AT&T, Discovery Deal Raises Questions For Global Streaming Expansions

If AT&T and Discovery’s shock announcement underlines any learnings in recent years, it’s that legacy media is fighting back. And for this particular deal, a key battleground could be overseas.

The new combination of WarnerMedia and Discovery, a closely guarded manoeuvre relegated to C-suite executives, has come as a surprise to the vast majority of staff in both companies’ international camps, who hope a town hall quickly scheduled for Tuesday will clear up confusion around what’s to come — one of the most urgent matters, by most accounts, being what lies ahead for each company’s much-ballyhooed streaming offering.

“My first reaction was, ‘Wow!’” says Mathew Horsman, director of London-based consultancy Mediatique, who describes the WarnerMedia and Discovery spin-off as “sensible” but rife with “all sorts of ramifications.”

The pact — which is expected to close in mid-2022, subject to approval by regulators and Discovery shareholders — sees AT&T and Discovery agreeing to combine their media assets into a standalone, publicly traded company in order to compete more directly with large rivals like Netflix, Walt Disney and NBCUniversal. Under terms of the deal, AT&T shareholders will control 71% of the new company, while Discovery shareholders will own 29%. Meanwhile, Discovery CEO Davis Zaslav has been tapped to lead the new company.

Between WarnerMedia’s HBO Max and Discovery Plus, the latter lifestyle-focused unscripted giant currently covers the most ground internationally.

Discovery’s SVOD launched in the U.K., Poland and Eastern Europe last year, and debuted this year in India, Japan, Spain, Italy, Nordics, Netherlands, Middle East, Turkey and Saudi Arabia. Plans are underway to launch the service in Latin America, Brazil and other parts of Asia.

HBO Max, meanwhile, is very much a U.S.-only proposition for the moment, though a Latin America roll-out is expected in a matter of weeks, while launches in Europe are planned in the next few months, with the platform set to be fully operational by year’s end. The main European markets at launch will be Spain, Central Europe, Portugal and the Nordics, where the existing HBO Europe services will become HBO Max. In France, HBO has an exclusive deal with French streaming group OCS, but this agreement is expected to end next year, which will allow HBO Max to launch as a standalone service in France.

Forward planning may have become a little murkier overnight. Will the new outfit, under Zaslav, integrate HBO Max and Discovery Plus? Or will both platforms remain separate — similar to Discovery Plus and Eurosport Player, which are distinct services in Europe — and instead be offered to consumers as attractive bundle deals, à la Disney Stateside? When asked about bundling, Zaslav opaquely promised in an investors’ call on Monday that the new company is “going to do it differently.”

Horsman says WarnerMedia and Discovery have “all to play for” in terms of what they choose to do with their streamers. “The key will be to have the ease to buy a single proposition [if they choose to bundle], whether that’s paying a bit more — or a lot more,” says Horsman.

As for timing, while some have questioned whether HBO Max might delay its international launches until the deal closes in mid-2022, sources have shut down this possibility, noting that there is “no change in direction” for the South America and Europe launches at it stands. “Both HBO Max and Discovery Plus have come so far in the last few months; to go back on that would be quite tricky,” said one insider.

Further afield, while any impact on Asia is too early to qualify, the first repercussions are likely to be on personnel. Streamlining human resources is a consequence of every major merger and this one is likely to be no different. Given that Discovery boss David Zaslav will lead the merged company as CEO, it’s likely that his senior Discovery team, including Arthur Bastings, president and managing director for Discovery Networks Asia-Pacific, will find roles in the re-jigged set–up. WarnerMedia went through a major management revamp in 2020, and hasn’t yet finished a three-year process of restructuring and personnel changes in Asia.

In terms of streaming services, Discovery Plus is available only in India and Japan so far in Asia, and HBO Max is yet to launch in the region. It’s easy to imagine a scenario in which the Discovery offering in Asia adds an extra layer to HBO Max when it’s eventually rolled out. Meanwhile, the Discovery and WarnerMedia channel bouquets could also benefit from distribution synergies.

Elsewhere, a Discovery-WarnerMedia alliance also raises questions about the future for Comcast-backed pay-TV operator Sky, which has long-term licensing agreements in place for key European markets with WarnerMedia.

“Will they become more willing to launch HBO Max in Sky countries? [U.K., Italy, Germany],” asks Francois Godard, senior media and telecoms analyst for Enders Analysis. “So far, they have said they’ll do it eventually, but it’s unclear because they make money with Sky and it would cost them a lot to establish HBO Max.”

But now, the launch of HBO Max in territories where WarnerMedia and Sky have deals “could become more likely,” adds Godard.

Naman Ramachandran, Nick Vivarelli and Elsa Keslassy contributed to this report.

Tobi❤

Tobi is a reserved individual, loves making friends and a top-notch web developer. Currently, he's working as a freelancer for cmatrends.com

Leave a Comment on CmaTrends

Next Post

Installation Of Automated Machines For Manufacturin Of Shoes In Anambra (Photos)

Mon May 17 , 2021
The advance team from Federal Government of Nigeria earlier today commenced the installation of shoe making machines and other equipment shipped to the state from Turkey, Italy and others by the government of Nigeria. The award winning Managing Director of Anambra State Small Business Agency, Chief Clement Chukwuka as well […]