Warner Bros. Discovery (WBD) has a lot of questions to answer ahead of its earnings report on Thursday.
The three-month-old streaming conglomerate, which is set to report its first quarterly earnings since the $43 billion merger, plans to lay off 70% of its development business, according to The Wrap, which cited “multiple insiders.”
The news has fueled speculation when it comes to the future of HBO Max with sources telling The Wrap that CEO David Zaslav, known for his cost-cutting leadership style, will announce a major restructuring to both HBO Max and Discovery+ either during the earnings results or soon after.
The outlet explained that the move “will result in a gutting of HBO Max, significant layoffs for its executives and staff to minimize redundancies with HBO and a combined streaming service with Discovery+.”
There will also be a harder line between scripted and non-scripted content, the source claims.
The stock was up 4.5% when the market closed on Wednesday but was relatively flat in after-hours trading.
Earlier on Wednesday, the studio confirmed that two films slated for an HBO Max release — “The Batgirl,” starring “In The Heights” star Leslie Grace, as well as “Scoob!: Holiday Haunt” — have been pulled.
Warner Bros. did not immediately respond to Yahoo Finance’s request for comment on the layoff reports or its decision to pull those two movies, but did provide a statement to CNN, which it owns.
“The decision to not release ‘Batgirl’ reflects our leadership’s strategic shift as it relates to the DC universe and HBO Max,” a Warner Bros. spokesperson told the network.
“Leslie Grace is an incredibly talented actor and this decision is not a reflection of her performance,” the statement continued. “We are incredibly grateful to the filmmakers of ‘Batgirl’ and ‘Scoob! Holiday Haunt’ and their respective casts and we hope to collaborate with everyone again in the near future.”
The DC Comics film was nearly complete and cost the studio a reported $70 million to produce.
The news comes as the company looks to improve profitability and reallocate costs.
Warner Bros. Discovery previously said it expects to slash $3 billion worth of costs over the next two years, and distribute those savings into streaming content.
At the time, questions swirled over where those funds might come from — this could be the start of that endeavor.
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
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Source: finance.yahoo.com