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Could NBCUniversal and WarnerMedia Team Up Against Disney+?

Jeff Kotuby

As Disney+ continues to pull away from any competitor not named Netflix, NBCUniversal CEO Jeff Shell might have inadvertently teased his future strategy. An article published by The Information discusses NBCU’s recent programming deals and how they have relied on outside entertainment companies to widen Peacock’s audience. Last month, Peacock announced it is absorbing the WWE Network to diversify Peacock’s content offerings.

Interestingly, the article also mentions a quote from Shell prior to his promotion to CEO, saying that NBCU “needed to merge” with WarnerMedia to have “enough scale to compete.” The fact that Shell mentions WarnerMedia by name is interesting, when he could have mentioned ViacomCBS or any other media house.

Media analyst Rich Greenfield agrees with Shell, saying in a report last November, “We believe it is time for both AT&T and Comcast to abandon the fool’s gold of vertical integration of content and distribution and merge NBCUniversal with WarnerMedia.”

In 2018, NBCU’s parent company, Comcast, attempted to edge out Disney in the bidding war over the 20th Century Fox properties. Disney won that fight, which is why “The Simpsons,” “Avatar,” and the “X-Men” movies are now part of the Disney+ library.

If NBCU is planning a merger or acquisition, they may need to act sooner than later. Peacock has just 33 million signups, with 11.3 million monthly subscribers. That’s low compared to other services in the space.

Just 4% of users subscribe to Peacock’s $9.99/month ad-free package, with many choosing to use the free service or the $4.99/month ad-supported package. HBO Max, however, added its largest share of subscribers in Q4 2020, and sits at 38 million total subscribers. If HBO Max continues that pace, WarnerMedia might be content to stand alone.

There is hope for Peacock, though. It recently acquired the exclusive U.S. streaming rights to “The Office,” which was the most streamed television program in the country last year. But can Peacock parlay that win with more victories, especially when the key to maintaining subscribers is original content? Current numbers suggest that’s an uphill battle, but NBCU’s focus on licensing existing content could turn out to be a good move in the short term.

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