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Warner Bros. Discovery CEO David Zaslav is increasingly in need of a win for shareholders.
Warner Bros. Discovery shares plummeted Thursday after taking a $9.1 billion impairment charge on the decline of its linear business and uncertainty around NBA rights.
The company may be an activist target given its persistent struggles to boost value, but it’s also possible outside investors would have limited options for alternative strategies.

David Zaslav attends the world premiere of “The Flash”, in Hollywood, Los Angeles, California, U.S., June 12, 2023.
Mike Blake | Reuters

Warner Bros. Discovery CEO David Zaslav needs a win. Soon.
Since merging Discovery with WarnerMedia in 2022 and immediately slashing billions in costs, Zaslav has struggled to convince shareholders that his company is a worthy investment.

Warner Bros. Discovery shares have fallen about 70% since April 8, 2022, the day the merger closed. His tenure has been defined by implementing thousands of layoffs, cutting movies and TV series for tax efficiencies, killing off CNN+ a month after its launch, hiring and firing CNN CEO Chris Licht, getting heckled at Boston University’s commencement by students chanting “pay your writers” during last year’s writers’ strike, and suing the NBA after the league chose not to renew media rights with his company following nearly 40 years in business together.
Making matters worse for him, Zaslav has long been one of the highest paid CEOs in the country. His 2023 compensation rose 26.5% to almost $50 million. Zaslav’s bonus is tied to increasing free cash flow and reducing debt, a mandate driven by John Malone, the media mogul and influential board member who has championed Zaslav, first at Discovery and now at Warner Bros. Discovery, which has a market capitalization of about $17 billion and $37.8 billion in debt.
The stock dropped roughly 9% in trading Thursday. The company took a whopping $9.1 billion impairment charge Wednesday given the loss of value in its linear cable networks — which still accounts for more than 100% of the company’s adjusted EBITDA. That means the rest of the company lost money.
Warner Bros. Discovery blamed “the continued softness in the U.S. linear advertising market and uncertainty related to affiliate and sports rights renewals, including the NBA” for the size of the write-down.
That’s not music to investors’ ears.

Part of the argument for why Discovery merged with WarnerMedia was that its diversified suite of content would be a “wonderful partner to advertisers,” as Zaslav said when the deal was initially announced in 2021.
Injecting uncertainty into the company’s valuation because of a loss of NBA rights also rings hollow given Zaslav’s claim in November 2022 that “we don’t have to have the NBA.”
“The write-down signifies that this company clearly overpaid for the linear assets as part of the WarnerMedia merger and, given the growing pressures on the linear ecosystem, it also raises a question on what the future cash flows will be on these assets after the potential of losing the NBA,” said Robert Fishman, an analyst at research firm MoffettNathanson.
Nonetheless, Zaslav projected a message of confidence during the company’s earnings conference call Wednesday.
“We feel good about where we are,” Zaslav said. “We have to look at all and consider all options, but the No. 1 priority is to run this company as effectively as possible.”

Fodder for activists

While the company continues to make progress adding streaming subscribers (gaining 3.6 million in the quarter) and moving closer toward sustained profitability, the decline in linear revenue and associated earnings continues to outweigh the growth in its flagship direct-to-consumer service, Max.
Warner Bros. Discovery’s failure to gain traction over the past two years suggests it could be a prime target for an activist investor, who could conceivably push for Zaslav’s ouster or, at the least, ask for the divestment of assets such as CNN or the gaming division.
The company also owns a number of other valuable businesses, including HBO, Warner Bros. studio and DC Comics. LightShed analyst Rich Greenfield has argued it should dramatically scale back its direct-to-consumer aspirations and focus on licensing content to other, larger streamers.
While Zaslav openly discussed seeking partnerships and mergers during Wednesday’s earnings conference call, finance chief Gunnar Wiedenfels brushed away talk of potentially breaking up the company, citing the benefits of “one Warner Bros. Discovery.”
“Every day I’m seeing evidence everywhere in the business of the benefits of those strategies,” Wiedenfels said.
There are two clear hurdles for a potential activist. The first is Malone’s influence over the board. It’s possible an activist fund may be scared away from angling for board seats if it thinks Malone’s power is so great that any suggestions will be rendered pointless.
The second is that Warner Bros. Discovery is arguably already pursuing the correct strategy given the company’s enormous debt load compared to its market valuation. If Zaslav is also looking for buyers for Warner Bros. Discovery, an activist’s pitch to sell the company may not be additive.
Warner Bros. Discovery generated more than $6 billion in free cash flow last year, buoyed by a drastic drop in content spending from the writers’ and actors’ strikes. That number will drop to about $4 billion this year as Hollywood has gotten back to work, according to MoffettNathanson.
Investors will surely want to know how losing the NBA will impact free cash flow in future years, assuming Warner’s lawsuit doesn’t net the company a package of games. But it’s possible that Malone and Zaslav’s strategy of focusing on streaming profitability and costs cuts will eventually pay off.
Still, it seems clear the pressure on Zaslav to show that he can deliver value is mounting. Looking at its competitors, Disney’s media properties appear on the upswing after several years of pain, and Paramount Global has pulled the rip cord and agreed to a merger with Skydance Media.
Part of why Zaslav fired CNN’s Licht last year is the narrative around him turned too toxic.
Now Zaslav in danger of falling into the same trap.
— CNBC’s Rohan Goswami contributed to this article.

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Boeing’s new CEO Robert “Kelly” Ortberg takes the reins of the aerospace giant on Thursday.
The 64-year-old aerospace veteran previously headed supplier Rockwell Collins.
Ortberg inherits a company mired in safety and manufacturing crisis.

Robert K. “Kelly” Ortberg is the Boeing’s new president and chief executive officer, effective August 8, 2024. Ortberg will also serve on Boeing’s Board of Directors.
Courtesy: Boeing

Aerospace veteran Robert “Kelly” Ortberg becomes Boeing’s new CEO on Thursday with a singular mission: restoring the reputation of a U.S. manufacturing icon.
That enormous goal will involve thousands of daily decisions that will determine whether Boeing can earn back the trust of regulators, airlines and the public; end persistent production defects; deliver aircraft on time and consistently to customers large and small; and stop burning cash.

That cash burn is running about $8 billion so far this year and counting. Meanwhile, Boeing shares are down some 37% so far this year, as of Wednesday.
Ortberg’s Day 1 activity is walking the floor of Boeing’s factory in Renton, Washington, where it builds its best-selling but problematic 737 Max. He plans to talk with employees and review safety and quality plans, with similar visits ahead at other Boeing plants.
“I can’t tell you how proud and excited I am to be a member of the Boeing team,” he said in a note to staff on Thursday. “While we clearly have a lot of work to do in restoring trust, I’m confident that working together, we will return the company to be the industry leader we all expect.”
Analysts and industry insiders are cautiously upbeat, painting the 64-year-old Ortberg — a more than three-decade veteran of the industry who spent years atop commercial and defense supplier Rockwell Collins after working up the ranks there — as a good listener with an engineering background (he has a mechanical engineering degree). Perhaps most importantly, he is a Boeing outsider.
“This guy has a fantastic reputation and level of experience in the industry,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “He has a reputation for listening and for letting people push back.”

Trouble across businesses

Those skills will be key as Boeing tries to stabilize its production and eliminate manufacturing flaws.
Boeing’s top safety executive for commercial aerospace told a National Transportation Safety Board hearing earlier this week that the company is working on a design fix so the near-catastrophic door plug blowout it faced at the beginning of the year never happens again.
The hearing was part of the NTSB’s probe of the the midair blowout of a door plug from a packed, months-old Boeing 737 Max 9 as it climbed out of Oregon. While no one was seriously injured in the accident, it put Boeing back into crisis mode just as it was trying to move on from two fatal crashes of its best-selling 737 Max planes in 2018 and 2019.
Worker testimony at the NTSB hearing also showed manufacturing pressure and frequent fixes on planes, putting a spotlight on Boeing’s factories.
“I will be transparent with you every step of the way, sharing news on progress as well as where we must do things better,” Ortberg said in the memo. He vowed to share reports to staff, “giving you timely updates of what I’m seeing and hearing on the ground from our teammates and our stakeholders.”
Boeing last month agreed to plead guilty to defrauding the U.S. government during the Max certification, a deal that will require an independent corporate monitor at the company for three years.
But Ortberg will have to address issues not only in the commercial jet business, including the delayed certification of new 737 and 777 models, but also in its defense unit.
That segment of the business is facing issues with two 747s that will serve as the next Air Force One aircraft but are years behind schedule. Meanwhile, Boeing’s misfiring Starliner capsule, which launched in early June, has NASA debating whether to use SpaceX instead to bring astronauts Butch Wilmore and Suni Williams back from the International Space Station.
A decision is also looming over whether to launch a new aircraft as Boeing loses ground to rival Airbus.
The first 100 days of Ortberg’s time as CEO will be crucial, said Bank of America aerospace analyst Ron Epstein.
“The decisions made early in his tenure will have generational impacts on the company,” he said in a note on Monday.
Ortberg and his team will need to ensure Boeing’s workforce is trained, with thousands of new workers in factories after more experienced staff members took buyouts or were laid off in the pandemic. A union representing some 30,000 Boeing factory workers in Washington state and Oregon is seeking more than 40% raises and, last month, members authorized a strike if a deal isn’t reached this September.
“The principles of safety and quality should be equally important as the manufacturing rates,” Jon Holden, local president of the International Association of Machinists and Aerospace Workers, said in a statement last week. “This potential collaboration with the new CEO could be a prime opportunity for Boeing to prove its dedication to its workforce and acknowledge the exceptional manufacturing capability and capacity of skilled IAM Members on the shop floor.”

Last week, alongside another quarterly loss, Boeing announced Ortberg would replace Dave Calhoun, who had said in March he would step down by year’s end.
That was part of a larger executive shakeup after the door plug blowout. Calhoun himself took over a Boeing in crisis in early 2020, replacing Dennis Muilenburg, who was ousted for his handling of the two Max crashes.
While Boeing is still based in Arlington, Virginia — where it announced it would move its headquarters in 2022 from Chicago — Ortberg will be based in the Seattle area, giving him a close eye on where the majority of Boeing’s commercial jetliner production is based.
“In speaking with our customers and industry partners leading up to today, I can tell you that without exception, everyone wants us to succeed,” Otberg said in his Day 1 note to employees. “In many cases, they NEED us to succeed. This is a great foundation for us to build upon.”
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“We look forward to working with Kelly Ortberg in his efforts to return Boeing to its place as the leading American aerospace company,” CEO Bob Jordan said in a written statement. “A strong Boeing is great for Southwest Airlines and it’s great for our industry.”
— CNBC’s Michael Sheetz contributed to this article.

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Eli Lilly reported second-quarter earnings and revenue that blew past expectations and hiked its full-year revenue outlook by $3 billion as sales of its blockbuster diabetes drug Mounjaro and weight loss injection Zepbound spike.
The drugmaker now expects full-year adjusted earnings of $16.10 to $16.60, up from a previous guidance of $13.50 to $14 per share.
The company also expects revenue for the year to come in between $45.4 billion and $46.6 billion, an increase of $3 billion at both ends of the range.

Eli Lilly on Thursday reported second-quarter earnings and revenue that blew past expectations and hiked its full-year revenue outlook by $3 billion as sales of its blockbuster diabetes drug Mounjaro and weight loss injection Zepbound spike.
Shares of Eli Lilly jumped more than 11% in premarket trading Thursday.

The drugmaker now expects revenue for the year to come in between $45.4 billion and $46.6 billion, an increase of $3 billion at both ends of the range.
The company also raised its full-year adjusted earnings to a range of $16.10 to $16.60, up from a previous guidance of $13.50 to $14 per share.
Eli Lilly said the guidance increase was primarily driven by the strong performance of Mounjaro and Zepbound and comes in part due to “improved clarity” into the company’s production expansions and planned launches of Mounjaro outside the U.S. The company said it hit several supply-related milestones during the quarter, without providing specific details.
Demand has far outstripped supply for incretin drugs such as Zepbound and Mounjaro, which mimic hormones produced in the gut to suppress a person’s appetite and regulate their blood sugar. That has forced Eli Lilly and its rival Novo Nordisk to invest heavily to boost manufacturing.
But Eli Lilly’s supply woes may be starting to ease. On Friday, the Food and Drug Administration’s drug database said all doses of Zepbound and Mounjaro are available in the U.S. after extended shortages.

Still, the company cautioned that expected increases in demand may result in period “supply tightness” for certain doses of its incretin drugs. 
“We just see unbelievable demand, and we’re not even trying that hard to promote this drug,” Eli Lilly CEO David Ricks told CNBC in an interview. “What you’re seeing is just consumer organic demand here as we’ve shipped more product, as we bring more supply online in the United States.” 
Ricks said the company has built six manufacturing plants, some of which are already ramping up, and hired thousands of workers to increase production. The company expects incretin drug production in the second half of 2024 to be 50% higher than it was during the same period last year, he noted.  
“We’re on that kind of ramp into 2025,” he said. Ricks added that Eli Lilly is still developing more convenient weight loss pills, which could help the company meet skyrocketing demand.
Here’s what Eli Lilly reported for the second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: $3.92 adjusted vs. $2.60 expected
Revenue: $11.30 billion vs. $9.92 billion expected

The pharmaceutical giant booked net income of $2.97 billion, or $3.28 a share, for the second quarter. That compares with a profit of $1.76 billion, or $1.95 a share, a year earlier. 
Excluding one-time items associated with the value of intangible assets and other adjustments, Eli Lilly posted earnings of $3.92 per share for the second quarter of 2024.
The company posted second-quarter revenue of $11.30 billion, up 36% from the same period a year ago. 
Eli Lilly said sales were largely driven by higher demand for Mounjaro and Zepbound as production increases improved supply in the U.S.
It is Zepbound’s second full quarter on the U.S. market after winning approval from regulators in November. The weekly injection raked in $1.24 billion in sales for the period, which is well above the $922.2 million that analysts expected, according to StreetAccount. 
Meanwhile, Mounjaro took in $3.09 billion in revenue for the second quarter, more than triple the sales it booked during the year-earlier period. Analysts expected $2.39 billion in sales, according to StreetAccount.
Mounjaro prices were higher in the U.S. during the second quarter, which came in part due to greater access to the drug and decreased use of savings card programs compared with the year-earlier period. 
But the company said savings cards should have “minimal effect” on realized price comparisons in the second half of the year because the $25 monthly coupon for patients who don’t have insurance coverage for Mounjaro expired in June. 
Ricks said pricing of Eli Lilly’s incretin drugs was “pretty stable” during the second quarter. 
That differs from Novo Nordisk, which reported weaker-than-expected second-quarter sales of its weight loss drug Wegovy and diabetes injection Ozempic on Wednesday in part due to pricing pressure. 
Revenue from Wegovy was hit by higher-than-expected price concessions to U.S. pharmacy benefit managers, which negotiate drug discounts with manufacturers on behalf of insurers, Novo Nordisk executives said on an earnings call Wednesday.
Shares of Eli Lilly are up more than 30% this year after jumping almost 60% in 2023 due to the soaring demand for the company’s weight loss and diabetes drugs – and increased investor interest in their potential as treatments for other health conditions. That popularity comes despite their hefty monthly price tags, inconsistent insurance coverage and intermittent supply shortages. 
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Disney’s post-pandemic box office has been riddled with starts and stops, but midway through 2024 the studio appears to have hit a groove.
“Inside Out 2” is the highest-grossing animated movie of all time and has topped $1.5 billion at the global box office.
“Deadpool & Wolverine” had the best domestic opening for an R-rated film and has scored more than $850 million in global ticket sales.
Still to come this year is “Moana 2,” the hotly anticipated sequel to 2016’s “Moana,” which was the most streamed movie of 2023.

Hugh Jackman, Robert Iger, and Ryan Reynolds at the Marvel Studios’ “Deadpool & Wolverine” World Premiere held at David H. Koch Theater on July 22, 2024 in New York, New York. 
Kristina Bumphrey | Variety | Getty Images

After years of starts and stops at the box office, Disney appears to have hit a groove in 2024.
Its latest Pixar film, “Inside Out 2,” is now the highest-grossing animated film of all time, topping $1.5 billion at the global box office. Its first R-rated Marvel Cinematic Universe flick — “Deadpool & Wolverine” —broke opening weekend records for an R-rated film and is set to surpass the $1 billion mark before the end of its run.

And the box office hits aren’t expected to stop there.
Over the Thanksgiving holiday, the studio is set to release “Moana 2,” the hotly anticipated sequel to 2016’s “Moana.” While the first film generated a little less than $700 million at the global box office, audience fervor for more “Moana” content is expected to drive high ticket sales in November. After all, it was the most streamed film of 2023.
Disney has already seen success from its animated franchises this year, as “Inside Out 2” has generated nearly double the $850 million its predecessor secured in 2015.
“The billion-dollar club, while growing ever less exclusive with each passing year, is no less a remarkable achievement for any film to join its ranks, particularly when one studio has the potential to land a trifecta of such hits for film released in the same year,” said Paul Dergarabedian, senior media analyst at Comscore. “Such is the enviable position that Disney, after a fallow post-Pandemic period has returned to glory with a vengeance. They are in the midst of phenomenal comeback year for the studio.”
A wild card for the studio is December’s “Mufasa: The Lion King,” a prequel to 2019’s “The Lion King.” While its predecessor generated $1.6 billion at the global box office, more than $1.1 billion of which came from international audiences, it’s unclear what appetite moviegoers have for this photorealistically animated sequel.

Disney has long been a box office champion, driving significant ticket sales domestically and globally. While its theatrical business is a relatively small part of its overall annual revenues, its a large part of Disney’s wider strategy. The company uses its theatrical successes across many of its other departments. Franchises like Star Wars, Marvel, Avatar and Pixar have transcended the big screen to become popular theme park lands and TV shows, and characters from those films appear on merchandise.
Disney’s recent box office rut came at a time when its theme parks were growing rapidly and generating enough revenue to balance out other pieces of the business that were less successful or still in the process of becoming profitable, like streaming platform Disney+. However, in the most recent quarter, Disney parks and experiences segment felt pressure due to lower consumer demand and inflation.
Having its theatrical business return to form is key for Disney because of how it can fuel other areas of the business.

Billion-dollar track record

Disney churns out more billion-dollar hits than anyone in the business. Of the 53 titles that have achieved this feat at the box office, more than half, or 27, have been under the Disney banner, according to data from Comscore.
Two of those films — 2009’s “Avatar” and 1997’s “Titanic” — were produced by 21st Century Fox prior to the 2019 merger of the two companies, but are considered part of Disney’s collection of billion-dollar features. Additionally, two Marvel Cinematic Universe Spider-Man films that were co-produced by Disney and Sony topped $1 billion. However, those are not included in Disney’s haul because they were distributed by Sony.
In the year before the pandemic, Disney had seven theatrical releases top $1 billion at the box office. However, theater closures and production shutdowns, coupled with a creative team that was stretched too thin, led to a cinematic slump for the company in recent years.
Audiences and critics bemoaned Disney’s push for quantity, which sacrificed quality in major franchises. The company was also criticized for allowing some of its content to become too focused on social messages.
While “Avatar: The Way of Water” became one of the top all-time box-office hits in 2022, and several Marvel features topped $800 million in global ticket sales, Disney also saw some of its lowest animated feature hauls in decades and its lowest-ever MCU release.
“Much has been said about a few of Disney’s underwhelming box office performances in recent years but it was always a fool’s errand to count the studio out for long,” said Shawn Robbins, founder and owner of Box Office Theory. “Their leadership made clear and convincing strategic moves to address the commercial struggles of several key releases coming out of the pandemic era … We’re starting to see the early dividends of that pivot back to quality franchise content and a renewed emphasis on the moviegoing experience.”
Disney’s CEO Bob Iger has addressed the company’s theatrical woes on several occasions since returning to the helm of the company in late 2022.
He admitted Disney’s fall from theatrical grace had a number of causes. He said that during Covid lockdowns, the company conditioned audiences to expect its films on streaming, and that pandemic-related restrictions made it difficult for executives to oversee its increased number of film and television productions. Additionally, he said the company’s push to feed Disney+ with new content diluted its quality.
Iger promised investors that Disney’s creatives would right the ship. And he appears to be making good on that pledge.
On Wednesday, he credited “Inside Out 2” for the company’s outperformance in its content sales and licensing division during the most recent quarter. The company noted that the first “Inside Out” drove more than 1.3 million Disney+ sign-ups and generated more than 100 million views globally since the first trailer for “Inside Out 2” was released last November.
He also touted the company’s slate of franchise features coming in the next few years.
“Let me just read to you the movies that we’ll be making and releasing in the next almost two years,” Iger said during Wednesday’s earning call. “We have ‘Moana,’ ‘Mufasa,’ ‘Captain America,’ ‘Snow White,’ ‘Thunderbolts*’, ‘Fantastic 4,’ ‘Zootopia,’ ‘Avatar,’ ‘Avengers,’ ‘Mandalorian’ and ‘Toy Story,’ just to name a few. And when you think about not only the potential of those in the box office but the potential of those to drive global streaming value, I think there’s a reason to be bullish about where we’re headed.”

Upcoming Disney franchise film releases

2024

“Alien: Romulus”
“Moana 2”
“Mufasa: The Lion King”

2025

“Captain America: Brave New World”
“Snow White”
“Thunderbolts*”
“Fantastic Four: First Steps”
“Tron: Ares”
“Blade”
“Zootopia 2”
“Avatar 3”

2026

“Avengers: Doomsday”
“The Mandalorian and Grogu”
“Toy Story 5”
“Moana”
Untitled “Star Wars”

2027

“Avengers: Secret Wars”
Untitled “Star Wars”
“Avatar 4”

Investors are expected to get a bigger glimpse into Disney’s theatrical plans during its biannual D23 Expo taking place in Anaheim, California this weekend.
“The past speaks for itself, but there’s no doubting the importance of Disney’s role in the industry’s present and future,” said Robbins. “If Marvel and Pixar continue their turnarounds, and if the Star Wars franchise can eventually execute a similar rebound under Lucasfilm, it won’t be long before the parent studio returns to some familiar box office prowess up and down the calendar each year.” More