[NashGuy]

Might HBO Max swallow the new discovery+?

AT&T in Talks to Combine Media Assets, Including CNN, With Discovery

AT&T, Discovery in talks to combine content assets - Bloomberg News

 

[James Long]

AT&T Is Preparing to Merge Media Assets With Discovery

"The idea is to combine Discovery's reality-TV empire with AT&T's vast media holdings, building a business that would be a formidable competitor to Netflix Inc. and Walt Disney Co. Any deal would mark a major shift in AT&T's strategy after years of working to assemble telecommunications and media assets under one roof. AT&T gained some of the biggest brands in entertainment through its acquisition of Time Warner Inc., which was completed in 2018."

So, spin off Video to TPG so AT&T doesn't have to deal with Premium TV and now potentially spin off WarnerMedia to Discovery+ (or a new company combining both) so AT&T does not have to deal with content streaming? Keep an investment in each new company so they don't lose all the profit but get out of the day to day management of the product offerings. It sounds like Elliott Management Corp (the activist investor group that pushed to sell DIRECTV) is getting it's wish to further divest AT&T's most recent acquisitions.

 

[NashGuy]

Of all the potential media tie-ups, this is not one I saw coming. Discovery is obviously ripe for M&A but I saw them combining with ViacomCBS, or maybe even NBCUniversal, as likelier. As for Warner, there have long been speculations about them potentially combining with NBCU, which would look like a better match-up to me, if the goal is to create a giant that can better face off with Disney.

A spin-off of WarnerMedia from AT&T seemed likely at some point down the road but I'm surprised it could be happening this quickly. Although with AT&T still having a big equity stake in the media company, I guess it still gives them a lot of the supposed synergy they wanted with the Warner acquisition, e.g. ability to sell/bundle content services to their cellular and broadband customer base.

Should the deal go through, I wonder if it will mean a combination of HBO Max and discovery+. They're very different services, so it's certainly possible that they remain separate. I almost hope they do, as I'm not crazy about the idea of all of Discovery's reality/lifestyle schlock strewn all across the HBO Max home screen.

Here's a fairly recent snapshot of the tech/media landscape for anyone pondering future consolidations. ViacomCBS, Fox, Lionsgate, MGM and AMC are tiny compared to everyone else.

Here's who owns everything in the media today

 

[SamC]

This looks to me like a lot of the failed airline mergers of the 80s and 90s. Two sick companies merging to form a new larger sick company.

AT&T owns CNN, the third player in a two team league; its various "general rerun" channels the main two of which are in deep in big $$ contracts with the NCAA, NBA, and NHL for what is, just about, the only non-rerun content on them; its HBO and Cinemax channels; DC comics; 50% of the CW network; and, after approval, still the majority of DirecTV. IMHO, the value of linear "general rerun" channels, is declining very fast, as the same sort of material is available free on OTA diginets and on free streamers like STIRR and Pluto, as well as being tossed in with the new original stuff in the major streaming services. Linear HBO is really just for people without internet nowadays.

Discovery owns 20 US channels, 17 of them in English, all of which are pretty much remixs and variations on each other. Much similar material is also available on OTA diginets, and, bluntly, a lot of self-appointed YouTubers produce similar material.

 

[NashGuy]

This looks to me like a lot of the failed airline mergers of the 80s and 90s. Two sick companies merging to form a new larger sick company.

AT&T owns CNN, the third player in a two team league; its various "general rerun" channels the main two of which are in deep in big $$ contracts with the NCAA, NBA, and NHL for what is, just about, the only non-rerun content on them; its HBO and Cinemax channels; DC comics; 50% of the CW network; and, after approval, still the majority of DirecTV. IMHO, the value of linear "general rerun" channels, is declining very fast, as the same sort of material is available free on OTA diginets and on free streamers like STIRR and Pluto, as well as being tossed in with the new original stuff in the major streaming services. Linear HBO is really just for people without internet nowadays.

Discovery owns 20 US channels, 17 of them in English, all of which are pretty much remixs and variations on each other. Much similar material is also available on OTA diginets, and, bluntly, a lot of self-appointed YouTubers produce similar material.

Well, both HBO Max and discovery+ are doing quite well in their first year. A lot of the appeal in Discovery's content, I think, lies in the personalities who do their shows, not simply the fact that they're shows about cooking or home improvement or whatever.

As for the linear channels, yeah, live sports and news are the main reasons to watch. But TBS and TNT are semi-sports channels. And CNN still ranked as the #7 most-viewed channel last year. The Discovery nets are popular too. Between Warner and Discovery, they own seven of last year's top-20-rated networks. So I don't see anything that looks like failure here.

 

[SledgeHammer]

Well, both HBO Max and discovery+ are doing quite well in their first year. A lot of the appeal in Discovery's content, I think, lies in the personalities who do their shows, not simply the fact that they're shows about cooking or home improvement or whatever.

As for the linear channels, yeah, live sports and news are the main reasons to watch. But TBS and TNT are semi-sports channels. And CNN still ranked as the #7 most-viewed channel last year. The Discovery nets are popular too. Between Warner and Discovery, they own seven of last year's top-20-rated networks. So I don't see anything that looks like failure here.

As you said above, HBO and Discovery is very different content. I don't think most of Discovery's fake-reality plays well for repeat viewing. While I enjoy Gold Rush, I can confidently say I'll never go back and re-watch old seasons. Same goes for any show I watch on Discovery. I doubt many people are going back and watching 10 yr old reality shows either. HBO has rewatchable content.

All these weird mergers were bound to happen. Even the "uber cord cutters" I think have better things to do then have to go and sign up and manage 37 different streaming services.

I for one stick with DirecTV because I've got better things to do then sign up and manage the 2 or 3 streaming services needed lol.

Every channel having it's own streaming platform was never going to work in the long run. Not only for the reasons above, but also due to the cost: streaming requires beefy infrastructure, so makes sense to share the hardware, bandwidth and electricity costs.

Netflix had the "one stop shop" platform, but Hastings blew it I think by letting all the pop content go and thinking people would be into all this foreign/dubbed garbage they are putting out now... they have already lost 9% market share and will continue to... Netflix content is a joke now.

 

[NashGuy]

As a consumer, the biggest question I had about this deal is what it means for HBO Max and discovery+. I'm a big fan of HBO stuff while the type of content Discovery has is -- well, some of it's OK but it's definitely not appointment TV for me, outside of the BBC nature docs. (And some of their stuff, like TLC, is just "reality" crap.) Their content seems more suited to the linear format, which is perhaps one reason why they've created psuedo-channels inside the d+ app.

Anyhow, my question is whether they'll try to put all the Discovery content inside HBO Max or keep the two services separate and maybe offer a bundling discount if you get both. Sounds like they don't know yet.

As to streaming, both partners have recently entered the direct-to-consumer space in significant ways, with Discovery+ and HBO Max. The execs were non-committal as to whether they would combine the services or bundle them as separate products. Zaslav said all options would be explored. "We'll see over the next few years as we learn more about what consumers want and how they want it," he said.
​

Story here:
David Zaslav And John Stankey Outline Plans For Merging Discovery And WarnerMedia, Addressing Future Of Jason Kilar, CNN, Streaming - Deadline

 

[raott]

As a consumer, the biggest question I had about this deal is what it means for HBO Max and discovery+. I'm a big fan of HBO stuff while the type of content Discovery has is -- well, some of it's OK but it's definitely not appointment TV for me, outside of the BBC nature docs. (And some of their stuff, like TLC, is just "reality" crap.) Their content seems more suited to the linear format, which is perhaps one reason why they've created psuedo-channels inside the d+ app.

Anyhow, my question is whether they'll try to put all the Discovery content inside HBO Max or keep the two services separate and maybe offer a bundling discount if you get both. Sounds like they don't know yet.

As to streaming, both partners have recently entered the direct-to-consumer space in significant ways, with Discovery+ and HBO Max. The execs were non-committal as to whether they would combine the services or bundle them as separate products. Zaslav said all options would be explored. "We'll see over the next few years as we learn more about what consumers want and how they want it," he said.
​

Story here:
David Zaslav And John Stankey Outline Plans For Merging Discovery And WarnerMedia, Addressing Future Of Jason Kilar, CNN, Streaming - Deadline

Another question I have is about bundles with outside companies (ie Verizon). I currently get the ESPN+/Hulu/Disney bundle free with Verizon; Discovery+ free with Verizon; and HBO Max free with my AT&T TV subscription. I'd hate to see any of those go away. I'm not sure I'd subscribe to any of them individually other than HBO max.

 

[harsh]

This bears a striking similarity to the TPG deal (~70/30% with the minority having at least figurehead control) but they're perhaps not talking about the same kind of operational independence.

I'm not sure I buy into this idea of letting the minority partner run the show. It sounds like they're just tiptoeing around a Comcast/NBCUniversal hairball (that really turned out pretty well for Comcast since they largely ignored many of the regulatory conditions).

 

[NashGuy]

Another question I have is about bundles with outside companies (ie Verizon). I currently get the ESPN+/Hulu/Disney bundle free with Verizon; Discovery+ free with Verizon; and HBO Max free with my AT&T TV subscription. I'd hate to see any of those go away. I'm not sure I'd subscribe to any of them individually other than HBO max.

We may see Verizon stop bundling discovery+ in with their unlimited cellular plans since I would expect AT&T to begin doing so (as they're already doing with HBO Max). And given that AT&T and Verizon are major wireless rivals, they probably won't want to bundle in the same service.

On the cheapest unlimited Verizon plan, you only get 6 months of D+ but on the upper plans, you get 12 months. I'm sure they'll honor those promises to anyone who signs up while that's currently advertised as a part of the plan. But at some point between now and mid-2022 (when the Warner/Discovery deal closes), I bet we see Verizon tweak their plans and replace discovery+ with something else for new subs. Maybe Apple TV+, which costs about the same. (They already bundle in Apple Music on some plans.) Or maybe the new Paramount+. Anyhow, no reason to expect any change with regard to Verizon's deal with the Disney bundle.

Who knows if AT&T TV (or DirecTV Stream, if that's what it will be renamed) will begin bundling in discovery+ with their channel packages. Perhaps as a first-year promo for new subs as they now do with HBO Max on the Choice package and above.

 

[James Long]

A lot depends on how long their arms are when they move to arms length agreements. Right now under common control it seems easier to make the deal that ATTWS would get access to HBO/TimeWarner content. But if the media is spun off they will need to deal with the new controlling ownership. Some existing deals may carry over, but if they are transferring control the new owner will want to be able to make their own decisions to protect the profitability of the spin off.

Special deals for HBOMax on what will become new DIRECTV may also be affected once the spin off is complete. Again, deals can carry over but the new controlling owner will want to make the decisions that are best for the spin off.

 

[raott]

We may see Verizon stop bundling discovery+ in with their unlimited cellular plans since I would expect AT&T to begin doing so (as they're already doing with HBO Max). And given that AT&T and Verizon are major wireless rivals, they probably won't want to bundle in the same service.

On the cheapest unlimited Verizon plan, you only get 6 months of D+ but on the upper plans, you get 12 months. I'm sure they'll honor those promises to anyone who signs up while that's currently advertised as a part of the plan. But at some point between now and mid-2022 (when the Warner/Discovery deal closes), I bet we see Verizon tweak their plans and replace discovery+ with something else for new subs. Maybe Apple TV+, which costs about the same. (They already bundle in Apple Music on some plans.) Or maybe the new Paramount+. Anyhow, no reason to expect any change with regard to Verizon's deal with the Disney bundle.

Who knows if AT&T TV (or DirecTV Stream, if that's what it will be renamed) will begin bundling in discovery+ with their channel packages. Perhaps as a first-year promo for new subs as they now do with HBO Max on the Choice package and above.

Going to end up costing me a few bucks a month it looks like, unless I just drop Discovery+ (my daughter watches it, I could lived without it) or unless, as you point out, AT&T Tv picks it up and adds it into that bundle. Shame, as I'm doing well with Verizon with all of the free bundles currently.

 

[harsh]

But if the media is spun off they will need to deal with the new controlling ownership.

Majority ownership retains AT&T some level of control. Management does what they feel they need to do but they still have to answer to the Board and the Board has to answer to the stockholders.

 

[SledgeHammer]

I'm sure they'll honor those promises to anyone who signs up while that's currently advertised as a part of the plan.

Are you sure ? DirecTV *has* been remarkably cool in honoring legacy deals... except for the ones that they don't. Like owned boxes, vacation homes, RVs, used equipment, lifetime DVR, etc. I lost that last one I had on my trail blazing Sony SAT-T60 because I didn't have a receipt.

 

[NashGuy]

Going to end up costing me a few bucks a month it looks like, unless I just drop Discovery+ (my daughter watches it, I could lived without it) or unless, as you point out, AT&T Tv picks it up and adds it into that bundle. Shame, as I'm doing well with Verizon with all of the free bundles currently.

But aren't you limited to 12 months (or, depending on your plan, 6 months) of free discovery+ from Verizon? After that, Verizon will start billing you $7/mo unless you cancel. That's what their fine print says. Even for someone signing up today, there's every reason to believe that they'll get their full free subscription period. So I don't see how you're affected.

 

[wmb]

So I don't see anything that looks like failure here.

At the end of the day, it will come down to whether their revenue is greater than their cost of earning that revenue. Essentially, can they keep their content interesting enough to retain subscribers. Subscribers to these products are notoriously price conscious. Interesting content can be expensive, and cutting back on new content is the quickest way reduce costs. Lack of interesting content leads to fewer subscribers and less revenue.

This will be the road to failure for all these services.

Sent from my iPhone using Tapatalk

 

[NashGuy]

Are you sure ? DirecTV *has* been remarkably cool in honoring legacy deals... except for the ones that they don't. Like owned boxes, vacation homes, RVs, used equipment, lifetime DVR, etc. I lost that last one I had on my trail blazing Sony SAT-T60 because I didn't have a receipt.

Their fine print probably does allow them loopholes but including free HBO Max in with various plans has been a really big feature they've touted. AT&T even has a dedicated webpage to advertise it.

HBO Max - Stream Movies, Original Shows & More - AT&T

I think it's pretty doubtful that New DirecTV would rescind that offer for customers who signed up under it if HBO Max is still in existence (which, of course, it will be for the next year). That would be a great way to piss off customers, many of whom are not under contract and could easily walk away. Consider how even when DTV/AT&T has changed channel package line-ups, those changes have applied to new customers coming in while existing subs got grandfathered under their existing line-up.

Remember AT&T's skinny streaming cable TV service called "Watch TV"? It hasn't been available for any new sign-ups since last June, but AT&T is still operating it just for wireless customers who got it as part of an Unlimited plan they signed up for prior to that point. And keep in mind that with AT&T TV, the offer is only one free year of HBO Max. So it's not even a permanent feature of the plan like with certain Wireless and Fiber plans. All this seems like pretty good reason to believe that New DTV will honor the "one free year of HBO Max" promo they're inheriting from AT&T.

Now, it's certainly possible that once New DTV takes day-to-day control, they tweak their pricing and promos and maybe they no longer offer a year of HBO Max to new sign-ups. It's also possible they strike a new deal with AT&T to include the upcoming $10/mo version of HBO Max in with every channel package, either for a year or even as a regular ongoing part of the package

 

[NashGuy]

At the end of the day, it will come down to whether their revenue is greater than their cost of earning that revenue. Essentially, can they keep their content interesting enough to retain subscribers. Subscribers to these products are notoriously price conscious. Interesting content can be expensive, and cutting back on new content is the quickest way reduce costs. Lack of interesting content leads to fewer subscribers and less revenue.

This will be the road to failure for all these services.

So your general view is that Americans are sort of done with TV and all the services -- cable TV, HBO Max, Netflix, Hulu, Disney+, etc. -- will see losses in subscribers and revenue going forward? That seems... unlikely to me.

 

[harsh]

At the end of the day, it will come down to whether their revenue is greater than their cost of earning that revenue.

These deals that AT&T are making also involve some fairly significant debt being transferred to the new management. The new media entity will hit the ground a year from now with about $28 billion in Time Warner debt in addition to Discovery's $15 billion dollar debt. That's not chump change for a operation said to be worth $122 billion on paper.

 

[rnbmusicfan]

You might see promotional bundles like with Disney+, Hulu, ESPN+, but HBOMax and Discovery+ remain separate just like the Disney streaming services are separate.

But not that anything else is really synergistic with Discovery and HBO. Disney makes far more sense, as the ABC Network is a binder for its streaming services and networks together.

The synergies might just be cost-cutting and even further degradation of channels. For example, cuts at CNN like how Warner converted CourtTV to truTV. Discovery will likely make it reality tv focused like its channels and like truTV. Some might say, no loss anyways. Or, maybe Discovery pawns off CNN/HLN to CBS/Paramount, so that CNN and CBS essentially merge their news operations. Anderson Cooper and a maybe few others already serve between CNN and 60 Minutes or CBS.

On a much more micro level, I wonder if fubo will drop the Discovery channels or add back in the Warner channels, after it dropped them. I hope that it drops the Discovery channels, and adds AXS TV/HD Net Movies, and lowers its price. But that is unlikely and likely it will cave in to the duplication and bloated model, while increasing prices, like all the companies do. I suppose Philo will stay status quo.