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WTH is Going on with HBO Max/Discovery?

Questions about the HBO Max/Discovery Merger…

In my postings here, I’ve often mentioned my time working at Home Box Office.  I started there in 1982; still the Gold Rush years of the pay-TV industry.  I left in 2009 while the company was successfully refining its new online presence.  I saw the company reconfigure itself several times over that period as the dimensions of the pay-TV business changed, and despite the occasional stumble, as a result, for nearly a half-century, HBO was the gold standard in the trade whether you measured success by profitability, size, or accolades.

Although I’ve been out of the company for some time, I still have a nostalgic attachment, like a New Yorker who moves to L.A. but still roots for the Giants.

And that’s why, when I read about what’s been going on over at my old team lately, I’m reminded of Casey Stengel’s exasperated complaint as he presided over the New York Mets’ disastrous first season:  “Can’t anybody here play this game?”


Over the last few years, I’ve watched HBO get fumbled around more than a football in the hands of an arthritic quarterback.  First AT&T picked up HBO’s parent, Time Warner (renaming it WarnerMedia), purged the executive ranks to put its own people in control with AT&T’s John Stankey in the top spot.  Stankey’s programming philosophy — “We need hours a day” — showed a fundamental lack of understanding of occasional use services like pay-TV channels and streaming services.  Just four years later, blanching at the cost of providing programming which would keep people watching for those desired hours in a day, and laboring under $180 billion in debt, AT&T sold off a number of WarnerMedia’s key entertainment assets to Discovery for cash to drain off some of that lake of red ink.

The new HBO Max/Discovery had barely stocked in their new letterhead when Discovery topper David Zaslov started making moves which are making some observers wonder if he understands the game any better than Stankey did.  A recent Hollywood Reporter story on some of the challenges Discovery is grappling with post-merger – and how Zaslov is dealing with them — quotes an unnamed leading talent representative:  “Zaslav doesn’t know what he doesn’t know.”

Unlike Stankey, Zaslov obviously has a background in cable TV entertainment, but Discovery’s meat and potatoes are documentaries and reality shows.  Say Game of Thrones and you think HBO.  Say The Sopranos, True Blood, Sex & the City, Band of Brothers and you think HBO.  And vice versa.  Conversely, for all its multiple channels, how many signature shows – shows that carry the same brand name weight as the above mentioned – do you think of when you think “Discovery”?  That’s not a slam at the content on Discovery’s spectrum of channels, but it makes the point that what premium services like HBO Max provide, and the basic cable fodder of Discovery’s channels are two very different products requiring different handling.

Zaslov’s moves thus far make one wonder if he gets that.  Or maybe he does, but he’s backed himself up against a fiscal wall, maybe even having some buyer’s remorse as his company deals with over $50 billion in debt, and Warner Bros. Discovery (WBD) stock is tanking.



In August, Zaslav was painting a rosy picture for investors, touting the possibilities of a DC universe to rival Marvel’s.  “(There) is going to be a team with a ten-year plan focusing just on DC.”  He said this two days after he pulled the plug on Batgirl, he’s been cutting back on original production, and so far his attempts to find his own Kevin Feige have been fruitless.  According to the same Hollywood Reporter story:  “(WBD) has content creators wondering publicly what happened to material that disappeared from the streamer without a word of warning, while insiders send out resumes as layoffs roll.”

Then came a head-spinner last week involving The Lord of the Rings franchise which Warners had held on to exclusively but was now up for grabs.  “We have a ton of content that has been sitting idly for just purely principle reasons,” WBD’s CFO Gunnar Wiedenfels said.  “The Lord of the Rings is a great (example):  It is a nonexclusive window (and) we look at it as what we are giving up versus what additional revenue we are generating.”

And that, in my view, is what it’s all about:  additional revenue for a company whose name is on $50 billion worth of IOUs.  Debt is forcing short-term thinking in a company which previously produced tons of disposable programming, and which has little apparent understanding of the value of “exclusivity.”  Or maybe they can’t afford to.


We need to digress a little here and take a look at how exclusivity has played in the subscription TV business.

In the early days of pay-TV – say from the 1970s up to around 1980, the major studios routinely licensed their movies to all of the premium channels simultaneously.  If Jaws (1975) was on HBO, it was on Showtime the same month, often in the same prime time slots.  The programming at the top end was so similar between the channels that the printed Program Guides and the services distributed in those days looked almost alike!  The differences between the services were minimal: second-tier titles picked up from smaller production companies outside the circle of majors, the small amount of original programming (mostly music and stand-up comedy specials), but for the most part, the services were mirror images of each other.

In the 1980s, the services began to see the value of exclusivity as a tactic to differentiate themselves from each other.  HBO fired the first major volley with an exclusive deal with Columbia.  Showtime fired back with a five-year deal with Paramount.

There were some inherent problems with these deals.  They were tremendously expensive because the programmer had to offer the studio enough money to make it worthwhile for the studio to give up a second paycheck from another service.  And, you were locked in.

Both of those deals had been signed when each studio was on a hot streak.  But streaks, by definition, end, and if a studio went into a slump, the programmer now had exclusive airing rights to a string of turkeys.

But there was another issue none of the pay-TV services had anticipated:  the explosive popularity of home video beginning in the mid-1980s.

The typical timeline for a studio release in those days put one year from the time of theatrical release until the time the title appeared on the licensing pay-TV channel.  By the late 1980s, that one-year period covered theatrical distribution, pay-per-view airings, and home video release.  Anybody particularly eager to see a given movie had plenty of opportunity to catch it long before it appeared on their premium channel.

The programmers didn’t back off of exclusivity, but certainly the exclusive licensing of theatrical movies had lost a lot of its shine.  This was a major driver behind the channels beginning to invest more heavily and seriously in original programming; content that was truly exclusive to its home channel, unavailable anywhere else including home video (at least for a while).

HBO Max/Discovery

Streaming, however, has forced a seismic reconfiguration of the premium TV terrain, hobbling – even gutting – some of the platforms which had devalued movie exclusivity for the pay-TV channels.  The at-home convenience of streaming has all but destroyed the home video market, and the whenever-you-want-it access to content is pushing linear channels toward obsolescence.  The six-month theatrical window of the 1980s had been whittled down to three months by the 1990s and now streamers have cut it down, in most cases, to a matter of weeks…providing a title gets any theatrical release at all.

All of those windows that used to beat the life out of a title before it got to HBO or Showtime or The Movie Channel et al are gone or crippled.  One would think that would reinstate the value of exclusivity:  Come to HBO Max!  The only place where you can see (fill in the blank with something choice).”

No company probably understands the value of exclusivity more than Disney.  No wonder; old Uncle Walt himself was decades ahead of his time in this respect when he realized he could re-release his animated classics – titles like Bambi (1942) and Fantasia (1941) and that lot – every seven-ten years for a new audience.  He didn’t see those interim terms as a title “sitting idly,” but as maintaining its value.  Ted Turner figured out the same dynamic when he bought the MGM library and rationed out airings of Gone with the Wind (1939).

But Discovery needs a better balance sheet and is willing to sell the family jewels to get it.  Bob Iger, one-time Disney CEO, at a September Code Conference, explained how Disney had learned what Zaslov is about to learn the hard way when Disney had licensed movies to Netflix to see how streaming worked:

It was very interesting to see as Netflix grew – and consumption of our movies on their platform grew – what might be possible.  As they started to use their increased distribution and revenue to make original content to compete with our original content, it became pretty clear that we had been selling nuclear weapons technology to a developing country, and they were now using it against us.

According to The Hollywood Reporter, Discovery is also looking at licensing DC properties to competing services as the basis for their own original series.  Let me go over that again, slowly:  Discovery will sell rights to a DC character – say Batman – to a competing service so its competitor can build a series around it.

And now there are rumors of yet another merger deal for WBD possibly with NBCUniversal.  Again, Hollywood Reporter quoting an unnamed exec:  “I’m sure (Comcast – NBCUniversal’s parent – CEO Brian Roberts) is licking his chops because the (WBD) stock is so low.  And I think that’s Zaslav’s endgame.  Get the place sold.”

If that happens and HBO Max gets handed off yet again, well, this is starting to remind me of the way investor Kirk Kerkorian manhandled MGM.  He bought into the company in the late 1960s and then for a period of thirty-five years, sold pieces off, re-acquired them, re-sold them, endlessly until finally selling off his ownership in 2004 leaving the once grand studio crippled.  MGM would go Chapter 11 in 2010.

I don’t know; maybe I’m wrong and there’s some subtly brilliant master plan at work here and the brand I knew will shine the way it always did.  But I have this sneaking suspicion that out of ineptitude, or miscalculation, or overreach, or some other corporate foible, there’s a possibility we may be witnessing the beginning of a slow death for the company that, for decades, defined everything pay-TV could be.

Written By

Bill Mesce, Jr.'s books include Overkill: The Rise and Fall of Thriller Cinema, the recently published The Wild Bunch: The American Classic That Changed Westerns Forever (McFarland), and The Screenwriter's Notebook: Reflections, Analyses, and Chalk Talk on the Craft and Business of Writing for the Movies (Serving House), as well as the novel Median Gray (Willow River Press) and Inside the Rise of HBO: A Personal History of the Company That Transformed Television.



  1. J

    September 22, 2022 at 4:59 am

    Appreciate the context of history. Hoping Zaz and his team do have a grand plan and one that will shine for Warner Bros centennial. The musical chairs at DC Entertainment haven’t helped but that seemed to start with Alan Horn being unnecessarily removed the first time and then the neglect that followed by Kevin and Sarnoff.

  2. Dlbroox

    October 2, 2022 at 10:34 am

    Apple TV plus is the new HBO. They are a closed ecosystem that puts out quality entertainment. When HOTD wraps it’s run I’ll bail from HBO even with my 11.99 a month deal and keep Apple. I’ll also use Pluto for my TV fix and let my in home antenna find ota hd channels for the rest. I cord cut over ten years ago and now streaming is just like the a la carte cable everyone wanted but now can’t afford. It’s a racket! And the rich people who own it ruin everything just to get richer!

  3. Bill Mesce, Jr.

    October 2, 2022 at 12:46 pm

    I won’t get into a debate about the merits/weaknesses of capitalism but you’re right about this being the a la carte cable everyone always wanted. What wasn’t realized back in the days of tiered cable channels was that, in effect, some channels — like say, TCM, A & E…you know, the biggies — were subsidizing channels with considerably narrow audiences. It was like the old days of Bell Telephone where Bell overcharged on long distance to subsidize cheap local service. We wanted a la carte, we got it, and this is what it looks like. This is what it would ALWAYS have looked like even if you had a committed socialist in charge.

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