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AT&T’s Hollywood Story Comes To An End
Michael Beach
May 27, 2021
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
2020 revenue and operating profit according to The Information:
1) WarnerMedia – $30.4B → $8.2B
2) Discovery – $10.7B → $2.5B
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
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%
Big question #2: How will WarnerMedia/Discovery’s ownership be structured?
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%
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