Since 1990, the finances at Warner Brothers have been a ride that has been far more thrilling than anything you would find at Six Flags. What was once a galvanized Hollywood institution that looked down on the likes of Disney, Universal and what used to be RKO Pictures has become a whittled down version of itself, begging for scraps and looking for anything that can save them from their financial woes.
The Legacy Of The Four Founding Brothers Who Started Warner Erodes Steadily With Each Poor Decision.
As rumors swirl the writing on the wall is clear. Barring a miracle, Warner seems to be headed towards the same unceremonious fate that befell RKO Radio Pictures. After a century of unforgettable characters and iconic storytelling, this industrial titan has finally succumbed to a series of bad decisions that has spanned multiple generations.
The 80s Weren’t Great For Warner
In order to fully understand the magnitude of the situation that Warner faces, we need to go back thirty-four years to 1989. Warner was facing the first of many existential crises. While they had achieved monumental success with Tim Burton’s Batman (earning $411.57 million dollars at the box office) They mirrored that success with the spectacular failure that was Superman IV: The Quest For Peace (earning just above a paltry $30 million dollars worldwide.)
Aside from Batman, DC comics properties which have been under Warner Brothers ownership since 1967 were not nearly as lucrative as they were in the decades earlier. Wonder Woman had been off the air for ten years at that point. The Flash tv series that was slated for the 1990 television series was released to little fanfare and disastrous reviews. No other property in the DC library aside from Batman was considered for development after the failure of The Quest For Peace.
Superman IV Was A Financial Disaster For Warner Bros.
Further compounding Warner’s woes in the 1980s, was a series of films that missed the mark in the second half of the decade. While the first half of the eighties started off strong with Warner releasing a string of classics beginning in 1980 with Caddyshack and stretching to 1985 with The Goonies; the second half of the decade proved to be inconsistent and without direction.
For every gem the studio released, such as The Lost Boys, Lethal Weapon, or Full Metal Jacket, they would negate that success with films such as Police Academy 5, Arthur 2: On The Rocks, and Caddyshack 2; a movie so bad that is most likely used by government agencies as a form of torture.
So Batman came and gave them a shot in the arm, but it wasn’t enough.
In order to stay solvent, Warner Brothers needed an injection of cold hard cash and they needed it fast. Here comes a merger with Time Inc.
Time Warner Was A Temporary Fix
The merger with Time Inc. started off being beneficial to both companies. The newly formed Time Warner brand gave Warner the financial freedom to return to form.
Free Willy Was One Of The Many Box Office Hits To Be Released Under Warner’s Family Division.
In 1992 the newly rejuvenated company was able to form the extremely successful Warner Brothers Family Entertainment division. This division breathed new life into the studio, producing financial powerhouses such as Free Willy, The Secret Garden, and Space Jam. The success would prove to be temporary. In 1995, Warner would partner up with Chicago’s Tribune Company to form the WB television network.
The WB Network Was Destined To Fail
As far as long-term planning goes, the WB probably had the worst business plan in the history of network television. They attempted to use a first run syndication model in prime time. First run syndication is a great course of action for a network airing a show like Baywatch which aired primarily on weekdays after the Soap Operas and advertising wasn’t expensive.
- A First Run syndication model in prime-time hours isn’t even a risky decision. It’s just a terrible approach. Advertisers aren’t going to spend prime time dollars on inferior programming.
- Without an adequate amount of ad revenue, there were no resources for the network to improve the quality of their programming. Success stalled and The WB Network became a perpetual also-ran in network television.
The WB Network Struggled Financially Through Most Of It’s Existence, Mostly Due To A Poor Business Plan.
- Compounding the dire situation for the network was the programming itself and the target audience.
- It was a novel idea to have a television network that catered specifically to teens and tweens but there was nothing to balance that out for advertising dollars. Nickelodeon realized this early on and began the Nick at Nite block in the prime-time hours to court viewers that had money to spend.
- While shows like Dawson’s Creek and Buffy The Vampire Slayer had a respectable number of viewers and sold well on the merchandise front, major advertisers wouldn’t spend money on ad space because it was viewed as a waste of money.
- The network would barely last ten years before merging with the ailing UPN network and forming the equally maligned CW.
America Online Proved To Be Disastrous For Warner
In 2000, new life was breathed into Warner Brothers yet again when the largest merger in American history took place. America Online; the world’s largest internet provider at the time, shocked the financial market when they announced their purchase of Time Warner for $350 billion dollars. No, that’s not a typo. Initially, this was a win and AOL’s stock doubled as soon as the announcement was made.
America Online’s Purchase Of Time-Warner Was Lauded At First. Then It Was Proven To Be A Financial Disaster.
This transaction would go down in history as the worst deal ever made.
- AOL lacked experience with legacy media and it showed.
- The company failed at every turn to understand the landscape of the media industry.
- Infighting between Warner Brothers and their new bosses made the merger a devil’s deal.
- AOL failed to recognize the importance of broadband internet. They stuck with the dial up model for too long and this decision led to the end of their stronghold in a market they once dominated.
By 2009, the merger dissolved. Time Warner went their separate way and the beleaguered former giant that was AOL faded away into obscurity and was purchased by Verizon, who in turn sold it off to Yahoo! in 2021.
New Communications Company, Same Pitfalls
In 2018, AT&T, primarily known as a communications company wanted to break into the media market. They wrote a check for $85 billion dollars and once again, Time Warner was under new ownership. While their tenure wasn’t as disastrous as AOL’s, it was still pretty bad. They tried to fix something that wasn’t broken and ended up inadvertently almost destroying the studio.
The Marriage Between Warner And AT&T Would Prove To Be Short-lived As AT&T Could Not Find A Way To Effectively Manage Their New Acquisition.
Between the economic fallout from the COVID pandemic and AT&T failing to admit that they were in over their heads, Warner suffered from financially catastrophic damage. As of 2022, due to the gross mishandling of the company Warner’s long-term debt continues to mount and is at almost $50 billion dollars.
Once again, this transaction would not last and it would be just over four years until Warner was purged from the AT&T family.
Coming Up…
There is a lot to unpack here, so I have to break this article into two parts. I will cover Warner’s merger with Discovery, David Zaslav’s ruthless cost cutting measures. I will also cover the rumors and possible ramifications of yet another sale, as Universal Studios continues its quest to finally emerge from the giant mouse shaped shadow that is Disney, rumors of them purchasing Warner are picking up steam.
Should a sale go through, the effects that a transaction like this would have on the entertainment industry as a whole would be monumental.
Stay Tuned!
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Stay Geeky Everybody!
