CFO: Discovery Eyeing Ad-Lite Options for HBO Max, Discovery+

The pending $43 billion merger between Discovery and WarnerMedia is set to create a new company called Warner Bros. Discovery. How that combination will affect each company’s branded SVOD platform remains “the $64,000 question,” one Discovery CFO Gunnar Wiedenfels shed little new light on.

Speaking Sept. 13 at the virtual Banc of America Securities 2021 Media, Communications & Entertainment Conference, Wiedenfels reiterated that the combined companies would realize $3 billion in synergies, including merging backend technologies driving the respective direct-to-consumer platforms, in addition to increasing average-revenue-per-subscriber, or ARPU.

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“I have no doubt we are creating one of the content powerhouses in the world,” Wiedenfels said. “As a consumer, I can’t wait to access to that kind of a content portfolio.”

Gunnar Wiedenfels

HBO Max and HBO ended the most-recent fiscal period with 47 million combined domestic subs, and 67.5 million subs globally. Discovery+ topped 17 million paid subs through the second quarter (ended June 30), and 18 million through Aug. 3.

Whether that translates into a combined streaming service or co-bundled combo, and at what price points, Wiedenfels wouldn’t address. He said both companies spent much of the summer ironing out details, including complementary content portfolios, and have “pretty much” a plan in place with a few “tweaks here and there” that he said would remain under wraps until the merger passes regulatory approval.

“I think [Discovery CEO] David [Zaslav] and the team have a pretty clear view,” he said. “Their whole strategy will be guided by what the consumer wants. I think we have our ducks aligned here. I’m really looking forward to coming out with more [details] as we go along.”

When asked about ad-supported options for Max and Discovery+, Wiedenfels said senior management would look “very hard” at the concept, adding that he believes Discovery and Max’s content alone justify a monthly subscription.

“That’s going to continue to be the priority,” he said.

The CFO admitted that an ad-based less expensive option of Discovery+ actually generates higher ARPU than the ad-free SVOD, adding that so-called “ad-lite” SVOD versions are being considered for rollout in Europe.

“It continues to be a focus area for us,” he said. “It’s something that’s going to be in the mix going forward. Whether at some point there may be an AVOD-only, subscription-free product, that remains to be seen. But it’s not a priority.”

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