Warner Bros. Discovery cites ad spending at pandemic lows, lays off over 70 staffers

Yahoo Finance media reporter Allie Canal details Warner Bros. Discovery CEO David Zaslav's outlook on ad spending in the media ecosystem amid Warner Bros. Discovery Sports lay offs.

Video transcript

SEANA SMITH: Warner Brothers Discovery CEO David Zaslav painting a grim picture of the advertising market while speaking at RBC's media conference earlier today. Yahoo Finance's Alexandra Canal following this. And Allie, when you take a look at what he said, weaker than it was during COVID.

ALEXANDRA CANAL: Yeah.

SEANA SMITH: Pretty dire.

ALEXANDRA CANAL: Very dire. He said the economy is weak, but the ad market is, quote, "very weak." And he did note that compared to COVID, that things are much worse off. And we've seen this play out with a lot of the earnings that we've seen from these media giants. Warner Brothers Discovery was impacted by some of this advertising slowdown that we've seen across the board. And to really combat this we've seen some of these companies really lean on live sports. Like, Disney, for example, has relied on ESPN.

And that's something that David Zaslav brought up during this conversation as well. It was very interesting. He said that due to the rising costs of sports media rights, there might not be a need to really renew their contract with the NBA. There might not be a need for them to really go after a lot of this sports content that we're seeing. A lot of the competitors do. He said that the sports business is very hard. It's a rough business since, essentially, you're renting the rights. You don't own that programming outright.

And we know that David Zaslav is very passionate about owning programming. He's really doubled down on the strong IP of the brand. He's said they want to rely on the Harry Potters, the Sex and the City's, the Game of Thrones content, to make them successful, moving forward. So that's something to continue to watch.

Then when we think about the DC franchise and how that could potentially compete with Marvel, David Zaslav says that they're close to writing a, quote unquote, "bible" on this, moving forward. And he thinks that this is one of the most, if not the most, crucial element of this company, is really solidifying the DC comic universe and really leaning in on that content for theatrical releases, maybe even shows as well.

RACHELLE AKUFFO: And Allie, it's interesting because it seemed like just a few months ago, we were hearing that things were actually going well when it came to ad spending. What do you think happened?

ALEXANDRA CANAL: I just think there is this grim picture overall heading into the end of the year. We've continued to see these rise in rates by the Fed. I think a lot of ad buyers are pulling back. Of course, there is some optimism when we think about Disney+ rolling out its ad tier next month. We just saw Netflix roll out its own ad-supported version, and that's been very successful as well.

But I think there's just this trepidation. And with a lot of these earnings reports, the killer really is the forecast, is the forward-looking guidance. When they're talking about how things could potentially escalate, potentially get worse, I think a lot of these media companies are just trying to prepare investors for the worst. And then maybe they'll surprise with a beat, or maybe they'll surprise with an improved macroeconomic environment. But I think it's a big wait and see approach right now.

SEANA SMITH: Yeah, and Allie, we're just getting breaking news here that WarnerMedia Brothers Discovery Sports laying off around 70 staffers. So we talk about the layoffs that have really been, obviously, happening at the company now over the last several months, but certainly we do expect more and more over the coming months as well.

ALEXANDRA CANAL: 100%, and this something we just heard from Disney as well. They are doing hiring freezes. They've said we expect more layoffs to come at this company. So I think for a company like Warner Brothers Discovery, where you have a CEO like David Zaslav, that's not afraid to fire people, not afraid to shake things up, I think that's what you can only expect. And it is interesting to get that breaking news, considering his comments about sports earlier. And then just a few hours later, we see these layoffs coming to fruition.

DAVE BRIGGS: It sure is because live sports are propping up television right now. And to move on from a highly popular NBA product is a gutsy move, though reports are the NBA wants $75 billion a year. So you can understand why they'd stay away.