Warner Bros. Discovery on July 4, shared a strategy change for its streaming business in Europe, proverb that it would “cease our original programming efforts for HBO Max in Scandinavia and Central Europe” and have already terminated “our nascent development activities in the newer areas of the Netherlands and Turkey, which had begun last year.”
The media giant had said at the beginning of the week that it had halted development of original dishes in parts of Europe following the merger that created the new industrial powerhouse and amid its “work on the combination of HBO Max and discovery+”.
HBO Max’s originals in the affected region include Danish family drama KamikazeSwedish sex comedy lustHungarian Spy Thriller the informantpolish crime drama the thaw and Romanian comedy drama Ruxx†
Sources tell The Hollywood Reporter that the company is also currently reviewing shows in production or post-production in Scandinavia, Central Europe and the Netherlands to find out whether they will be made available on streamer HBO Max or whether they will require another licensing arrangement. According to these sources, the company’s original programming efforts in Spain and France are unaffected by the strategy change.
The management of Warner Bros. Discovery has pledged to focus on profitable streaming subscriber growth and $3 billion in cost savings following the mega-merger the new company has created. CEO David Zaslav picked up on the same theme when he arrived Tuesday at the Allen & Co. meeting of media and technology moguls in Sun Valley, Idaho, highlighting his team’s focus on creating fewer, better shows as part of the game plan. .
“The world has changed, and it’s not about how much, but how well,” Zaslav told reporters. Bloomberg reported:† He also suggested the meeting would be “great”, pointing out that there was “a lot of turmoil in the company”. Zaslav added: “That means, I think, a lot of opportunities.”
Wall Street has also taken note of the changes on the other side of the pond.
Benchmark analyst Matthew Harrigan, in a July 5 report, highlighted the European content strategy update, adding his “buy” rating and the $26 price target on Warner Bros. Discovery reiterated “after the July 4 news that management is making rapid progress on cost discipline for HBO Max European originals.” He added, “We believe the market’s recession fears are exaggerated at the current valuation level of the market. Warner Bros. Discovery, even recognizing that any concomitant ad market failure would dampen stock performance in the near term.”
Harrigan’s conclusion: “Investor perceptions in the second half of 2022 should benefit from management’s demarcation of HBO Max and discovery+ branding and pricing strategies, as well as clarity from new pro forma financial data for the reconfigured WarnerMedia and Discovery Activities.”
Wells Fargo analyst Steve Cahall also caught up on the European news on Wednesday. “While initial spend in these regions will be limited, the company expects to continue acquiring local content for its linear networks,” he wrote in a report. “Warner Bros. Discovery is also reportedly removing some original content from its platform to recalibrate licensing agreements, meaning we can say goodbye to certain European originals and some US shows that will leave the HBO Max platform worldwide.”
Cahall’s Takeaway: “Management leaves no stone unturned in realizing synergies.” But Cahall also shared a warning: “If HBO loses the Sky-produced” gomorrahwe will take to the streets in protest.”