Warner Bros. Discovery is hyping free cash flow. Investors don't appear to be buying it

Listening to Warner Bros. Discovery Chief Executive Officer David Zaslav speak on Friday's fourth-quarter earnings calls, I couldn't help but think of a scene in the movie "Office Space."

An employee named Tom meets with two consultants, both named Bob (together, The Bobs), who have been tasked with deciding which employees at the company should be promoted or fired.

When The Bobs press Tom on what he does at the company after they don't initially understand, Tom snaps, screaming, "I have people skills! I am good at dealing with people! Can't you understand that?! WHAT THE HELL IS WRONG WITH YOU PEOPLE?!"

Warner Bros. Discovery investors are The Bobs, Chief Executive Officer David Zaslav is Tom and the disconnect he's worked up about is free cash flow.

Warner Bros. Discovery on Friday said it generated $3.3 billion in free cash flow during the fourth quarter and ended the year with $6.2 billion in free cash flow, up 86% from a year prior. Yet it missed analyst estimates for revenue and profit, and shares fell 10%.

For more than year, Zaslav has repeatedly told the investment community that his priority is to boost free cash flow to improve the health of the company and to pay down debt. Warner Bros. Discovery has paid down $12.4 billion in debt in less than two years since announcing the merger of Discovery and WarnerMedia.

He led with that message again on Friday during his company's earnings conference call.

"Our top priority this year was to get this company on solid footing and on a pathway to growth, and we've done that," Zaslav said. "We said we'd be less than 4-times levered, and we are. We're now at 3.9-times and expect to continue to delever in 2024. We've significantly enhanced the efficiency of the organization with