If you thought the streaming wars were hot before, just hold on to your hats. Bloomberg reports AT&T is in talks to merge its media operations, WarnerMedia with Discovery. The deal could happen as soon as this week.
What might the deal mean for cord cutters?
The end result may depend on the resulting arrangement. If AT&T’s WarnerMedia Group and Discovery are in play as reported, changes could be coming for the following streaming entities:
There may also be some changes or adjustments to these linear channels as well:
Bundles, pricing, and carriage disputes
Perhaps the biggest question is how WarnerMedia and Discovery would treat their streaming properties. Disney bought out the 20th Century Fox catalog and bundled some of it inside Disney+ with other content heading to Hulu. For now, those remain separate entities in the U.S. But in international markets, Disney+ includes the Star tile, which provides more mature entertainment all within the standalone Disney+ app.
HBO Max could absorb discovery+ into one mega-hub. Or there could be some kind of rearrangement where some HBO Max documentary-style content might flow to discovery+, while some of the more entertainment-oriented discovery+ content moves over to HBO Max. (This option seems less likely.) More likely might be a continuation of the current services, but with a bundle pricing option.
Prices could also be affected. HBO Max is currently $14.99 while discovery+ is $4.99. The size of the combined catalog might put that bundle closer to what Disney offers with its Disney+ Hulu and ESPN+ bundle, which costs just $13.99 per month. If this new entity wants to compete, it would likely need to a bundle cost on par with that.
There’s also the daunting prospect that the new entity would have more leverage in a pricing battle with live streaming companies. Philo and fuboTV don’t carry the WarnerMedia stations. Would a newly empowered mega-company price itself significantly higher for YouTube TV or Hulu Live TV subscribers?
If things got really heated, the new media monster could only allow its channels to be streamed on AT&T TV, or possibly cut a deal with cable companies like Comcast, which is considering selling its streaming device to retail. That seems like a nuclear option, however. More likely is that you would see prices creep upward for every live TV streaming service to keep those channels in the fold.
AT&T Shuffles the Deck
Whatever happens, it’s well in-line with AT&T’s recent strategy. It sold off 30% of its stake in DirecTV in February and it sold Crunchyroll to Sony in December.
Bloomberg reports AT&T has been funneling money into rolling out its 5G wireless network, which requires billions of dollars of investment, as well as expanding its fiber-optic footprint. If AT&T is going back to its telephonic roots, there may be no room for the big money and big headaches of media ownership.