Warner Bros. Discovery leader David Zaslav is taking no prisoners, but he will be taking tax breaks.
HBO Max has removed at least half a dozen Warner Bros. movies that were specially produced to the HBO Max, IndieWire has confirmed — and more cuts are coming.
Moonshot starring Cole Sprouse and Zach Braff Superintelligence starring Melissa McCarthy (written by her husband Ben Falcone) The 2020 remake of The Witches An American Pickle starring Seth Rogen Locked Down starring Chiwetel Ejiofor and Anne Hathaway, as well as the Sundance title Charm City Kings, were those notably removed from HBO Max in recent months. Also on the bench was LeBron James and Maverick Carter’s “House Party” reboot, which was scheduled to premiere July 28 on HBO Max but never released.
A person with knowledge of the decision told IndieWire that the six films in question, as first discussed in a Reddit thread and reported by Variety, are part of a long list of films and series managed by HBO Max and Discovery+ as executives of Warner Bros. Discovery Prepare to turn two Subscriber Video On Demand (SVOD) services into one. The content to be removed is typically shows and movies that do not perform for the service but have the potential for partial write-off.
Content costs can be amortized over the expected life of the program or film—or allocated to a business as a cost that is recognized over multiple years. If years remain on this timeline, a company can withdraw that asset from distribution and use its remaining expense balance to offset taxable income elsewhere. (According to our source, there’s also a non-monetary benefit of cleaning the house: the service may not be more likely to overwhelm subscribers with content choices.)
The accounting practice isn’t new, but it’s currently under scrutiny — especially in light of the Batgirl bombshell. On Tuesday, Warner Bros. Discovery’s decision to cancel the release of the finished, streamable film Batgirl outright (save for a few reshoots) shocked Hollywood. With the option of releasing the DC Comics film starring Leslie Grace on Max as planned, or investing tens of millions more and moving to theatrical release, David Zaslav chose neither. So you’ll never see that movie, which involved Michael Keaton returning as Batman, and Zaslav’s accountants probably didn’t see their families for weeks to find out.
Sony Pictures Classic
Scrubbing streaming movies from HBO Max is another example of the differentiation strategies between new boss Zaslav and old boss Jason Kilar. Zaslav, who oversees the entirety of Warner Bros. Discovery, has the unenviable (and partly self-imposed) task of identifying $3 billion in cost savings synergies between his now-merged former company Discovery, Inc. and WarnerMedia. Kilar was immediately shown the door, as were some of his projects (remember CNN+?) and his streaming-centric approach.
Kilar was so excited about the streaming opportunities that he ordered all the Warner Bros. theatrical releases in 2021 to go day-to-day with HBO Max. The decision, which of course counted Covid and the recovering box office as a factor, was not popular with film exhibitors and talent. At the end of Kilar’s run, HBO and HBO Max combined had nearly 77 million subscribers. Zaslavs Discovery+ had 24 million subscribers at the time.
The person we spoke to for this story said that streaming-exclusive Warner Bros. movies will not be disproportionately removed from HBO Max. And it certainly doesn’t all get scrubbed: Take the remake Father of the Bride, for example. The Andy Garcia-Gloria Estefan version did well on HBO Max so keep it on HBO Max. Media analysts — and the fair media — will receive an explanation of the strategy during Warner Bros. Discovery Q2 earnings conference call Thursday afternoon, we’re told.