Too Much TV: Your TV Talking Points For Friday, February 23rd, 2024

Another tough day for Warner Bros. Discovery

Here's everything you need to know about the world of television for Friday, February 23rd, 2024.

ANOTHER DIFFICULT DAY FOR WARNER BROS. DISCOVERY
Warner Bros Discovery announced its fourth quarter earnings today and while there were a couple of highlights that were widely over-hyped in some of the trade press, investors in the company were left with more questions than optimism. Especially when it comes to the company's long term strategy.

Yes, the company added 1.8 million subscribers to its direct-to-consumer subscriber base. But 1.3 million of those subscribers came from the acquisition of the Turkish streamer BluTV and the addition of 800,000 subs from TNT Sports Chile. And given the company doesn't break out individual numbers, there's no transparency on how individual platforms might be faring.

It's a similar problem with the perplexing Hollywood Reporter headline "Warner Bros. Discovery Becomes First Hollywood Conglomerate to Turn Full-Year Streaming Profit, Hitting $103M." It was an especially perplexing headline given the company missed on both earnings and revenue for the quarter.

Despite the misleading headline, the company also lost money on streaming in the fourth quarter. But the bigger issue is that WBD isn't reporting a "full year profit" in its streaming products. It's an annual profit for its Direct-To-Consumer (DTC) unit. Which includes the company's streaming platforms, but also its pay-TV products. That unit is also where much of the money derived from licensing content formerly on its DTC platforms ends up, as well as the cost savings attributable to writing off projects formerly headed to streaming. So the phrase "streaming profit" is doing a lot of work in this headline. But that didn't stop the piece from being heavily aggregated today on other sites.

A lot of the problems at WBD are deep-seated institutional challenges. In part because there was a determination after the merger with Discovery Communications to radically undo every strategic decision made by outgoing Warner Media head Jason Kilar. But the strategy at WBD is also a reflection of CEO David Zaslav's worldview as well as the advice being given by trusted figures such as John Malone.

Zaslav seems to believe that success will come from a combination of deep cuts into the meat of the company in order to lower operating costs and increase free cash flow. While somehow convincing other industry rivals to "rebundle" their services as a way to lower churn and lessen marketing costs.

The problem is that even supporters of Zaslav's vision have real doubts about whether this is the correct approach in the medium and long-term. Rumors continue to swirl Zaslav would like to do a merger or two in order to give the already large media company more weight in the industry. And while I understand the strategic vision involved in that desire, I don't see any clear indication that a merger on an equal basis or one merging with a smaller company would solve any of the core WBD problems. 

Thinking about this today, I kept going back to a piece I wrote last summer about the "innovator's dilemma." And much of what I wrote then seems to be very applicable to the challenges being faced by Warner Bros. Discovery executives right now:

A common misinterpretation is that incumbents fail to develop these disruptive technologies or embrace them due to the inability of the organization to adapt operationally or technologically. In other words, management is unable to identify new trends, develop new ideas, and reorganize to bring these new technologies to market. This interpretation, however, is plain wrong and the opposite is shown to be true.

What the theory — and the extensive evidence — in fact, support is that incumbents often are the ones to spot and develop new technologies while easily reorganizing themselves to do so. The problem is they fail to value new innovations properly because incumbents attempt to apply them to their existing customers and product architectures — or value networks. Often new technologies are too new and weak for the more advanced and mature value networks that incumbents operate.

This leads to the ROI needed to advance the innovation to be seen as low. In other words, management acts sensibly in rejecting the continued investment in these new technologies and acts in the company’s best fiduciary interests.

You should go read the entire piece. And I'll also note that many of the problems WBD executives are wrestling with right now are the result of a merger that added a lot of debt to the company. Slashing costs to service that debt has forced the company into making some very short-sighted moves, ones that my farmer grandad would have described as the equivalent of "eating the seed corn."

ODDS AND SODS
* The two-part Alex Gibney documentary Restless Dreams: The Music Of Paul Simon, will premiere Sunday, March 17th on MGM+

* Starz confirmed today that Dermot Mulroney and Evan Jonigkeit will join as series regulars in its upcoming drama series The Hunting Wives, alongside previously announced co-leads Malin Åkerman and Brittany Snow.

* The American Federation of Musicians of the United States and Canada (AFM) has reached a tentative agreement with the Alliance of Motion Picture and Television Producers (AMPTP) on the Basic Theatrical Motion Picture and Basic Television Motion Picture contracts. Details of the deal haven't been made public, but apparently there have been some gains on the issues of AI use and streaming.

* I like Richard Rushfield, in part because I think he might be the one media reporter crankier than I am. So I'll just point to his takedown of industry reporters and just note that it's more a look at industry trade reporters than journalists like myself (although I certainly have my own set of unique flaws)

THE MOTOR TREND SVOD IS GOING AWAY
When Warner Bros. Discovery stopped breaking out subscriber numbers for its smaller SVODs following the merger, it was clear that their days were numbered.

Today, the company announced that the Motor Trend SVOD was "sunsetting" in March, and that is interesting mostly because the way they are handling it provides a bit of insight into how management is using the decision to boost upcoming numbers. According to the company, current Motor Trend SVOD subscribers (and we have no idea how many that might be) will be migrated to Discovery+ (Ad-Free) by the end of March, retaining their same subscription price. But the Motor Trend library will be available both on Discovery+ as well as on Max beginning today.

The offer to retain the same price is a good incentive for current Motor Trend subscribers, since they are currently paying $5.99 a month (or $54.99 annually) and the current subscription rate for ad-free Discovery+ is $8.99. So there is every incentive for current subscribers to stick around.

As for WBD executives, the move has several upsides. Since they stopped reporting Motor Trend subscribers about the time when HBO Max shifted to Max, the subscriber losses to the company's bottom line were masked a bit in the turmoil. Now any of the Motor Trend subscribers shifting to Discovery+ will show up on the company's bottom line in Q1 as "new subscribers." 

Which is perfect for WBD, because the company doesn't break out where subscribers originate. In today's earnings call, the company touted that it has 97.7 million direct-to-consumer (DTC) subs, which includes linear (cable) HBO. So however many Motor Trend subscribers shift over this quarter will simply show up on the company's next overall DTC subs number. 

I've been told the company also plans to offer current Motor Trend SVOD subscribers a temporary discounted rate to pay a bit extra and shift over to the more expensive Max option. Which would be a win for WBD, even at a slightly cheap ARPU (average revenue per user).

A MUST-READ ON VIEWING DATA
Vulture's Joe Adalian has sent out a new edition of his Buffering newsletter and while this week's piece won't be available on Vulture.com until Monday, you should go here to subscribe for free.

He writes about a recent piece in The Hill with the extremely clickable headline "The top streamed shows are almost all old. Why?" Now the fact that a Beltway-based political news site is writing about streaming viewer numbers is a pretty good indication that site is just hoping to gin up some controversy. And to The Hill's credit, the piece was all over social media yesterday. But as Adalian notes, the premise is almost completely mistaken:

Part of what makes the narrative around Nielsen’s streaming ratings so problematic is the fact that folks (reporters, entertainment industry folks, and pop culture fans on social media) are used to looking at Nielsen’s far more established linear TV ratings, where things are a lot simpler. Instead of messing with minutes consumed, or measuring up all the viewership of every episode that might air over the course of a season or calendar year, Nielsen’s public-facing household survey focuses on both the average number of viewers per episode of a series, as well as a show’s average audience over the course of a season. And that’s true whether we’re talking about a current series still airing once a week in primetime or a library show which can be seen on cable multiple times a day.

But while I agree completely with Joe's take on Nielsen numbers, I don't agree with this take, which is one I hear a lot from TV people:

While big numbers for shows like Suits are not evidence that audiences have rejected the idea of short-run series or shows that feel like movies, the people who complain that streamers should not be abandoning so many of the hallmarks of network TV are absolutely correct. Given programming budgets that stretch into the billions, it borders on malpractice that streamers aren’t greenlighting more 20-episode series that run for five or six years. Indeed, I actually wrote an entire story about this last summer in the wake of the summer of Suits. You can read it here, but one of my key points was that streamers like Netflix, which have been able to rely on a healthy broadcast/cable ecosystem to feed them a steady supply of mega-bingeable library series, have so succeeded in diminishing their linear competitors that the pipeline for such shows is starting to dry up.

This is way too complex to argue here (especially in a newsletter that is already entirely too long). But those long 23-episode seasons were only possible because of a couple of factors that don't exist in streaming. Most new broadcast TV shows premiered with a 13-episode initial order and somewhere between 80-90% of those never produced more than the initial order of episodes. In fact, most of them were yanked before the entire produced season was aired. But because of the massive amount of syndication money available, if a show lasted, long seasons were economically attractive because each additional new episode of a successful series meant more syndication money.

None of that is available in the streaming world. But what is viable are a number of shorter seasons in a universe where nearly every show that is produced at the very least gets a full release. We're in an evolving business model and you're starting to see the season one scripted drama order for streaming moving from 6-8 episodes to 8-10. But there's no existing economic model for a 23-episode season. Otherwise, the Paramount+ season orders for Frasier and NCIS Sydney would have been longer than 10 episodes.

WHAT'S NEW TONIGHT AND THIS WEEKEND

FRIDAY, FEBRUARY 23RD:
* Earthsounds Series Premiere (Apple TV+)
* Great Performances: George Jones: Still  Playin’ Possum (PBS)
* Formula 1: Drive To Survive Season Premiere (Netflix)
* Hideo Kojima: Connecting Worlds (Disney+)
* History Of Evil (Shudder)
* Jenny Slate: Seasoned Professional (Prime Video)
* Married To The Game Series Premiere (Prime Video)
* Mea Culpa (Netflix)
* Poacher Series Premiere (Prime Video)
* Pokemon Horizons Series Premiere (Netflix)
* Sacred Soil: The Piney Woods School Story (Hulu)
* The Indrani Mukerjea Story: Buried Truth (Netflix)
* The Second Best Hospital In The Galaxy Series Premiere (Prime Video)
* Through My Window: Looking At You (Netflix)

SATURDAY, FEBRUARY 24TH:
* Sense & Sensibility (Hallmark)
* The 30th Annual Screen Actors Guild Awards (Netflix)
* Where Is Wendy Williams? (Lifetime)

SUNDAY, FEBRUARY 25TH:
* Bar Rescue Season Premiere (Paramount)
* Biography: WWE Legends (A&E)
* Independent Spirit Awards (YouTube)
* Sin City Murders Series Premiere (Oxygen)
* The Food That Built America Season Premiere (History)
* The Soulmate Search (UP tv)
* The Walking Dead: The Ones Who Live (AMC/AMC+) 
* 2024 Urban One Honors (TV One)
* Vegas: The Story Of Sin City (CNN)
* WWE Rivals Season Premiere (A&E)

MONDAY, FEBRUARY 26TH:
* County Rescue Series Premiere (Great American Family)
* Deal Or No Deal Island Series Premiere (NBC)
* Murdoch Mysteries Season Premiere (Acorn TV)
* The Voice Season Premiere (NBC)

SEE YOU ON MONDAY!