David Zaslav’s Strategy Shift: Licensing Out Warners’ IP Treasure
The mogul’s “open for business” mantra has led Warner Bros. Discovery to aggressively pursue rights deals — even for its core brands.
by Alex Weprein, September 16, 2022
Amazon was launching its own $500 million Lord of the Rings TV series, and it was in the market for a way to hook potential viewers of its fantasy epic. So, naturally, it called Warner Bros. Discovery, the owner of Amazon Prime Video’s competitor, HBO Max.
The Lord of the Rings and Hobbit films are controlled by Warner Bros. and had been locked up exclusively for streaming on HBO Max by the company’s previous owner. The trilogy, which generated nearly $3 billion in box office revenue and comprised some of the best known IP in the HBO Max film library, was now up for grabs, at least on a nonexclusive basis. Whereas before, WarnerMedia zealously guarded its films for HBO Max, now Warner Bros. Discovery is open about the fact that, well, they are, as CEO David Zaslav says, “open for business.”
“We have a ton of content that has been sitting idly for just purely principle reasons,” WBD CFO Gunnar Wiedenfels said at a Bank of America event Sept. 8. “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,” the CFO added, noting that “there are positive knock on effects on our own platforms as well.” WBD received an undisclosed sum in licensing revenue (effectively monetizing a film that had been, in Weidenfels’ words, “sitting idly”), while Amazon was able to engage potential TV series viewers ahead of its launch with the iconic films.
But The Lord of the Rings isn’t the only franchise WBD is willing to let others mine. A Batman animated series in development from J.J. Abrams also is being shopped around. Bruce Timm, Abrams and Matt Reeves took the show on the road for a series of big pitches to the major streamers this week and last. The series, Batman: Caped Crusader, was originally planned for HBO Max before the WBD merger. At press time, Netflix, Amazon and Hulu are the big contenders.
And while it isn’t going to be part of any larger live-action DC universe, Batman is still some of DC’s most popular IP. “Once you decide your streaming ambitions are not your ‘north star,’ why not license as much as possible?” ” Lightshed analyst Rich Greenfield wrote in an Aug. 10 research note. “Catalog only has value to streaming services if you can drive meaningful daily time spent where subscribers are getting lost in your service.”
The decision is a major shift for the company, which under Jason Kilar and AT&T withheld as much content as possible for HBO Max to rapidly grow its subscriber base. (HBO and HBO Max had 76.8 million subscribers before WBD updated subs to include Discovery+.)
Of course, Warner Bros. is no stranger to licensing content, with its TV division having long been one of the most aggressive about selling shows to other networks and platforms. But the message from the C-suite seems to be clear: There’s a new sheriff in town, and they are willing to deal even more. It’s also a stark contrast to Disney, which has leaned into controlling all of its content.
At the Code Conference on Sept. 8, former CEO Bob Iger recalled selling Disney’s movies to Netflix so they could learn about streaming distribution. “It was very interesting to see as Netflix grew — and consumption of our movies on their platform grew — what might be possible,” he said. “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.” Now WBD is pursuing a different path, with the rest of Hollywood all but certain to watch both strategies closely.