The parents of HBO Max and Discovery Plus have officially completed their merger, allowing WarnerMedia and Discovery to build what the companies have said will be “the world’s most differentiated content portfolio.”
Investors today approved the multimillion dollar deal that will allow AT&T, the current owner of WarnerMedia, to transfer its content power to Discovery and form a new business under the Warner Bros. Discovery name. This new business companies said last year, “it will be able to invest in more original content for its streaming services, improve programming choices on its global linear pay TV and broadcast channels, and deliver more innovative video experiences and consumer choice.”
Discovery Chairman and CEO David Zaslav is set to lead the new company, a huge responsibility at a time of significant change for WarnerMedia (the crown jewel of this merger). Jason Kilar and a number of others Executives of the AT&T era are at WarnerMedia, and a new leadership team under Zaslav It was announced shortly before the finalization of the agreement.
The agreement will allow AT&T to liquidate its gigantic debt while positioning Discovery as a more formidable competitor in the broadcast and studio space.
HBO Max and Discovery Plus are eventually expected to merge in a single service. As AT&T said last year, the deal will allow the two companies to “combine WarnerMedia’s historic content library of popular and valuable IP with Discovery’s global footprint, treasure trove of local language content and deep regional expertise in more of 200 countries and territories.
From a value perspective, this deal is mathematical. Most streaming service owners are fighting each other to buy valuable IP and diversify their portfolios enough to take on giants like Netflix, says Anthony Palomba, a business administration professor at UVA’s Darden School of Business. .
“This is a merger that makes a lot of sense,” Palomba said. the edge on the phone recently. “If you look at AT&T stock, which has been trending down for the last five years, and then you look at Discovery, which has been trending down for almost a decade, it made sense to do this one.”
At the same time, both companies specialize in two content businesses that seem, at least with respect to their studio legacies, opposites. HBO is recognized for critically acclaimed series such as Euphoria and vigilantes. Discovery, meanwhile, is best known for its unscripted content – think ghost hunting and 90 day fiancé.
Sure, that gives Discovery the Netflix advantage of having something for just about everyone (something HBO Max has tried to achieve, possibly with mixed results). But if company executives choose to cannibalize one service for the benefit of another, that will only serve to further complicate their respective brand identities, which, at least in the case of HBO Max, have already been rebranded by AT&T to the point of be underrecognized.
“If HBO stayed the course of curation, perhaps targeting what was once known as the yuppie segment, the young urban professionals, perhaps the highly educated or perhaps the very finicky or picky or picky consumers, it wouldn’t have to compete against Netflix. or Disney,” says Palomba. “Because that is a completely different market. And that’s a market that’s still tried and true and, frankly, would stand out more with a consumer decision.”
There is the question of how much mega-mergers like WarnerMedia and Discovery really benefit consumers at the end of the day. Bundling and rebranding that give consumers more choice are, in theory, a great bargain. In practice, we’re more likely to end up with a conflated production ethic, weird mixes of algorithmically suggested content, and more consumer frustration with finding the content they want to watch. At the end of the day, it’s hard not to wonder if these company executives have some legitimate consumer-centric direction in mind.
“If I’m thinking about the average consumer, do they really care that WarnerMedia and Discovery are together? I wonder if these strategic library acquisitions are for investors,” says Palomba. “These streaming services are under pressure to show value differently. At a certain point, that’s why you’re seeing levels of ads come up, the amount of spending on content that you have to spend to look sexy, attractive, to catch anybody is a game that’s going to be hard to sustain in the long run. ”
More selection is fine. But at the cost of becoming cable’s successor in terms of charging consumers for things we don’t even want, it’s worth asking: what do we really gain from this?