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AT&T's WarnerMedia & Discovery merger streaming consolidation
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AT&T and Discovery Inc. have made it official, unveiling their plan to merge their media and entertainment assets in a deal that will bring together TV channels like CNN, TBS, TNT, HGTV, Food Network and Discovery Channel, the Warner Bros. film studio, and streaming services HBO Max and Discovery+.

 

They said the merger would create a “global leader in entertainment” and “a stronger competitor in global streaming.”

 

The new company will “compete globally in the fast-growing direct-to-consumer business, bringing compelling content to direct-to-consumer subscribers across its portfolio, including HBO Max and the recently launched discovery+,” the firms said. “The transaction will combine WarnerMedia’s storied content library of popular and valuable IP with Discovery’s global footprint, trove of local-language content and deep regional expertise across more than 200 countries and territories.”

 

And they highlighted: “The new company will be able to invest in more original content for its streaming services, enhance the programming options across its global linear pay TV and broadcast channels, and offer more innovative video experiences and consumer choices.”

 

Under the terms of the deal, WarnerMedia and Discovery will merge through a complex all-stock transaction called a Reverse Morris Trust that would see AT&T receive $43 billion in cash, debt securities, and WarnerMedia’s retention of certain debt, and AT&T’s shareholders would receive stock representing 71 percent of the new company. Wall Street observers said the Reverse Morris Trust had the handwriting of big Discovery shareholder and media mogul John Malone who has a reputation for complex, tax-efficient deals.

 

Discovery CEO David Zaslav will lead the merged company as CEO, and there is no word about a role for WarnerMedia CEO Jason Kilar. The companies say the deal will close in 2022, subject to shareholder and regulatory approvals.

 

The combined company is expected to have $52 billion in revenue in 2023, and the companies say there will be $3 billion in cost synergies through the combination. AT&T, meanwhile, will focus its efforts on 5G and fiber broadband.

 

“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” said AT&T CEO John Stankey in a statement. “It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want.”

 

“During my many conversations with John, we always come back to the same simple and powerful strategic principle: these assets are better and more valuable together. It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity,” Added Zaslav. “With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins…consumers with more diverse choices, talent and storytellers with more resources and compelling pathways to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet that is better positioned to compete with the world’s largest streamers.”

This could spin up more streaming service consolidations to cut back on all the madness over the past few years.

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4 minutes ago, ThothAmon said:

Shouldn’t be a problem so long as Disney doesn’t end up owning both Marvel and DC. Think crossing the streams in Ghostbusters. 

Who knows what spin-offs and other surprises come from this? This could take a year to sort out. So I guess we will find out over time.

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Friends tell me Jeff Zucker may drop his plan to depart at year's end and instead remain head of CNN, as a result of the massive merger of AT&T-Discovery media assets announced Monday morning.

 

Driving the news: I'm told that nothing has been decided. But absent this tectonic media shift, Zucker — who's chairman, WarnerMedia News and Sports, and president of CNN Worldwide — was gone. Now, the door is open for him to stay.

 

Why it matters: Zucker is one of the world's most experienced media executives, running a global machine with an unmatched reach and footprint. And CNN.com is the largest news-organization website.

 

Discovery CEO David Zaslav, who's golfing/Hamptons buddies with Zucker, will run the new company, Axios is told.

 

Zucker, 56, relishes his news and sports roles, and runs CNN with a producer's passion and eye for detail. He also could have a political career in his future.

 

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By the numbers: A merged company's subscriber numbers will still pale in comparison to the streaming giants.

  • AT&T reported in January that it had 17.2 million HBO Max "activations." An activation is when someone that pays for its service, actually turns it on and uses it.
  • Activations can come from someone purchasing the HBO Max digital streaming service as a standalone product, or from people who have purchased HBO — the premium cable channel — and have activated their complimentary HBO Max subscriptions.
  • Because AT&T no longer reports "activations"  it's impossible to say just how many people pay for and have activated HBO Max as of today. A fair estimate would be around 20 million people. For now, HBO Max is only available domestically. It will start rolling out globally in June.

Between the lines: A combination of assets could result in a media company worth over $150 billion in enterprise value, per the Financial Times. Discovery today has a market cap of nearly $17 billion. Its value reflects its nearly $12 billion acquisition of Scripps Networks Interactive for in 2018.

  • Discovery has used the content from the lifestyle cable networks it bought from Scripps, like Food Network and HGTV, to build its streaming service, discovery+. It also has international sports rights. It owns Eurosport, the European sports TV network and the GolfTV streaming network.
  • AT&T’s crown jewel is HBO, the cable network if acquired via its acquisition of Time Warner and the namesake of its streaming service, HBO Max. It also owns CNN, worth about $10 billion, as well as other cable channels, like TNT and TBS — both of which have entertainment and live sports. AT&T also owns Warner Bros., the movie studio that sources say is worth around $40 billion.

 

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AT&T chief John Stankey and Zaslav, who will lead the new venture, also addressed the status of WarnerMedia CEO Jason Kilar and the future of CNN.

 

AT&T CEO John Stankey and Discovery CEO David Zaslav shared their reasons and visions for the mega-combination of their companies’ media businesses in a joint venture, unveiled early on Monday, during a conference call with Wall Street analysts.

 

It was a deal that was negotiated in Zaslav’s New York City brownstone, and that began with a weekend text exchange between the two executives.

 

“I was sitting around on a Saturday or Sunday afternoon, and I just texted John, and we ended up on a two-hour conversation about the future of media,” Zaslav told reporters over Zoom on Monday morning. The Discovery CEO will lead the combined company when it closes.

 

Under the terms of the deal, AT&T will spin off entertainment arm WarnerMedia and combine it with Discovery, creating a TV, film and streaming powerhouse. AT&T’s WarnerMedia owns the likes of the Warner Bros. studio, HBO and streaming service HBO Max, as well as the Turner cable networks, including CNN, TNT and TBS. Discovery’s reality TV-heavy properties include the likes of Discovery Channel, HGTV, TLC, Food Network, OWN and Animal Planet, among others.

 

“We think together, the combination makes us the best media company in the world,” Zaslav said Monday, noting that the combined company will spend $20 billion on content. “We will be one company, one culture, one mission: Great stories, great content that entertains people in every country around the world.”

 

“The new company will have a content spend that exceeds most of its industry peers,” Stankey added.

 

Stankey and Zaslav also addressed the status of WarnerMedia CEO Jason Kilar, who only joined the company a year ago.

 

“Jason is still the CEO of WarnerMedia,” Stankey said, adding that Zaslav “has a lot of decisions to make about personnel.”

 

“Jason is a fantastic talent,” Zaslav said, noting that he got to know him when he was developing Hulu. He added that CNN president Jeff Zucker was a close friend as well. “The focus will be on talking to everybody at Discovery and everybody at WarnerMedia and we will be trying to figure out how to get the best people to stay.”

 

Zaslav also seemed aware of some of the criticism WarnerMedia has faced in recent months from high-profile Hollywood talent, many of whom felt blindsided by the decision to release Warner Bros. films on HBO Max the same day they were released in theaters.

 

The Discovery CEO said that his “number one priority” will be building “relationships with the creative community,” and that he planned to spend time in Los Angeles, New York, and anywhere else that the talent the company works with are based.

 

“I will be anywhere in the world the creatives are, to strive to create the best creative culture,” Zaslav said. “We want our company to be the place where people that want creativity, they want flexibility, they want stories, they will come to us.”

 

Zaslav thanked the founders of the two companies, Ted Turner and John Hendricks, as well as his mentor (and Discovery’s largest shareholder) John Malone, before noting the impact of Harry, Jack, Albert and Sam Warner.

 

“The story of the Warner Brothers, is the story of everyone in our industry, success is about creative talent in front of the screen and behind the screen, and fighting for the culture that creates that vision,” he said.

 

 

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36 minutes ago, Angel of Death said:

This is looking like there will be no hope for the 'SnyderVerse' going forward, as Kilar seemed monumental in making ZSJL happen.

The Discovery CEO was mentioning a few names he respects. If not playing for the cameras versus reality, consider the SnyderVerse dead.

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:facepalm:

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Considering the way they treated Zack Snyder, I'm glad the snyderverse won't continue. No one should have to put up with that :censored: at work.

WB can go :censored: themselves. 

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Just now, Broke as a Joke said:

Why is HBO max $14.99 a month compared to Disney + at $7.99?  

 

I subscribe to both.

I've seen much more new content on HBO Max compared to Disney+ for now. I don't know if it is because HBO re-routed in-flight new content directly to HBO Max or it was all planned in advance (how I even include that statement with 'WarnerMedia' is shocking). Plus it pulled over content from other networks like Cinemax's Warrior and DC Universe's Harley Quinn, Doom Patrol, Titans and Young Justice along with TBS's 'Search Party' which is 4 seasons going on its fifth.

Disney+ you had content here and there like The Mandalorian, The Bad Batch, WandaVision, Falcon/Winter Soldier and then Mulan, Soul and now Raya. Then you were loaded up with all the great content many of us own anyway due to the incredible Disney marketing machine and its 'Get it before The Vault closes' messaging. So many of us are packed with these DVDs, blurays, digital content and maybe even the old VHS tapes for those that like it 'old school'.

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This actually is great news for comic collectors.  In the merger announcement, David Zaslav, the new CEO, specifically mentioned the intellectual property of DC comics providing countless opportunities for content, comparing it to Disney’s MCU strategy. Giddy up. 

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2 minutes ago, ThothAmon said:

This actually is great news for comic collectors.  In the merger announcement, David Zaslav, the new CEO, specifically mentioned the intellectual property of DC comics providing countless opportunities for content, comparing it to Disney’s MCU strategy. Giddy up. 

Sony wants you to know that it's not the “X” button it's the “Cross” button  and you're wrong – Critical Hit

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6 minutes ago, Angel of Death said:

Sony wants you to know that it's not the “X” button it's the “Cross” button  and you're wrong – Critical Hit

Of course DC sucked generally compared to Marvel during my peak buying years. Doesn’t mean I won’t take advantage of the higher demand for my 30k copies or so of my DC drek!

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8 minutes ago, ThothAmon said:

This actually is great news for comic collectors.  In the merger announcement, David Zaslav, the new CEO, specifically mentioned the intellectual property of DC comics providing countless opportunities for content, comparing it to Disney’s MCU strategy. Giddy up. 

I hope this finally comes true. I am not a big DC guy but I was looking forward to using some of these properties to kind of dip my toe in the water and figure out if there was anything I was more interested in exploring. But I really do think they're going about things in a wrongheaded way. I mean, Batman is their biggest property and they're developing a Batman trilogy outside of the DCEU? What sense does that make? He's their biggest draw by a factor of two and they're eschewing the chance to use him to draw viewers into other properties? If the RP films are huge, imagine what a RP cameo could do for say a Swamp Thing movie or something. The interconnectedness of the MCU gets people to check out properties they would otherwise have no interest in... like who really cared about Falcon and Vision and Monica Rambeau before this year? I know they've been in good books but not many that have sold well.

DC doesn't have to emulate Marvel's tone and make most everything PG-13 to have the same sort of connectedness driving interest in their projects... but I don't see that being built over there so far. If they can commit to that element I think DC DOES have tons of A++++ content to mine but they are not focused and aligned on how to build their cinematic universe. They keep saying they're doing it but then they keep driving forward with all these one-offs that aren't tied to their DCEU. Make everything DCEU for the next 6 years THEN do some Elseworlds type stuff like Joker or the RP Batman or whatever... I hope their new leadership can focus their projects because right now I think they're missing a strong steward big time

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AT&T Chief John Stankey, WarnerMedia Head Jason Kilar Address Discovery Merger in Staff Memo

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In the wake of a mega-deal with Discovery that seems primed to shake up the media landscape, AT&T chief John Stankey and WarnerMedia CEO Jason Kilar urged employees to stay focused on their jobs while they wait for the pact to close.

 

“During this period, our direction and mission remain the same,” Stankey wrote in a staff-wide memo obtained by Variety. “The market and product strategies underway across WarnerMedia are consistent with a merged, post-close company. So during the review period, we will support and commit to delivering on WarnerMedia’s full aspirations and capabilities with regards to the existing strategy and business plans. There will be no waiting on direction, hitting the pause button, or resting on our market position in the coming months – only continued forward drive and progress.”

 

For his part, Kilar also argued that staff needs to stay focused while the companies try to obtain regulatory approval for the merger between Discovery and WarnerMedia. The deal comes as HBO Max is continuing to work to add subscribers and to stake out a place for itself in the crowded streaming space.

 

“I want to stress how important I believe it is in this moment for us to continue to keep our focus and to live up to our potential as a team,” Kilar wrote. “As I shared last month in the context of our first quarter’s results, there is so much wind in our sails. This kind of momentum is hard earned but easily lost.”

 

The deal will leave Discovery CEO David Zaslav in charge of the combined company. On a press conference, Zaslav had complimentary things to say about Kilar and top WarnerMedia executives such as CNN head Jeff Zucker and Warner Bros. chief Toby Emmerich. However, some of these executives could lose out in the merger.

 

Shedding the media business gives AT&T greater financial flexibility as it works to expand its 5G network. The telecom will receive $43 billion in a combination of cash, debt securities and WarnerMedia’s retention of debt. It will also have a 71% ownership stake in the new venture. Merging with Discovery will give the new enterprise approximately $20 billion in combined spending firepower when it comes to producing new shows and movies.

 

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Jason Kilar has hired a legal team to negotiate his departure as chief executive of WarnerMedia, according to two people briefed on the matter. AT&T, which owns WarnerMedia, said on Monday that it had agreed to spin off the division and merge it with a rival media company, Discovery Inc.

 

Mr. Kilar was kept in the dark about the deal until recent days, the people said, speaking on the condition of anonymity to discuss private conversations.

 

A spokeswoman for WarnerMedia declined to comment.

 

The new company will be run by David Zaslav, 60, a media veteran and the longtime chief executive of Discovery. Mr. Zaslav and AT&T’s chief executive, John Stankey, had met over the last few months “secretly from my brownstone in Greenwich Village,” Mr. Zaslav said on a call with reporters on Monday.

 

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