The cancellation by Warner Bros of two made-for-HBO Max streaming movies came as a shock to the town. There are several threads here, but the move amounts to an emphatic rejection of past WarnerMedia CEO Jason Kilar’s strategy to make original $70 million live-action and animated films directly for the streaming site.
The makers of the live-action Batgirl and the animated Scoob! learned today that those films were being stopped in their tracks. The timing was particularly awkward for Batgirl co-directors Adil El Arbi and Billal Fallah. Both are in Morocco for El Arbi’s wedding — some wedding present — and they expected to return to the cutting room and continue work on the film that stars Leslie Grace, J.K. Simmons, Brendan Fraser and Michael Keaton.
There were initial cries that the scrapping of Batgirl carried bad optics because the title role is played by a Latina. But there were reasons for the move. In both cases, the filmmakers were told that it came down to a “purchase accounting” maneuver available to Warner Bros Discovery because the company has changed hands, and also changed strategy from the previous regime. This opportunity expires in mid-August, said sources, and it allows WBD to not have to carry the losses on its books at a time when the studio is trying to pare down $3 billion in debt across its divisions.
There has been much speculation on why Batgirl was canceled, having to do with it being a bad movie. Sources said that the film tested once, and the result wasn’t that bad, considering that the cut had temporary visual effects that tend to temper audience enthusiasm in the scores. Already, the studio is discussing making different deals with the directors and Grace, because this was not a reflection on their talent as much as the radical strategy shift. It was a hard decision for all and highly unusual to simply scrap a film that cost $60 million-$70 million, made by the hot directors who helmed Black and the Disney+ series Ms. Marvel under Kevin Feige as well as the pre-pandemic $426M-grossing hit Bad Boys for Life.
Much of the decision came down to this: Warner Bros Discovery boss David Zaslav is rejecting Kilar’s strategy to lean heavily into building streaming subscriptions for HBO Max. That was punctuated by his Project Popcorn initiative that put the entire 2021 theatrical slate — including Dune, Godzilla vs Kong, King Richard, The Matrix 4 — day-and-date in theaters and on HBO Max when theater attendance was sparse during the pandemic. Even after he was shown the door, Kilar continued to call the strategy a win. Many did not agree, particularly after Top Gun: Maverick waited and grossed north of $1.3 billion. It’s a decidedly different world from when Kilar made the move. Wall Street no longer is impressed by subscriber numbers as much as profits, as seen by the precipitous decline of Netflix’s stock value.
Companies have come around to philosophies espoused by the likes of Sony’s Tom Rothman and Universal’s Donna Langley — that films gain cultural relevance when they debut first in theaters with an appreciable theatrical spend. When they appear on streaming sites 45 days or so later, they are prized because they have cultural relevance. That will be the strategy Apple employs next year with the Martin Scorsese-directed Leonardo DiCaprio-Robert De Niro drama Killers of the Flower Moon, which pulled out of 2022 and, as Deadline revealed, is likely to debut at Cannes before a full theatrical release through Paramount.
Back to Batgirl and Scoob! Batgirl is a gritty entry — not near the budgets of DC theatricals The Flash and Aquaman and the Lost Kingdom — and wasn’t designed to compete with tentpole theatrical releases, and neither for that matter was Scoob! In addition, there were introductions of characters in that film that the studio wanted to save for those DC theatrical titles. Rather than spend vast sums pumping up the budgets of each film to compete in theatrical marketplace, and then spend $80 million in global P&A, the studio felt that scrapping both movies was a better choice, when coupled with the purchase accounting maneuver. DC will be preserved as a place that takes big swings, from Aquaman 2 to Flash, Black Adam, Shazam! Fury of the Gods, a sequel to its billion-dollar Joker and another Wonder Woman pic.
Sources don’t expect other films to get killed like this, because the accounting opportunity expires by the middle of this month. But as all of Warner Bros Discovery braces for Thursday’s quarterly earnings report and the layoffs that are sure to come, no one with a project made specifically for HBO Max or execs there can feel confident at the moment.
Warner Bros Discovery just released this statement: “The decision to not release Batgirl reflects our leadership’s strategic shift as it relates to the DC universe and HBO Max. Leslie Grace is an incredibly talented actor and this decision is not a reflection of her performance. 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.”
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