Warner Bros. Discovery (NASDAQ:WBD)
Warner Bros. Discovery’s (NASDAQ:WBD) CEO David Zaslav has restructured the company to prioritize profitability. Not all of the company’s recent measures have favored HBO Max.
Investors should avoid Warner Bros. Now, discover why?
Content Alterations
Zaslav is paying down a $55 billion debt Warner Bros. Discovery (NASDAQ:WBD) incurred after WarnerMedia and Discovery merged. Zaslav has made several controversial choices with HBO Max, including canceling European programming and live-action family programs and stopping development on an almost completed feature, costing $90 million.
Many initiatives could lower short-term costs, but investors should focus on the long-term effects. Axios found that 38% of Latino households pay for cable and streaming services, compared to 29% of U.S. households. HBO Max, Netflix, and Disney+ subscription rates are 9% higher than average.
Recent modifications to Warner Bros. Discovery (NASDAQ:WBD) streaming content could alienate Latinos. Live-action children’s series Gordita Chronicles was canceled on July 29, and Batgirl on August 2. Gordita Chronicles followed a Dominican family moving to Miami in the 1980s, and Leslie Grace played Batgirl. Grace would have been the first Hispanic or African-American to lead a D.C. film.
Warner Bros. Discovery (NASDAQ:WBD) cited corporate strategy shifts for the cancellations. Gordita Chronicle’s cancellation means the firm will move away from live-action family material, while Batgirl’s cancellation means it will stop making streaming films and focus on theatrical releases. Zaslav scrapped Batgirl when test audiences disliked its scale for a theatrical debut.
These cancellations may reduce the company’s content budget, saving money. Long-term damage could result from alienating a vital group. Given how heavily the competition caters to this audience, the move is particularly risky.
Who are the Competitors?
Warner Bros. Discovery (NASDAQ:WBD) significant competitors, Netflix (NFLX) and Disney (DIS), also cater to critical demographics.
Netflix prioritizes Latino and Spanish-language titles. Popular shows on the platform include Selena: The Series, Money Heist, and Jane the Virgin. Money Heist Part 5 has 792.2 million viewing hours, while Part 4 has 619 million. The 1970s-set Netflix drama Roma won three Oscars in 2019.
Hispanic actors have starred in Disney’s Hulu and Disney+ programs Love, Victor, Diary of a Future President, and Only Murders in the Building, Hulu’s most-watched comedy. Black Panther, the first Marvel picture led by a Black actor, was the highest-grossing superhero film of all time in the U.S. in 2018. African-American fans came out in the millions to see Black Panther.
Warner Bros. Discovery’s (NASDAQ:WBD) lack of focus on the biggest-spending demographic may reflect a lagging multicultural and multinational perspective. Netflix and Disney’s success proves that representation benefits society and may boost revenues by attracting more viewers.
Hispanics account for up 1/6 of the U.S. streaming market; therefore, Warner Bros. Discovery (NASDAQ:WBD) may leave $10.2 billion on the table. The company’s streaming segment lost $1.5 billion in revenue last quarter.
Is Investing in WBD a Right Call?
Warner Bros. Discovery (NASDAQ:WBD) stock is down 46% since April and 7% this week. The company’s restructuring will decide its future success and profitability. Recent content moves, a lack of focus in significant areas, and the pending HBO Max and Discovery+ merger make the company too risky to purchase the dip.
Featured Image: Megapixl @Danielconstante
Author Shariq Khan 
