HBO Max and Discovery+ are to be merged as Warner Bros Discovery Inc (NASDAQ:WBD) announced a new strategy taking aim at streaming market rivals and Marvel franchises.
Investors reacted with distaste, with the shares set to tumble over 10% to US$$15.65 on Friday as Warner Bros executives look to reshape the DC superhero franchises, which include Wonder Woman, Superman, and Aquaman, as part of the development of a new 10-year plan in an effort to emulate the success of rival Brand Marvel (TSX-V:BMW).
The move comes amid a decline in streaming services' demand, with WarnerMedia's dramas, comedies, movies and shows to be incorporated with Discovery's reality shows, as well as the recently agreed joint venture for its European sports business with BT Sport.
Chief executive David Zaslav compared the approach to Walt Disney Company (NYSE:DIS)'s strategy to Marvel Cinematic Universe.
The move also follows close on the heels of the company announcing it would scrap its upcoming Batgirl movie, five months before the scheduled 2022 release, following the cancellation of several other TV shows since the Warner Bros Discovery merger and the DC Comics film of The Wonder Twins.
WarnerMedia executives told analysts on their first conference call, after launching a comprehensive review of the company's assets after it merged with Discovery for US$43bn, how they planned to shift the company from one that prioritised streaming videos investment to one that will target diversified sources of revenue.
"We have every platform in the ecosystem, and in a world where things are changing and there's a lot of uncertainty ... that's a lot more stable and a lot better than having one cash register", Zaslav said in the call.
A free ad-supported streaming service is also envisaged in the new plan.
However, shares slumped 11% after the company cut its core profit forecast.
According to executives, the review found previously approved investments and strategies that would damage EBITDA by US$2bn in 2022, with an investment in CNN+ and an emphasis on making its theatrical slate available directly on the subscription streaming service among these efforts.