The Shuttering of CNN+ Is the Least of Warner Bros Discovery’s Concerns

Stock Market

In the least surprising announcement of the newly-merged entity, Warner Bros Discovery (NASDAQ:WBD) announced on Thursday that it would shut down CNN+, the news network’s month-old streaming service, as of April 30. If you own WBD stock, this is the least of the company’s worries in the coming months. 

If you’re Chris Wallace, who left Fox News for CNN+, this has to be a punch to the gut. And while I’m sure he’ll find his way onto the CNN roster and will probably get his own show eventually, how this entire episode went down suggests the problems with both partners in this merger run deep. 

While CNN is estimated to have spent approximately $300 million launching CNN+, it’s a drop in the bucket for a company whose combined revenue in 2022 is projected to be nearly $50 billion. That’s less than 1%. 

As I said, the shuttering of CNN+ is the least of the company’s concerns. One problem that could be brewing is the move by Chip and Joanna Gaines’ Magnolia Network from Discovery to HBO. 

According to Deadline, the Gaines have had an ongoing feud with WBD executive Kathleen Finch. As a result of this feud, the power couple quit their show, Fixer Upper, in 2017. Discovery CEO, now WBD CEO David Zaslav, promoted Finch to get her out of the couple’s way. Today, Finch is in charge of all Warner Bros Discovery’s channels except CNN and HBO Max, serving as its chairman and chief content officer of its U.S. Networks Group. 

Here’s Where It Gets Interesting

Casey Bloys is the new head of HBO and HBO Max. However, Discovery+ and HBO Max will combine to provide WBD with a super streamer. At first, they will be offered as a bundle, but eventually, the Gaines’ will have to cross paths with Finch once the two become one.  

Putting feuds aside, Warner Bros Discovery has approximately $55 billion in debt. Zaslav thinks he can cut $3 billion in annual costs to meet its 2023 earnings before interest, taxes, depreciation and amortization (EBITDA) target of $14 billion.

However, Wall Street is skeptical that it can meet this target and still spend enough on new content to compete with the other big streaming businesses. 

As I said, WBD has much more significant concerns than CNN+.    

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

Articles You May Like

Investors See the False Dawn of Exxon Mobil
Recession fears flare and June jobs report looms as jittery markets head into third quarter
Are Oil Stocks Still a Good Buy?
3 Undervalued Dividend Stocks for Long-Term Returns
10 Warren Buffett Stocks to Buy for the Second Half of 2022