Warner Bros. Discovery Media Company Officially Opens for Business

The new Warner Bros. Discovery media giant April 11 officially began as a publicly traded company when the market opened, with the stock trading at $24 per share with a market capitalization of more than $12.4 billion. Some analysts have a stock valuation target at $40 per share.

The $43 billion merger between Discovery and AT&T’s WarnerMedia business unit closed April 8 with Discovery CEO David Zaslav assuming the CEO position at Warner Bros. Discovery, which includes Warner Bros., HBO, HBO Max and Turner (TBS, TruTV, TNT, CNN), discovery+, HGTV, Magnolia Network and Animal Planet, among other properties.

“I am confident that our collective energy and genuine love for these businesses and brands will build the world’s most dynamic media and entertainment company,” Zaslav wrote in an April 8 company memo.

WarnerMedia CEO Jason Kilar, Warner Bros. CEO Ann Sarnoff and HBO Max boss Andy Forssell all exited the company last week.

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Zaslav reportedly is making the rounds across the company nationwide this week with stops planned in New York, Atlanta and Los Angeles — and a message how he intends to trim $3 billion in synergistic cost savings.

On Wall Street, analysts remain upbeat about the fiscal prospects for Warner Bros. Discovery, with Geetha Ranganathan, senior media analyst at Bloomberg Intelligence, contending the HBO Max subscription streaming service is now among the top four SVOD platforms on the market.

“At the end of the day, the HBO Max/Discovery product is going to be in the top four streamers, along with Disney, Netflix, and Amazon Prime Video,” Ranganathan told Yahoo! Finance. At the same time, some observers worry whether the new media company can turn a near-term profit, including generating free cash.

Indeed, HBO Max, which ended 2021 with more than 73 million combined HBO subscribers, is expected to generate a $1.5 billion pre-tax loss this year.

“[Max] is at the very beginning of its growth curve,” Jessica Reif, research analyst at Bank of America, told Yahoo.

Discovery, WarnerMedia Complete $43 Billion Merger

Discovery and WarnerMedia April 8 announced the completion of their $43 billion merger, a union that creates a streaming-focused media giant that brings together a leading Hollywood movie studio (Warner Bros. Pictures) with a top producer of documentary and other non-fiction programming.

Warner Bros. Discovery, as the new company is known, will be headed by Discovery CEO David Zaslov and other Discovery executives. It begins trading on the Nasdaq with the start of trading on April 11, under the new ticker symbol “WBD.”

The new company combines WarnerMedia’s premium entertainment, sports and news assets with Discovery’s leading non-fiction and international entertainment and sports businesses, including Discovery Channel, Discovery+, Warner Bros. Entertainment, CNN, CNN+, DC, Eurosport, HBO, HBO Max, HGTV, Food Network, Investigation Discovery, TLC, TNT, TBS, truTV, Travel Channel, MotorTrend, Animal Planet, Science Channel, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies and others.

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“With our collective assets and diversified business model, Warner Bros. Discovery offers the most differentiated and complete portfolio of content across film, television and streaming,” Zaslav said in a statement. “We are confident that we can bring more choice to consumers around the globe while fostering creativity and creating value for shareholders. I can’t wait for both teams to come together to make Warner Bros. Discovery the best place for impactful storytelling.”

AT&T CEO John Stankey said the sale for operational control of the former WarnerMedia company would help the telecom giant reduce its debt and enable it to focus on wireless technology, including 5G. AT&T retains majority ownership in the new company.

“We are at the dawn of a new era in connectivity,” Stankey said.

Under the agreement, which was structured as a Reverse Morris Trust transaction, at close AT&T received $40.4 billion in cash and WarnerMedia’s retention of certain debt. Additionally, shareholders of AT&T received 0.241917 shares of WBD for each share of AT&T common stock they held at close. As a result, AT&T shareholders received 1.7 billion shares of WBD, representing 71% of WBD shares on a fully diluted basis. Discovery’s existing shareholders own the remainder of the new company. In addition to their new shares of WBD common stock, AT&T shareholders continue to hold the same number of shares of AT&T common stock they held immediately prior to close.

AT&T CEO: HBO Max ‘Unstoppable’ Following Discovery Merger

AT&T may be selling operational control of WarnerMedia and HBO Max to Discovery for $43 billion, but that didn’t stop the telecom’s CEO John Stankey from gushing about Max’s purported year-end achievements. AT&T said Max and HBO ended 2021 with 73.8 million combined subs, which exceeded previous year-end estimates of 73 million.

Speaking Jan. 5 at Citi’s AppsEconomy Conference, Stankey attributed the Max subscriber gains to “really good” international launches.

“We are now a product that has moved from just not only mid-40 million domestic subscribers, to one that is got momentum in Latin America,” Stankey said. “Our early launches in Europe have been really strong and have demonstrated that there is a market for the library [content] that Max brings … as well as our new content performing incredibly well in all markets, not just in the U.S.”

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Stankey said that following the launch of Max in May 2020, he hoped user engagement would reach one hour daily. He now says that projection was too conservative.

“We have been so far beyond that and have done so much better,” he said. “I just couldn’t be more pleased.”

The executive contends that with movie and TV program production emerging from the COVID hiatus, further rollout of HBO content will see “great longevity into the cultural zeitgeist” from Max users.

“The platform, the technology is getting better,” Stankey said. “More features are coming in. Like any software development that you have to globally scale, you’re always making tradeoffs between time to market and the functionality of the platform. Once you get through another year of those cycles, the product gets better. It adds more features. It does things where people can engage with it more, they can find more content because search starts to improve.”

Stankey lauded WarnerMedia CEO Jason Kilar for doing a “remarkable job” driving Max growth through the company’s controversial same-day theatrical/streaming movie release strategy in 2021. While Kilar is not expected to remain at the helm following the merger with Discovery, Stankey has faith Discovery CEO David Zaslav can take Max to greater heights.

“I think 2022 is going to be even a better year for [Max],” he said. “And once David closes Discovery and can start to bring in the strength of what Discovery does so well into that portfolio, it’s going to be unstoppable.”

Discovery CEO Eyes HBO Max Sub Additions; Ex-Disney Streaming Boss Kevin Mayer Consulting

With Discovery Inc.’s $43 billion acquisition of WarnerMedia expected to be approved in 2022, Discovery CEO David Zaslav has great expectations for the pending Warner Bros. Discovery company he will oversee.

Speaking on the company’s Nov. 3 fiscal call, Zaslav said that less than half of the company’s Discovery+ U.S. subscribers also pay for HBO Max — suggesting room for growth across both platforms after the merger.

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“Assessing the overlap in respective subscriber bases, at least here in the U.S., we believe … [that] with the right packaging, [Max] provides a real opportunity to broaden the base of our combined offering,” Zaslav said. “And with our global appeal, infrastructure and local market capabilities, our international roadmap is very much still untapped and provides meaningful upside over the coming years.”

Discovery ended the third quarter (Sept. 30) with 20 million SVOD subscribers, led by Discovery+. The company doesn’t breakout separate subscriber data for its over-the-top video platforms, which include Golf TV, Eurosport and Global Cycling Network, among others.

HBO and HBO Max ended the quarter with a combined 69 million subscribers worldwide, including 45.2 million in the United States. WarnerMedia also does not publicly break out separate HBO and Max subscriber base data.

Kevin Mayer

Zaslav said that Kevin Mayer, the former boss of Disney’s direct-to-consumer operations and key driver of the Disney+ launch in 2019, is consulting with him on the pending Warner Bros. Discovery joint venture.

Mayer left Disney to briefly lead TikTok as CEO before departing when the social media platform became embroiled in a political spat with former President Trump.

When asked if Mayer would assume a permanent position on the pending Warner Bros. Discovery company, Zaslav said the former Disney executive has a lot of projects on his plate.

“[Mayer’s] a great entrepreneur and he’s got a number of really exciting things he is doing and working on,” Zaslav said. “This is one of them.”

Discovery SVOD Services Top 20 Million Subscribers

Discovery Inc. Nov. 3 announced that its branded subscription streaming video services, led by Discovery+, ended the third quarter (Sept. 30) with 20 million subscribers. That’s up 3 million subs from the second quarter, (ended June 30).

Direct-to-consumer brands include Golf TV, Global Cycling Network, Food Network Kitchen and Eurosport Player. Discovery’s high-profile SVOD service launched in January, priced at $4.99 monthly with ads; and $6.99 without. Discovery+ features streaming access to myriad channels, including HGTV, TLC, Discovery, Magnolia Network, Investigation Discovery and Animal Planet, among others.

“We made great strides in the quarter operationally, financially and creatively,” CEO David Zaslav said in a statement.

Discovery in May acquired operational control of WarnerMedia for $43 billion, as part of a minority stake asset purchase from AT&T. The “Warner Bros. Discovery” deal, which includes control of Warner Bros. Pictures, HBO, HBO Max and Turner, is pending regulatory approval.

“We are very excited about our pending merger with WarnerMedia and the opportunity to bring these two companies together, combining iconic and globally cherished franchises and brands, and positioning us to more efficiently drive global scale across the combined portfolio,” he said.

Discovery CEO in L.A. ‘Learning’ About Warner Bros. Ahead of WarnerMedia Takeover

Discovery CEO David Zaslav is in Los Angeles meeting with executives at Warner Bros. ahead of the media company (and him) assuming operational control of the studio and the other WarnerMedia business units, HBO and Turner, in 2022.

Speaking Sept. 21 at the virtual Goldman Sachs Communacopia Conference, Zaslav said he has spent the past two weeks in the Southland familiarizing himself with the venerable studio, executives and staff.

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“The more I look at Warner has, what HBO has, and see what [Warner boss] Ann [Sarnoff], [AT&T CEO] John [Stankey] and [WarnerMedia CEO] Jason [Kilar] have been doing, together, I think we have the best IP menu in the world,” Zaslav said. “We’re working hard at what this [Warner Bros. Discovery] company will look like.”

Zaslav said he spending two weeks a month in Southern California attending studio and off-site meetings with executives and lawyers.

“There was a lot we couldn’t see and couldn’t talk about [until the $43 deal billion closes],” he said, adding that on the Discovery integration team the company has 182 “work streams” in motion ahead of the merger.

What the Warner Bros. Discovery direct-to-consumer products, i.e. HBO Max and Discovery+, will look like remains a work in progress Zaslav said he couldn’t discuss in further detail. At the end of the most-recent fiscal period, HBO and HBO Max had a combined 47 million subscribers, while Discovery+ had 18 million subs.

“Now, we’re going to position ourselves, so when we close we can affect that strategy and drive ourselves onto ever [streaming] device around the world,” he said.

Discovery+ Tops 18 Million Paid Subscribers, Thanks to the Olympics

Discovery+, the subscription streaming video platform Discovery launched in January for $4.99 per month ($6.99 ad-free), topped 17 million paid subscribers through the second quarter (ended June 30), and 18 million through Aug. 3. The tally, which includes Eurosport Player and GolfTV, among others, is up from 15 million paid subs in April and 13 million at the end of the first quarter, ended March 31.

“We continued to steadily execute in our emerging next generation businesses,” CEO David Zaslav said in a statement.

Discovery, which is attempting to close its $43 billion minority stake control of WarnerMedia from AT&T, will meld Discovery+ with HBO Max when the new Warner Bros. Discovery media company is formed following regulatory approval.

CNN to Launch ‘CNN+’ SVOD Service

Following competitor Fox News’ launch of Fox Nation in 2018, CNN reportedly will launch a branded subscription streaming service next year dubbed “CNN+” and featuring the network’s media personalities.

The move comes as CNN parent WarnerMedia is merging with Discovery to rebrand as Warner Bros. Discovery in 2022. The new company will be run by Discovery CEO David Zaslav, who said he plans to ramp up investment in CNN going forward.

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The Wall Street Journal, citing sources familiar with the situation, said the CNN+ programming would be complementary — not a replacement — to the premium network. The platform would operate and be priced similarly to Disney’s ESPN+, which offers programming separate from the flagship ESPN network.

In addition to Fox News, NBCUniversal’s Peacock streaming service features progressive news/commentary platform The Choice, as well as NBC News Now. The Paramount+ SVOD platform offers CBS News.

CEO Stankey Says AT&T Key to HBO Max Success

AT&T just announced it is spinning off a 30% minority stake in WarnerMedia for $43 billion, the latter including Warner Bros., Turner, HBO and HBO Max. AT&T CEO John Stankey contends the Max subscription streaming platform launched last summer would not be “where it is today” without the assistance and support of the telecom giant.

Speaking May 24 on the virtual JPMorgan 49th Annual Global Technology, Media and Communications Conference, Stankey said vertical integration of the former Time Warner media giant (a.k.a. WarnerMedia) helped the telecom expand its brand while validating Max on a global scale.

HBO and HBO Max ended the most-recent fiscal period with 44.2 million combined subscribers. That tally could expand to 63.9 subs worldwide when Max launches in Latin America and the Caribbean in June. A less-expensive ad-supported tier is slated to a launch next month as well.

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“I think realistically, HBO Max would not be where it is today, if not for the strength of the two combined companies, what AT&T was able to bring both in distribution as well as some of the economic clout — market clout, to be able to normalize agreements, and get the product and service off the mark,” Stankey said.

He said AT&T’s continued push of wireless distribution and high-speed Internet, helped more than pave the way toward consumer adoption of HBO Max.

“We had a strong belief that we could help our domestic connectivity business significantly,” Stankey said. “And that started us down the path of the direct-to-consumer evolution.”

The executive contends Max will help AT&T expand high-speed Internet and fiber connections in markets around the world.

“Our connectivity business is kind of captive to the United States for the most part,” Stankey said. “And as a result, when you start looking at the opportunity to grow a fantastic subscriber base … we kind of look at this and say, ‘it’s time to unleash the media assets to go and seize, you know, multi $100 billion opportunity and become one of the premier assets for distributing content,'” he said.

Discovery CEO David Zaslav will be tasked with operating WarnerMedia and Discovery+, the latter the five-month-old SVOD service featuring largely reality-based DIY programming. Stankey contends the combined companies’ synergies can help fund growth in the new OTT video business.

“It’s a deeper content library that can carry forward. And it brings exactly some of that heft in the international side of things, [which is] going to be necessary to scale up [Max and Discovery+] worldwide.”

Discovery CEO David Zaslav Exits Lionsgate Board

On the heels of hammering out control of WarnerMedia from AT&T, Discovery CEO Davis Zaslav has announced he is leaving his seat on the board of directors of Lionsgate, effective immediately.

Zaslav’s resignation is not the result of any disagreement with Lionsgate on any matter relating to its operations, policies or practices, according to the May 19 regulatory filing.

Also leaving the board is businessman David Sanchez, nephew of media mogul John Malone, who replaced his uncle on the board in 2018.

Zaslav’s departure comes after he signed a six-year extension to remain CEO at Discovery through 2027. He is also heading the combined media assets of WarnerMedia and Discovery following the latter’s $43 billion majority stake purchase of the former Time Warner, which includes Warner Bros., Turner and HBO. Current WarnerMedia CEO Jason Kilar is reporting planning his exit strategy after little more than a year on the job.

Lionsgate, along with Paramount Pictures, is seen as a potential acquisition target due to its deep movie and TV show content portfolios and streaming assets. Lionsgate operates the Starz pay-TV platform, as well as multiple Starz-branded streaming services. Paramount+, of course, is the brand name of the former CBS All Access SVOD platform owned and operated by ViacomCBS.