David Zaslav Says Ad Market Is Tanking: ‘Weaker Than It Was During COVID’

The Warner Bros. Discovery CEO says ad sales are crumbling, something the mogul didn’t forecast when he bought his movie and TV empire

Warner Bros. Discovery David Zaslav
Warner Bros. Discovery CEO David Zaslav. (Photo by Dimitrios Kambouris/Getty Images for TIME)

Warner Bros. Discovery chief executive David Zaslav said Tuesday that entertainment companies are facing a huge challenge — the advertising market is crumbling just as studios are diverting cash to fuel a massive arms race in streaming.

“The advertising market right now is very weak … quite weak,” Zaslav said during a presentation at RBC’s annual technology investor conference. “This is weaker than it was during COVID, and right now there is a pretty big miss of the whole Christmas season.”

Despite his concerns about the ad market, Zaslav reaffirmed Warner Bros. Discovery’s plans to launch a free ad-supported streaming service to compete with Pluto and Tubi. And he predicted a recovery with the return of the NBA and NHL, adding that WBD took a greater ad hit in recent months since “we don’t have local and we didn’t have sport.”

And he defended recent moves to scale back the amount of the company’s film and TV programming on HBO Max. “Our whole library went on HBO Max, and we weren’t selling any of it, but it was all on there,” he said. “Now, all that could have worked, but we looked at it and we said: Most of this is not being watched. Or, we don’t think anybody is subscribing because of this. We can sell it non-exclusively to somebody else. Look at this huge library that we have.”

Zaslav acknowledged the fact that American companies delivered $285 billion in U.S. advertising last year, and high inflation and a potential recession puts beating that number into question.

Even more importantly, the entertainment mogul who cobbled together Discovery’s $44 billion acquisition of WarnerMedia put it bluntly: “It’s going to be hard” to meet 2023 financial goals if the advertising market is in the dumps. Warner Bros. Discovery projects earnings of $12 billion next year. He then said these words that should put fear into every Hollywood executive: “Things got a lot worse” during the past few months.

Zaslav also teased future plans for DC Studios under the tutelage of newly installed CEOs James Gunn and Peter Safran — with a multiverse apparently not on the agenda. “Over the next few years, you’re going to see a lot of growth and opportunity around DC, there’s not going to be four Batmans,” he said. “And so part of our strategy is drive the hell out of DC, which James and Peter are going to do. I think they’ve thrilled the fans. I think they’re going to thrill you over a period of time.”