian Academy back to national prominence."

* Prime Video has picked up a third season of The Summer I Turned Pretty, although it won't begin production until the WGA and SAG-AFTRA strikes are resolved. One interesting thing about the order is that it is for ten episodes. That's an increase over the seven-episode season one and eight-episode season two orders.

CONVENTIONAL WISDOM IS OFTEN JUST THE LIES WE ALL AGREE MAKE US FEEL BETTER
Usually when I am pointing to one of Joe Adalian's Buffering columns, it is because I find myself agreeing with him. This is one of those rare occasions when that is not the case. But you should still read his piece. In part, because based on the conversations I've had with other people in the industry in recent months, you probably agree with him.

In the post entitled "The Looming Catalog Crisis," he argues that the success of Suits on Netflix shows that the streamers should be making more shows that have longer seasons and more seasons overall:

One of the hottest shows on streaming this summer isn’t some critically-adored masterpiece or a bold new statement by an international auteur. Nope, the warm-weather winner this year might just be new-to-Netflix reruns of Suits, a basic cable drama which lasted nine seasons and produced well over 100 episodes during its USA Network run — in other words, exactly the kind of decade-spanning hit the streaming giant has helped make all but obsolete. While Netflix loves acquiring older shows with hefty episode libraries (think Grey’s Anatomy or Seinfeld), when it comes to original content, it can be a little more, shall we say, promiscuous — lots of relationships, little long-term commitment. And because so many other platforms have followed its lead, even successful series on streaming now regularly disappear in as little as three years and typically leave behind no more than a few dozen episodes. They’re literally not making shows like they used to — and that’s a big problem.

I encourage you to read the entire piece and while I do disagree with the premise, I'll also admit it's an argument I hear from people inside the industry on a regular basis. 

My perspective is that from the streamers point of view, licensed catalog titles perform very differently than original series. Part of the reason they over-perform is that suddenly, viewers who have heard of the show but probably never watched it the first time around (which statistically, is most of the subscribers on Netflix) are suddenly confronted with a 100 or 200 episodes of a well-made series. That's going to drive engagement, encourage bingeing and skew the show's performance. You could take a show like Suits, release one season every six months and while it would likely do very well, spreading it out over a number of years would likely lead to a similar number of viewers, but distributed across a much longer time frame. Fewer spikes in viewing, less topping-the-charts hype.

There’s nothing mysterious or complicated about what could be done to avert this potential problem: Streamers should just start making shows that film more episodes every season and, if audiences embrace them, they should allow them to run for six, seven, and eight seasons instead of two or three. That doesn’t mean giving up on big stars and cinematic production values or even shows that come and go after 40 episodes. Netflix and HBO have raised the bar for what television can be and audiences clearly crave — and will pay for — big spectacles or the chance to see Steve Martin, Martin Short, and Selena Gomez solve mysteries with Meryl Streep. “You can’t put the toothpaste back in the tube,” one senior streaming programmer says about the desire to go back to a world where all hit shows cranked out 22 episodes a year.

I have no doubt that pretty much everyone in either the WGA or SAG-AFTRA would love to get back to a 22 episodes a year world. But it's important to remember that production model was dependent on a specific set of factors that weren't usual for the American markets. It also wasn't the norm in most other parts of the world.

In the old linear TV universe, there were financial incentives to produce a large number of episodes per year and as many seasons as possible. Because the studios took a loss on every episode until it went into syndication, there was an incentive to produce enough episodes to resell it (typically at least 100) and the more episodes you had of a show, the more money you were going to make overall. And while the bins of TV history are filled with lots of shows that only lasted one or two seasons, the dynamics of the business meant that even a mediocre show could make everyone a lot of money. I believe in the business they refer to that as the "Coach Effect."

But in the streaming business, none of those incentives exist. Certainly not at Netflix, which doesn't license out its original content. But you don't see episode orders longer than 10-13 episodes at any streamer.

Part of it is the economics of streaming. Data shows that nearly all the viewing for an original series takes place in the first 45 days. And that having more episodes of a show just means that most subscribers will watch all 23 episodes in that 45-day window instead of the typical order of 10. There's no real financial upside to for the streamers.

There have been some efforts by streamers to produce more traditional feeling scripted dramas - a streaming take on a network procedural. But as has been the case with traditional comedies, audiences have been resistant to the idea. Although no one has a clear sense of why that's the case.

While I could ramble on about this forever, I'll leave you with one other thought. This paragraph is worth highlighting, because it illustrates how deeply certainly beliefs are held in the industry:

But recognizing that TV is different now doesn’t mean accepting that all the changes of the past decade have to be considered permanent or insisting on a one-size-fits-all approach to program models. The same suit who says we’re not going back to the pre-Netflix world also says he’s been sensing an openness among his fellow execs to an evolution in how they think about the lengths of both seasons and series. “Some people are starting to push back against these accepted truths,” he says. “Consumers really liked having 12 or more episodes of a show every season. And we all enabled Netflix to change that.” TV critic and Burn It Down author Maureen Ryan echoed those thoughts earlier this week on the social network formerly known as Twitter: “U.S. TV was a money-printing machine for decades because people like 12- to 22-episode seasons that allow for meaty character development,” Ryan wrote.

Ryan is one of the smartest journalists I know and I respect her take on things. But that storyline of what happened to the TV industry is only slightly accurate. But it's the one nearly everyone believes, because it matches how we feel about the direction the industry is headed.

I know I talk about this a lot in this newsletter. But it matters. Because if we can't agree on how we got here, how can we agree on the best methods to improve it all?

TWEET OF THE DAY

WHAT'S NEW TODAY AND TOMORROW:

THURSDAY, AUGUST 3RD, 2023:
* Botched Season Premiere (E!)
* Choona (Netflix)
* Demons & Saviors (Hulu)
* Fboy Island Series Premiere (The CW)
* Happily Married Season Two Premiere (Topic)
* Heartstopper (Netflix)
* Jersey Shore Family Vacation Season Premiere (MTV)
* Secrets Of A University (LMN)
* The Lincoln Lawyer Season Two Premiere (Netflix)
* Wrongly Accused (Sundance Now)
* Zom 100: Bucket List Of The Dead (Netflix) 

FRIDAY, AUGUST 4TH:
* Eva The Owlet (Apple TV+)
* Fatal Seduction (Netflix)
* The Big Nailed It Baking Challenge Series Premiere (Netflix)
* The Hunt For Veerappan (Netflix) 
* The Lost Flowers Of Alice Hart (Prime Video)
* The Marriage Pact Series Premiere (The Roku Channel)
* Witness To Murder Series Premiere (A&E)
* Women On Death Row Series Premiere (A&E)

Click Here to see the list of all of the upcoming premiere dates for the next few months.

SEE YOU WEDNESDAY!

If you have any feedback, send it along to Rick@AllYourScreens.com and follow me on Twitter @aysrick.