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The WarnerMedia-Discovery Deal Changes Everything for Streaming

The merger announced Monday seems to be a concession that AT&T’s 2018 acquisition of Time Warner was a bad idea. But the new media company that arises could be the biggest player in the streaming landscape.

Getty Images/Ringer illustration

The WarnerMedia-Discovery merger is bad business. It’s also likely terrific news for consumers. Let us explain.

The $43 billion deal announced Monday has been described as a U-turn for AT&T, which acquired Time Warner in 2018 for $85 billion despite the Trump Justice Department’s best efforts to thwart the merger. AT&T sought that acquisition to get a piece of the rapidly expanding movie and TV streaming pie. That 2018 merger saw AT&T, a phone company, gain control of HBO, CNN, Warner Bros., TBS, DC Comics, and several other iconic mass-media brands. The new division overseeing these properties was dubbed WarnerMedia, which launched the streaming service HBO Max to house all of that content. By most accounts, HBO Max is relatively successful just about a year after its arrival. But the nascent platform hasn’t justified the costs. Establishing a major streaming player in a crowded market that includes Netflix, Disney+, and Amazon Prime Video takes time and money. AT&T took on lots of debt to buy Time Warner. And it now has bigger priorities, like building out its nationwide 5G and fiber-optic networks given that, you know, it’s a phone company.

With hindsight, we, and clearly the executives at AT&T, can see this was a bad idea. But for the mere consumer, you and I, Monday’s announcement that the company will spin off its content arm and form a new media company with Discovery marks a pretty fortunate reversal: The company that emerges once the WarnerMedia-Discovery deal closes in 2022 will have a vast and compelling catalog that could not only compete with Netflix and Disney, but beat them.

Just look at this chart of brands under the new company’s umbrella: There’s the prestige highbrow of HBO; the blockbuster film franchises of Warner Bros. and DC; the cultural niches of Cartoon Network, Adult Swim, and Cinemax; the undisputed leader in broadcast news in CNN; sports and comedy on TBS and TNT; and—most dangerously for this new company’s rivals—a plethora of unscripted and reality content with the likes of HGTV, the Food Network, TLC, the Oprah Winfrey Network, Animal Planet, and, of course, the Discovery Channel.

No other company can package this much content. Netflix has made strides in reality television but lacks sports. Disney covers kids with animation—and even has Hulu and ESPN+ in its empire—but is short on reality series. Amazon is establishing itself as a respectable film and television distributor but doesn’t do news. This new conglomerate, meanwhile, says it has “one of the deepest libraries in the world with nearly 200,000 hours of iconic programming” featuring more than 100 brands.

The still-to-be-named company, which will be helmed by current Discovery Inc. CEO David Zaslav, says it wants to further invest in content—about $20 billion worth a year. That could cause the price for whatever streaming service it rolls out to rise—but will it matter if consumers feel like they don’t have to pay for several different streaming services, and instead can access a cornucopia of content from just one provider? The question remains what exactly that streaming service will be. HBO Max isn’t going away quite yet and is still going forward with plans to launch a cheaper, ad-supported version of the platform later this year. Discovery, meanwhile, has its own service, Discovery+, which houses the aforementioned unscripted content. But it’s clear Zaslav sees the company’s strategy as combining forces. During a conference call on Monday, he didn’t rule out merging Discovery+ and HBO Max into a giant streaming service. Or, he said, the two might exist separately, but bundled together—sort of like what Disney+ does with Hulu and ESPN+. Either way, the new company’s brands will exist symbiotically—and that will appeal greatly to consumers.


“We think together, combined, this makes us the best entertainment company in the world,” Zaslav said. “The combination of these assets brings together the most valuable, important, and exciting IP in the world. … I think we fit together like a glove.”

Are Netflix, Disney, Amazon, and Co. powerless to compete against this new media giant? Not at all. They have the advantage of existing first. Despite ceding ground to an upstart Disney+, Netflix by far has the most subscribers out of any streaming service; Disney is the biggest media company in the world; Amazon is one of the biggest companies in the world, period. But any company that can offer consumers access to Batman; Game of Thrones; Harry Potter; Diners, Drive-Ins and Dives; the NBA; Anderson Cooper; the Property Brothers; and so much more will be a serious threat to those existing services—and of serious interest to viewers.