Cheat Sheet: WarnerMedia and Discovery bundle up

By Tim Peterson

AT&T’s WarnerMedia and Discovery had been separately looking to bundle up as a way to withstand the streaming wars. Now they’ll be teaming together to stand up against the likes of Netflix and Disney.

Nearly three years after AT&T closed its acquisition of Time Warner, the telecom giant has decided it no longer wants to be a media mogul and will spin off its media arm. The owner of Warner Bros., Turner and HBO Max will merge with the owner of Discovery, Food Network and Discovery+, the companies announced on May 17.

The key details:

Discovery president and CEO David Zaslav will take the helm of the combined WarnerMedia-Discovery.
The merger is expected to close by the middle of 2022.
The name of the new company has not yet been announced.
WarnerMedia’s ad tech arm Xandr will not be part of the merger and will remain with AT&T, according to an AT&T spokesperson.

A streaming superpower

Discovery did not set out to rival Netflix when it debuted its standalone streaming service, Discovery+, in January. But WarnerMedia took exactly that aim at the dominant streaming service when it rolled out HBO Max in May 2020. Now, the combination of HBO’s top-tier comedies and dramas, Warner Bros.’s blockbuster movies and Discovery’s portfolio of comfort-food programming gives the company the best shot of not only taking on Netflix, and it’s not too much of a stretch to see the merged media conglomerate potentially taking over the top spot.

Discovery ended the first quarter of 2021 with 13 million subscribers across its streaming portfolio, which includes Discovery+. WarnerMedia, meanwhile, had topped 44.2 million subscribers in the U.S. and 63.9 million globally by the end of the period between the people who subscribe to HBO’s linear TV network and receive HBO Max and those who solely subscribe to the streamer. Even if there’s no overlap between Discovery’s and WarnerMedia’s subscriber bases, the combined figure would only give the company 76.9 million subscribers. That’s a sizable number, but it’s short of Netflix’s 208.6 million subscribers.

While WarnerMedia and Discovery have plenty of ground to make up to make a real run at Netflix, the combined company may have the content to do so. HBO has a slate of “Game of Thrones” spin-offs in the works. Warner Bros. has the DC Universe, which may not be Marvel but remains a major franchise, and WarnerMedia shares the rights to “Harry Potter” with author J.K. Rowling. Then, Discovery has the full sweep of Discovery, Food Network, Animal Planet, HGTV, TLC, etc. Netflix may dabble in home, cooking and animal shows, but Discovery has the deeper library. And then WarnerMedia has CNN as well as Turner, which has rights to live sports like the NBA and MLB, whereas Netflix lacks news and live sports.

Upscaled ad sales

The advertising business is a numbers game: How many unique individuals can an advertiser reach through as few companies as possible? With the shift to streaming, this dynamic benefits aggregators such as connected TV platform owners Amazon, Roku, Samsung and Vizio. But TV …read more

Source:: Digiday