Skip to Content

WarnerMedia-Discovery Merger Gets Regulatory Approval - What It Could Mean For Streaming

Ben Bowman

The government won’t stand in the way of the planned merger between WarnerMedia and Discovery. The $43-billion deal will create a massive media titan that could result in major fallout for streaming consumers.

What Happens Next?

Barring any unexpected setbacks, the deal will close in Q2. Discovery CEO David Zaslav becomes one of the most powerful men in Hollywood, since he’ll oversee all the media assets of both companies. Whatever happens with the Warner Bros. movie studio, HBO Max, CNN, TNT, TBS, and DC Comics will be his responsibility. Of course, Zaslav will still oversee the Discovery portfolio, including discovery+, Animal Planet, HGTV, OWN, TLC and Travel Channel.

More than likely, this spells the end for HBO CEO Jason Kilar, who burned several bridges by releasing all the Warner Bros. theatrical films on HBO Max the same day in 2021. He angered the creative community, but the decision was an absolute business success, sending subscription rates rising throughout the year. The service closed out 2021 with an impressive 73.8 million subscribers worldwide.
AT&T stockholders as a group will end up owning 71% of the new company.

What Does This Mean for Streaming?

It seems inevitable that we are going to see some kind of bundle package along the lines of Disney. An HBO Max-CNN+-discovery+ combo seems likely. It’s unclear if that bundle would be able to include streaming rights for NBA & NHL games on TNT or baseball on TBS.

A 3-service package would seem to offer something for the whole family, from news to light entertainment to prestige dramas and blockbuster films. The company would likely price aggressively to undercut Disney’s bundle and supercharge growth.

The future success of each of these streaming services will depend on Zaslav’s ability to evaluate and support leadership talent. CNN+ just lost its captain with the resignation of Jeff Zucker, but its expected slate of new shows looks like an exact copy of linear CNN, so the value isn’t there yet. A new CNN chief will need to find the right balance to make the streamer a success, but the cupboard looks empty for now.

TL;DR - Expect bundles and pricing fluctuations as the company balances growth with profit.

Why is AT&T Selling WarnerMedia?

AT&T bought Time Warner in 2018 for $85 billion, but AT&T’s CEO seems positively annoyed by the entire media business whenever he’s asked about it. The company has been selling off chunks of the media empire for years. In February 2021, the company sold a 30% stake in DirecTV to private equity firm Apollo. The company also sold Crunchyroll to Sony in December 2020 for $1.175 Billion.

With this deal, AT&T will only control a chunk of the DirecTV satellite service and the vMVPD DIRECTV STREAM. There have been no indications AT&T wants to kill off that service, since it’s a more hands-off enterprise than something like a movie studio or a direct competitor to Netflix.