On one level, Monday was a great day for HBO and HBO Max. Ratings data showed The White Lotus ended its second season with record-high ratings, and the platform basked in the glow of 14 Golden Globe nominations. Yet as it has several times this year, the ruthless cost cutting of parent company Warner Bros. Discovery stole some of that spotlight. Word leaked that several more HBO and HBO Max series were about to disappear from Max, including the very successful Westworld. The timing obviously wasn’t intentional, but folks in Hollywood again wondered, What the hell is going on?
The short answer, based on conversations with sources familiar with the situation, is this is a sequel to the story we saw play out earlier this year. Programs such as Minx and Westworld are being shelved because WBD is taking advantage — one last time — of special circumstances related to the merger of the former WarnerMedia and Discovery Networks. Long story short, there are legal rules and regulations allowing a company like WBD to write down costs incurred as part of a post-merger restructuring — but only for a short amount of time. Taking shows such as Minx or Westworld out of the HBO Max and, more importantly, WBD library will apparently help the megacorporation make its future balance sheets look a lot better. This isn’t just about saving a few thousand dollars on residual checks or licensing costs; it’s about writing down millions in amortization costs these titles would have incurred in coming years. A vanished show here, a vanished show there, and pretty soon you’re talking about a meaningful impact on WBD’s overall earnings report — or so the company hopes.
What’s weird about this week is that a few months ago, it was assumed WBD had gone through its books and found all possible cost savings related to the merger. Since Westworld and Minx haven’t aired new episodes since the first round of slashing went down, why not simply delete them from the HBO Max vault over the summer? Nobody is talking, but it’s hard not to conclude that WBD CEO David Zaslav opted to pull out his cost-cutting axe one more time because his company’s financial situation has grown direr in the last few months.
Indeed, the refrain from multiple media CEOs in recent weeks indicates the advertising market has grown far chillier with no signs of improvement. In fact, just last month, Zaslav told an investors conference that “it’s going to be hard” to meet revenue forecasts unless things improve on the ad front. And referring to the overall state of WBD, Zaslav made Debbie Downer sound like an optimist: “It’s messier than we thought, it’s much worse than we thought.” So basically, in addition to a debt problem and Wall Street’s generally meh attitude toward streaming, WBD found itself dealing with broader economic headwinds this fall. The result? One more round of disowning WBD content.
If there’s any good news, it’s that several titles may well resurface elsewhere next year. HBO Max has given full rights to Minx back to producing studio Lionsgate, and the indie studio has said it plans to find a new home for both the first season of the show and the as-yet-unaired second season. (If need be, Lionsgate could even decide to put the series on its own platform, Starz.) Titles produced in-house by WBD studios, meanwhile, may end up on free ad-supported streamers such as Roku Channel or Amazon’s Freevee, sources say. While there have been reports that these shows would end up on a planned WBD-owned ad-supported streamer, sources tell me that’s unlikely. Because they are being shelved as part of the “restructuring” savings, those shows can’t make significant money for the company anymore. Any revenue gleaned by selling to an outside FAST platform, however, would be so relatively small that, apparently, it’s okay.
The last six months have been, as Zaslav himself said, incredibly messy for WBD — and, by extension, HBO Max. A streamer that seemed to be coming into its own at the beginning of 2022, with buzzy shows and an improving user interface, has been subjected to a thousand little cuts (and a few big ones) from its owners. It’s entirely possible more pain is yet to come if the ad market continues to deteriorate. And on Dec. 14, HBO Max said a few titles we didn’t know about earlier in the week— including The Time Traveler’s Wife and Finding Magic Mike — will disappear in the coming days as part of the same elimination round that claimed Minx and Westworld.
On the other hand, a source tells me the major cause of the increasingly shrinking HBO Max library — the post-merger restructuring rules — will no longer be an issue in 2023. Those special rules made the 2022 purge possible and won’t apply in the New Year. As a result, any shows that get removed going forward will save WBD much less money, and while Zaslav has never met a budget cut he didn’t love, it seems less likely we’ll see as many — or even any — dramatic catalogue cleansings in 2023. Of course, if and when WBD decides to sell itself to Comcast or Apple or Amazon in 2024? Well, all bets are off.
This story has been updated with additional information.
