Warner Bros. Discovery CEO Zaslav under pressure to increase value, facing stock decline.

From CNBC: 2024-08-08 15:02:10

Warner Bros. Discovery CEO David Zaslav is under pressure as the company’s shares have dropped 70% since the merger with Discovery in 2022. Despite implementing layoffs and cost-cutting measures, Zaslav is facing challenges with falling stock prices and a $9.1 billion impairment charge due to loss of value in linear cable networks.

Zaslav, one of the highest-paid CEOs, faces scrutiny over a $50 million compensation tied to increasing free cash flow and reducing debt. The company’s earnings call highlighted challenges in the linear advertising market and uncertainty regarding affiliate and sports rights renewals, leading to investor concerns.

While the company is adding streaming subscribers, the decline in linear revenue outweighs growth in the Max service. Activist investors may target Warner Bros. Discovery, pushing for Zaslav’s ouster or asset divestment. The company owns valuable businesses like HBO and DC Comics, but faces challenges in pursuing a successful direct-to-consumer strategy.

Despite hurdles like John Malone’s influence and a high debt load, investors are closely monitoring future cash flow impacts following the loss of NBA rights. Zaslav is under pressure to deliver value amidst competition from Disney and Paramount Global, with mounting challenges and the risk of succumbing to a toxic narrative similar to the situation with former CNN CEO Chris Licht.



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