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Discovery CEO: ‘Warner Bros. Discovery’ Won’t Outspend the Competition

With regulatory approval of Discovery’s $43 billion minority stake/operational control of WarnerMedia from AT&T expected to close in the second quarter, Discovery CEO David Zaslav said the new Warner Bros. Discovery media company would not engage in a content spending war with industry heavyweights such as Netflix, Disney+ and HBO Max.

The corporate combination of WarnerMedia and Discovery includes consolidating disparate streaming services HBO Max, Discovery+ and Eurosport.com overseas.

“Our goal is to compete with the leading streaming services, not to win the spending war,” Zaslav said on the Feb. 24 investor call. The executive said he has no idea what additional content costs may be required going forward but added that throwing out a big number like $5 billion increase doesn’t make sense either.

“If you say we do 600 hours on Food Network and [subscribers] like it and we make $400 million, for example, if we did another 400 hours of content, maybe audiences would be a little happier, but we would make no money,” Zaslav said.

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German CFO Gunnar Wiedenfels said Discovery spent about $4 billion on original content in 2021. HBO Max spent upwards of $2 billion on original content, which pales compared with competitors such as Netflix at more than $12 billion, and Disney+ at north of $8 billion.

“It’s not about winning the spending war,” Wiedenfels said, adding in soccer parlance that, “money doesn’t score goals.”

CEO Zaslav contends the right amount of content spending is required to “nourish” the audience, so they spend their streaming time on Max and/or Discovery+.

“The key to these platforms … [is] that [consumers] feel that you’re the place that they want to be and you’re important,” he said.

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