It’s Wednesday. The week before Thanksgiving. We’re off next week.

We’ll open with this stroke of genius. Hurriedly buying on Amazon now.

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Today it’s all about Warner Brothers Discovery (WBD). You know, the people who vanished HBO overnight.

We cover a lot of companies with strong brand communication, so it’s easier to uncover where they’re headed next.

But how do you parse a company’s strategy when the brand is all over the place?

Well, let’s find out.

WBD: A half-assed breakdown

1. WBD, by the #’s

WBD’s stock sunk something like ~20% over its earnings last week, but performance is a little like story telling.

Let’s dig into some key metrics:

• $417m net loss, BUT narrowed from $2.3b last year
  

• 700k subscriber loss, BUT MAX TURNED A PROFIT!
  

• Ad Revenue dropped 12% (okay, that’s bad)
  

• Huge debt on its balance sheet (~$40B), but they have a plan to pay it down (it’s realistic)

2.Okay, why is this important?

If you’ve subscribed to Max, have you noticed what they’re actually trying to do? Neither do we.

That’s why its stock had a steep drop on news of the missed metrics because the vision isn’t as clear-cut as its peers (Disney to double down on streaming/Netflix uses data to drive content).

We’ve gotten used to seeing a company’s growth from streaming, but that doesn’t tell WBD’s full story, since its a multi-property, multi-channel company (Linear TV, Streaming, etc.).

But we think it’s coming into view. Here are 2 things that stood out to us in the last week:

1. If you look closely, you’d find that WBD has tripled the revenue of their licensed content (aka - putting their shows on other platforms/channels). from ~$130m to ~$420m
   

2. They also signed a deal with Verizon where customers will pay a subsidized price for its ad-supported option.

3. Gimme the zinger, already

1. WBD is focusing heavily on distribution.
   
   Example: Where you might see Disney take a piece of content, and monitor it for quality/stickiness on its tentpole delivery channel, WBD will look at it and ask ‘what shows/movies can we license that will bring us the greatest amount of money?’
   

2. WBD is probably doing the ‘growth through acquisition’ thing rather than growing organically
   
   Example: For a company like WBD, which covers TV, movie studios, and gaming, the growth strategy gets a little more complicated. But it’s probably going to be conquer + consolidate, which they know well.
   

   CEO David Zaslav mentioned M&A opportunities over the next couple of years. Makes sense to do it if there’s a recession, where you can pick up a studio or a content company at a discount.

    

   Maybe Paramount?

Again, none of this is investment advice.

What AI made this week

Sigh. We’d probably offer 4 grand on this thing sight unseen on Facebook Marketplace.

Have a great week!

Ahmed & Peter