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Warner Bros. Discovery Chief Says ‘Careful’ About Sports Spending

Anthony Crupi
·4 min read

David Zaslav had a lot of ground to cover in his first earnings call as the helmsman of the newly formed Warner Bros. Discovery, and while analysts mostly quizzed him on matters related to streaming, the CEO was particularly enthusiastic about the company’s live sports portfolio.

With less than a month to go before WBD ad sales chief Jon Steinlauf presents the company’s inaugural upfront slate to media buyers and advertisers on May 18, Zaslav said the new entity would bundle its sports and news assets with its entertainment inventory.

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“We’ve already gone out to agencies and advertisers,” Zaslav said during the Q&A session of Tuesday’s call. “Before it was sports [in one silo], and it was Warner Entertainment, and it was Discovery. Now, it’s all in one. It’s one place to get the broadest demographics and all the different types of content that an advertiser can want.”

This one-stop shopping scheme effectively reverses the long-held strategy whereby ad units across Turner Sports and CNN were sold separately from the dramas, comedies, prank shows and movies that generate the vast majority of TNT/TBS/truTV’s impressions.

Per a recent MoffettNathanson breakdown of cable’s top draws, movies accounted for 42% of TNT’s ad deliveries in 2021, double the potency of its NBA telecasts (21%). Meanwhile, more than one-third (36%) of TBS’s commercial impressions were served up care of repeats of Friends and The Big Bang Theory.

By comparison, sports last year accounted for 77% of Fox’s ad deliveries; zero in on the fall schedule, and the NFL, college football and MLB postseason action were responsible for more than 90% of Fox’s commercial engagements.

Under former sports and sales boss David Levy, Turner kept its valuable sports inventory well clear of the flood of cheaper, older-skewing entertainment programming. Broadcast networks, on the other hand, tend to sell bundled sports-and-shows packages, as that sort of gambit helps shift units in some underwhelming primetime slots.

From the outside, these negotiations may take on the ambient drama and bad vibes of a hostage situation. Buyers looking to secure units in, say, national NFL games aren’t necessarily overjoyed when told they must also take a position in a bunch of shows that average 650,000 viewers in the target demo. (“Sure, you’re spending $870,000 on a 30-second in-game spot, but have you considered what 10 $87,000 units in this show about a psychic mandrill who works in a children’s hospital might do for your reach?”)

Elsewhere on the call, Zaslav reiterated his talking points about concentrating on growing the value of WBD’s current assets rather than going on a shopping spree. “We will not overspend to drive subscriber growth,” Zaslav said. “Our focus is to invest in content and platforms that extend the life and return of our global IP, and position us to drive greater returns out of each dollar spent.”

While WBD has yet to hire an exec to lead its global sports unit—Jeff Zucker abruptly stepped down from his perch as WarnerMedia’s news & sports chair in February—the incoming boss is unlikely to be given the green light to make any major acquisitions, at least in the near term.

“When it comes to sports, we’re very careful,” Zaslav said. “The TNT and Warner team was clever about getting long-term rights, which we’re going to get a lot of benefit from, but sports are rented and news is scalable.”

Under Zucker, Turner Sports re-upped with Major League Baseball in a seven-year, $3.75 billion deal, and picked up the NHL’s “B” package for another $1.6 billion.

Zaslav wrapped his sports chatter with a sales pitch that Levy first perfected some 15 years ago, telling analysts that the WBD portfolio is of a scale that will allow it to compete directly with the likes of CBS, NBC, ABC and Fox. “If you lay out the four broadcasters…by any measure in terms of reach, the quality of the IP and the amount of sports, we are in the top three, and by some measures, we’re No. 1,” he said.

Zaslav didn’t clarify as to which “measures” he was referring, but No. 1 is arguably out of reach for any media company that doesn’t pay for the rights to televise live NFL games.

On the streaming front, sports will make their way to the HBO Max program by 2023. Last month, Turner Sports inked an eight-year, $200 million deal with U.S. Soccer that will see about one-half of the national team’s matches air on basic cable while being simulcast on the DTC service. The remaining matches will be carried exclusively on HBO Max.

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