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State of the Screens

AT&T’s Hollywood Story Comes To An End

By May 27, 2021No Comments

Hollywood Warner Brothers

Big news: WarnerMedia and Discovery are merging to take on Netflix/Disney.

Why this matters: This is a major retreat for AT&T 3-years after acquiring WarnerMedia.

Quote from Peter Kafka – Senior Correspondent @ Recode:

“But first, let’s take a second to marvel at the things you can do if you run a really big, really valuable phone company: You can tell the world that the future of your business involves combining your business — selling subscriptions to broadband and wireless phone service — with someone else’s media business, and spend tens of billions of dollars doing that. And then you can announce, with a shrug, that you’ve changed your mind.”

Worth the time: The New York Times has the tick-tock on how this deal went from emoji-filled text messages to a $100B+ merger.

Big question #1: Why are they doing this?

Quick answer: Scale.

Market capitalization according to Bloomberg:
1) Apple – $2.1T
2) Amazon – $1.7T
3) Google – $1.6T
4) Disney – $309B
5) Comcast – $255B

Meet the Buyers and Sellers

2020 revenue and operating profit according to The Information:
1)
WarnerMedia – $30.4B → $8.2B
2) Discovery – $10.7B → $2.5B

The arms race for eyeballs

2021 estimated content spend according to Evolution Media Capital:
1) Disney – $25B
2) WarnerMedia/Discovery – $20B
3) NBCUniversal – $18B
4) Netflix – $17B
5) ViacomCBS – $15B

Warner Media - Discover MErger Provides Necesarry Scale To Complete In The Streaming Wars

Share of U.S. premium SVOD subscriptions according to Antenna:
1) Disney – 40%
2) Netflix – 28%
3) WarnerMedia/Discovery – 13%
4) ViacomCBS – 11%
5) Starz – 5%

Premium SVOD Share of Subscriptions

Big question #2: How will WarnerMedia/Discovery’s ownership be structured?

Ownership structure for WarnerMedia/Discovery:
1) AT&T – 71%
2) Discovery – 29%

Big question #3: What is the subscriber overlap between HBO Max and Discovery+?

Current U.S. subscriber overlap for HBO Max and Discovery+ according to the Maru Group:
1) Only HBO Max – 14%
2) Only Discovery+ – 7%
3) Both – 5%

Current US Subscriber Overlap for HBO Max and Discovery Plus

Video: Barry Diller: AT&T is making ‘the great escape’ with Discovery deal

Barry Diller on Streaming

 

More #1: The WarnerMedia-Discovery Merger Is AT&T’s Latest Clash of Titans

More #2: AT&T’s Hollywood Ending Erased Billions in Value

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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