Warner Bros. Discovery Lays Off Almost 1,000 Employees And It’s Looking Worse
Believe it or not, content costs and producing and acquiring content for media channels and streaming platforms costs a lot of money—especially since streaming is currently packed with competition. As a result of content costs, high debt level, and market conditions, Warner Bros Discovery just made a decision to lay off nearly 1,000 employees. Admittedly, the number of those affected is not as high as last time, but it’s still pretty significant.
Cost-Cutting Through Layoffs
This is just one among many cost-cutting measures Warner Bros Discovery and other media companies resort to when debt gets too high and profits too low, and it most certainly has nothing to do with cutting into the executives’ bonuses. Jokes and sarcasm aside, the new wave of layoffs affects several sectors at the company, with the financing division taking the heaviest hit, followed by business affairs, production, and Max—WBD’s streaming service. In fact, the latter is actually the least affected by the layoffs.
It Will Get Worse Before It Gets Better
It’s worth noting that not everyone affected by these layoffs has been informed about Warner Bros Discovery’s decision, and since this is a developing story, we can expect more details in the following days. For now, the most recent wave of layoffs is just another downsizing move at the company, which began firing people left and right in April 2022, with sporadic termination throughout 2023. The SAG-AFTRA strike certainly didn’t help much with the productions being stopped and streamers being pressured into paying actors.
Content Costs And Competition
All of this is hardly surprising, considering that Warner Bros Discovery has been dealing with significant debts, mostly due to WarnerMedia. The company has been working on reducing its debt, but all of its $39 billion in debt remains a significant burden to the company. Streaming platforms struggle to maintain profitability since, as we previously stated, content costs and the current economic environment with increasing competition and advertising market fluctuations negatively impact the company’s revenues, let alone profitability.
Revenue Does Not Equal Profit
Warner Bros Discovery had $41.3 billion in revenue in 2023, which should be enough to cover the existing debt, at least in theory. We mustn’t mix revenue with profitability, and once all the expenses were subtracted, Warner Bros. Discovery only made $103 million in profit after it paid down $5.4 billion in debt. Not bad, especially since the company reported a $2.1 billion loss in 2022, especially when we consider the challenges the other major studios faced as well.
Other Streamers In Peril As Well
Warner Bros Discovery isn’t the only company struggling with debt. Paramount Global is also having financial issues of its own, with the company recently signing a preliminary agreement with Skydance Media, according to which the latter would acquire Paramount’s parent company, National Amusement. As per the agreement, Skydance will merge with Paramount to create a “New Paramount,” but the transaction isn’t expected to close until September 2025.
As a result of its financial struggles, it’s not outside the realm of possibility for Warner Bros Discovery to split in half. The break-up approach seems to be the strongest option, and WBD could opt to sell some of its poor performers. Of course, this is only a speculation on our part.
Source: Deadline
