Since completing its April 8th merger, Warner Bros. Discovery has been on a cost-cutting frenzy, with an announced goal of finding $3 billion in savings. The process began when WBD axed CNN+ on April 21st, and since then the company has shelved Batgirl, removed over 200 classic episodes of Sesame Street, and iced dozens of upcoming projects — with a result that WBD has lost a total of $20 billion in market cap and counting.
Importantly, this isn’t an apples-to-apples comparison. WBD is trying to save $3 billion in cash, while market cap is the stock market’s estimate of a company’s total value, found by taking the amount of stock in circulation and multiplying that by the stock’s price. And there are several other factors dragging down the stock, especially WBD’s $55 billion in debt, which has concerned analysts since the merger. But the debt has been stable, and the fact remains that no matter which project WBD puts out to pasture, the stock is only going in one direction: down.
On April 22nd, the day after WBD subtracted CNN+, the company had a market cap of approximately $49.51 billion according to CompaniesMarketCap.com, which uses data from Reuters, NASDAQ, Yahoo Finance, and more. Today, August 22nd, the same company is estimated to be worth $31 billion. If the market’s estimate is accurate — and that’s a big if — WBD is worth about $20 billion less than when they started cutting costs. You can’t even blame market volatility for the plunge; the Dow Jones has barely budged since April, and the S&P 500 is down about 4% on the year, even as WBD has been unable to stop the bleeding. In the eyes of investors, the company has done nothing but hurt its brand for four months running.
Much of the blame will be laid at the feet of CEO David Zaslav, who was paid $246 million ahead of the merger. His plan to combine HBO Max and Discovery+ has been widely derided, and everyone from Kevin Smith to John Oliver has criticized his decision to kill content for tax write-offs. Fortune named him one of the 10 most overpaid CEOs in the Fortune 500, and it’s not hard to understand why. Even if you think he’s a genius, surely any Vice President at WBD could do at least 80% as good of a job for 10% of the cost.
For now, expect the cuts to keep coming. Just today, WBD pulled the plug on an animated Batman series from Matt Reeves and J.J. Abrams. As a spoonful of sugar to help the bleach go down, HBO Max is offering 30% discounts on annual subscriptions.