Warner Brazzers. Discovery CEO Zaslav Uses Linear TV as He Plans for Streaming Future

David Zaslav, President and CEO of Warner Bros. Discovery speaks to the media as they arrive at the Sun Valley Resort for the Allen & Company Sun Valley conference on July 5, 2022 in Sun Valley, Idaho.

Kevin Ditch | Getty Images

The most important decision for any major media CEO is how much he can look forward to in the future.

Warner Brazzers. Opening Chief Executive Officer David Zaslav chose strategic uncertainty.

Unlike previous WarnerMedia CEO Jason Kilar, who centered the company around HBO Max, Zaslav is moving away from a streaming-centric mindset to support his company’s theatrical and traditional pay-TV business for as long as possible.

Zaslav on Thursday reaffirmed his position that Warner Bros. Discovery isn’t going to approach the streaming wars as a race for maximum subscribers. His comments come as Netflix has lost more than 60% of its value over the past year after subscriber growth stalled for the first time in a decade, forcing media and entertainment companies to rethink their streaming strategies.

Warner Brazzers. Discovery has officially announced that it will launch the HBO Max-Discovery+ combo product in the US by mid-2023 and develop a free, ad-supported variant of the service. The company has set a goal of 130 million subscribers worldwide by 2025. That’s about 40 million more than HBO Max and Discovery+ subscribers today, but still far from the 221 million paying subscribers. Netflix World.

Zaslav stressed that he believes in both the release of movies in theaters and the longevity of traditional television as “a generator of cash and great business for us for years to come” during his company’s second-quarter earnings conference call on Thursday.

But he also intends to spend “significantly more” on HBO Max and add Discovery programming to the streaming service.

Kilar made a splash during the pandemic by choosing to put his entire 2021 movie slate on HBO Max at the same time the movies hit theaters. While this turned out to be a temporary move, Kilar later supported the decision, simply being the first to change.

“History is already looking at it quite favorably,” Kilar said in April interview with a deadline. “It worked. We were the first to climb over the wall.”

Zaslav on Thursday, in stark contrast, emphasized the importance of theatrical distribution for big-budget films, refusing to Batgirl this week which Kilar ordered to run directly on HBO Max. According to Zaslav, launching expensive films directly to streaming is not economically viable. Batgirl cost $90 million to create.

“We came to the conclusion that live streaming movies are expensive, in terms of how people consume them on the platform, how often people buy services for them, how they eat over time, this is nothing compared to what happens when you launch a movie in theaters,” Zaslav said. “This idea of ​​expensive films being direct-to-air, we can’t find economic value for it, so we’re making a strategic shift.”

This is not Zaslav’s first reboot during his tenure.

Kilyar too pushed the launch of CNN+, a $300 million effort to give CNN a digital streaming strategy. As with Batgirl, Zaslav decided to kill the streaming service before it had a chance to prove its success.

On Thursday, Zaslav said he believes the strength of live news lies in traditional pay TV, not streaming. This suggests that CNN live streaming will not transition to the HBO Max/Discovery+ product when it launches or any time soon.

“We believe that live news is critical to linear pay TV services,” Zaslav said.

The decision to promote HBO Max while also trying to slow down the decline in box office and linear pay TV is an act of juggling. But that’s also the problem with the modern media CEO. Pushing too far into the future cannibalizes a positive cash flow business.

It cannot be strategically pure. But this is the hand that Zaslav chose.

“I’ve been here for a long time,” Zaslav said, adding that he “hung out” with former General Electric CEO Jack Welch when he ran NBCUniversal, where Zaslav worked. “Broadcasting was dead in the 90s, at least that’s what people said. But in the end, that reach and ability to market the ad product was what kept it alive. We are big supporters [in overall reach] and we think it will help us.”

WATCH: Paramount Global shares sink, Warner Bros. Shelves Discovery ‘Batgirl’

Disclosure: CNBC is part of NBCUniversal.