Streaming Isn't Everything, It's The Only Thing

Michael Hedges April 11, 2022 Follow on Twitter

Size matters. Scale matters. Bigness means everything to media and finance watchers. Appearance matters, too; particularly the appearance of bigness. Top rated and top earning are always headline grabbers, now meaning TikTok. This facilitates quick movement to the next top headline. Nuance is not allowed.

The acquisition of WarnerMedia by Discovery closed last Friday (April 8), valued at about US$43 billion. Transaction talks between Discovery and telecom AT&T, WarnerMedia owner, began in May 2021. At early stages it appeared AT&T would continue to hold a 71% stake in the new company, Warner Bros Discovery. Several smaller spin-off were completed in process, often to satisfy regulators. David Zaslav remains president and chief executive.

Warner Bros Discovery is huge, working parts around the globe, “the most differentiated content portfolio in the world,” said the AT&T press statement (April 8). It is a film producer, TV producer and distributor of both. The channel stable now includes everything from Animal Planet and Food Network to CNN and Cartoon Network. There are also the Eurosport channels, rights holders for auto racing, basketball and the next round of Olympic Games.

Largely, though with a tinge of suspicion, financial watchers found the result quite pleasing. After all, their first rule of dealmaking held fast: grow or die. “This is a merger that makes a lot of sense,” said Darden School of Business at the University of Virginia (US) professor of business administration Anthony Palomba to The Verge (April 8). “If you look at the stocks for AT&T — which has been on the downward trend for about the last five years — and then you look at Discovery, which has been on a downward trend for maybe almost a decade now, it made sense to make this.”

There was some grousing about Mr. Zaslav’s swift executive team decisions. Virtually all the top folks at WarnerMedia, specifically those hired by AT&T on the 2018 Time Warner acquisition, were released last week, gaps filled by the Discovery team, many who had worked with Mr. Zaslav at NBCUniversal. “I don’t know if you’re good. I don’t know if you’re not. I don’t have time to figure it out,” said another media executive after a big merger. Mr. Zaslav said he wants to save US$3 billion. One WarnerMedia executive retained was Gerhard Zeiler as president of Warner Bros Discovery International. He had been RTL Group chief executive from 2003 until 2012 when he joined Turner Broadcasting, part of Time Warner.

But streaming is holding all the attention. “There’s Disney, HBO Max, Netflix, Amazon and Apple — that’s five,” said media analyst Michael Nathanson to the New York Times (April 9). “You don’t want to be in position six, seven or eight. At some point, they’ll say, ‘We have to find a dance partner.’” HBO Max and Discovery+ are to combine as one streaming platform and will take third place in global subscribers after Netflix and Disney.

“A new giant is born when they prove they have international scale,” he continued. “I don’t think Discovery content on HBO Max in the US is a needle mover. But because international is such uncontested territory, they can have more impact outside the US.” Consulting Mr. Zaslav on executive matters is sports streaming sensation DAZN chief executive Kevin Mayer, suggesting the remaining empty seat for a sports might soon be filled.

See also...

• Hot Topics - Warner Bros Discovery

• Hot Topics - Streaming Media

• Hot Topics - Mergers and Acquisitions