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.

 

CEO Zaslav: WarnerMedia, Discovery Together ‘Best Media Company’ in the World

On the heels of AT&T and Discovery’s massive merger deal, Discovery CEO David Zaslav, who will head the new combined company, said the agreement, which combines the assets of Warner Bros., Turner and HBO with HGTV, Food Network and Animal Planet, among others, translates into the “best” media company in the world.

Zaslav said he and AT&T CEO John Stankey had been discussing a “singular vision” for some time over rounds of golf regarding media distribution in a burgeoning direct-to-consumer ecosystem.

“Simply put, these assets are better together,” Zaslav said on a conference call with reporters. “Together, we are the best global media company in the world … and believe the deal alters the growth profile of [AT&T and Discovery] in a material way. In an explosive way.”

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Zaslav said the merger would not only enhance the companies’ programming for its legacy pay-TV and broadcast channels, it would also ensure its place as a fully scaled differentiated global streaming platform.

“The combination [of HBO Max and Discovery+] will fully establish us as one of the leading direct-to-consumer streaming players worldwide,” Zaslav said.

Indeed, Discovery+ and HBO Max and HBO had a combined subscriber base of more than 57 million at the end of the most-recent fiscal period. That tally trails significantly when compared with Netflix, Amazon Prime Video and Disney+ with 207 million, 175 million and 103 million subscribers, respectively.

“The capabilities and overall optionality of each facet required to compete at the highest level of the direct-to-consumer playing field, is significantly higher when we’re together,” Zaslav said. “It’s a complicated and strategic roadmap that every single one of our peers is on.”

Complicated is an understatement. How HBO Max and Discovery+ will position themselves together remains uncertain. Zaslav contends the two platforms would be offered to consumers in a bundle similar to what Disney does with Disney+, Hulu and ESPN+.

“In terms of bundling … we’re going to do it differently,” he said.

Stankey said the deal puts WarnerMedia in a position to self-fund its growth going forward, while giving AT&T the ability to invest and address the growing demand for connectivity through 5G and fiber.

“At the highest level, this transaction is an opportunity to unlock value for shareholders on both sides of this deal,” Stankey said.

Report: AT&T, Discovery Looking to Merge Media Assets

Could WarnerMedia, HGTV, Animal Planet, TLC and Food Network soon be corporate siblings? Media reports suggest AT&T, which owns WarnerMedia, is in negotiations with Discovery to merge media assets in an attempt to better compete in the streaming video world against Netflix and Disney, among others.

Bloomberg is reporting that some kind of a deal could be announced in the coming week. Who would run the combined assets is unclear as Jason Kilar, who heads WarnerMedia, and Discovery CEO David Zaslev both have separate leadership skills. Kilar, who helped launch Hulu, would appear a frontrunner considering his experience in the digital ecosystem. Kilar brought on former Hulu CEO Andy Forssell to run HBO Max and WarnerMedia’s direct-to-consumer business.

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For AT&T CEO John Stankey, a merger of WarnerMedia, which includes Warner Bros., Turner and HBO, better validates the $85 billion spent acquiring the former Time Warner three years ago. That purchase sent AT&T’s corporate debt through the roof — a financial weight the telecom has been trying to reduce ever since. Stankey has been shedding non-core (and core) assets as fast as he can, including selling off Time Warner’s stake in Hulu, AT&T’s New York corporate space, anime unit Crunchyroll, and DirecTV, among other actions.

For Discovery, which launched a branded SVOD platform in January, getting penetration in a saturated market was always going to be a significant challenge — despite offering such assets as “Property Brothers” and Chip and Joanna Gaines’ Magnolia Empire, among others.

HBO and HBO Max ended the most-recent fiscal quarter with 44.2 million subscribers. Discovery+ topped 13 million subscribers at the end of April since launching in January. A strong start, but paltry when compared to Netflix’s 200+ million subs and Disney+ exceeding 103 million. Amazon just disclosed that its Prime Video service has 175 million subs.

 

CEO: Discovery+ Streaming Service Expected to Reach 12 Million Subscribers by End of February

Discovery’s nascent branded subscription streaming VOD service, Discovery+, finished the fourth quarter and fiscal year (ended Dec. 31, 2020) with 11 million subscribers. The platform, which launched Jan. 4, is expected to end February with 12 million subs, CEO David Zaslav disclosed in a fiscal briefing.

CEO David Zaslav

The $4.99 monthly service offers streaming access to Discovery’s portfolio of branded programming including Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, MotorTrend, Animal Planet, Science Channel, and the forthcoming multi-platform joint venture with Chip and Joanna Gaines, Magnolia Network, as well as OWN: Oprah Winfrey Network in the U.S.

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“We are off to a promising start in 2021 with the successful launch of Discovery Plus … underscoring the value of the investments we’ve made in content, personalities and brands, supported by industry-leading DTC capabilities,” Zaslav said in a statement.

Discovery CEO: SVOD Market Turning into ‘Street Fight’

On the heels of WarnerMedia putting a name (HBO Max) to its pending subscription streaming video service, Disney launching branded service as well as expanding Hulu globally, Discovery CEO David Zaslav says “chasing the same ball” (i.e. scripted digital content) with the world’s biggest media companies is not the company’s focus.

Speaking July 10 with CNBC from the Allen & Co. confab in Sun Valley, Idaho, Zaslav contends the bustling SVOD market is turning into a “street fight” — a scenario he believes Discovery has successfully side-stepped.

“[About] 50% to 60% of the content that people consume is not scripted series or scripted movies,” Zaslav said. “For us, it’s home [HGTV], food [Food Network], Discovery, Oprah, crime [ID], Chip and Joanna Gains [‘Fixer Upper’]. We own most of the golf [programming] in the world, most of the cycling. We have almost all [non-scripted] quality content. And we own it everywhere in the world.”

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With Netflix and Hulu expanding non-scripted programming, including documentaries and food-themed reality TV, Zaslav says Discovery’s market hold on food, home and crime-themed shows is not in threat.

“We’re pretty secure in our space,” he said. “People aren’t buying Netflix to watch a home [improvement] show. We think we have something very differentiated and people come to us for it. They come to us for it on all platforms in all languages.”

Yet, much of HGTV, Food Network, ID and Oprah content is consumed through traditional pay-TV channels — distribution under threat by over-the-top video.

Zaslav agrees the traditional linear TV business is in secular decline. But he said Discovery generated about $3 billion in free cash flow in its most-recent fiscal year.

The executive said Discovery dominates the female non-scripted market in the United States, with OTT video businesses targeting golf (outside the U.S.), cycling and natural history.

“We have a low to mid-single digit growth company, having nothing to do with all of the global IP that we own,” he said. “We think it’s sustainable that we can grow low to mid-single for the next several years.”

Zaslav contends streaming movies and TV shows has become commoditized with Showtime Now, HBO Now, Amazon Prime Video, Netflix, Apple TV all offering similar content.

“That’s why we did Scripps [Networks] acquisition, because we think people that love food are always going to come to food, people that love home are always going to come to home. So, we think that this is an ecosystem that will work together,” Zaslav said.

With Disney buying Fox, Comcast acquiring Sky and AT&T buying Time Warner, Zaslav dismissed suggestions Discovery would have merge with another major media company to remain competitive.

“We’re the largest independent media company,” he said. “We think some of the assets we have that we’re the largest international media company. We’re in 200 countries.

“But in the long run if we’re wrong, then we have the biggest assortment of IP in affinity groups that people love and we’re in every language around the world. We think that we’re going to win either way. We’ll be more valuable.”

Discovery Returns to Profitability Following $15B Scripps Networks Purchase

Discovery Feb. 26 reported fourth-quarter (ended Dec. 31, 2018) net income of $265 million following a net loss of $1.1 billion during the previous-year period. Revenue increased 51% to $2.8 billion from $1.85 billion a year earlier.

Spearheading the turnaround was last March’s $15 billion acquisition of Scripps Networks, including coveted brands HGTV, DIY Network, ID, TLC, Animal Planet and Food Network. Discovery also owns stakes in MotorTrend Group and Oprah Winfrey Network (OWN).

For the fiscal year, net income reached $594 million compared to a $337 million loss in the previous year. Revenue increased 54% to $10.6 billion from $6.9 billion.

Discovery has also invested hundreds of millions in sports programming in Europe, including Olympics rights and an over-the-top video deal for the PGA European Tour.

It also inked exclusive pay-TV and streaming deals with Chip and Joanna Gaines, the husband and wife team behind the hugely successful “Fixer Upper” franchise, and Christina El Moussa, the prettier half of the now-divorced from “Flip or Flop” husband/co-star Tarek El Moussa.

“2018 was a transformational year for Discovery, highlighted by our operational accomplishments, our strong progress in synergy generation and our overall solid financial performance, as we continued powering people’s passions around the world,” CEO David Zaslav said in a statement. “Discovery is a differentiated global content company, and we are optimistic that we will continue to build on all of our operating momentum to drive additional shareholder value into the future.”