WarnerMedia and Discovery Merging? 5 Things It Could Mean for the Future of Streaming

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WarnerMedia and Discovery Merging? 5 Things It Could Mean for the Future of Streaming

It’s been impossible to ignore how much television has changed over the last decade, particularly over the last few years. Cable has died away, streaming has risen up, and studios have seen the dollar signs associated with providing subscribers with direct access to their content libraries instead of licensing them out. Catch-all services like Hulu, Amazon, and Netflix—which used to be a collection of TV shows and movies from all different studios and networks—are now producing their own content as WarnerMedia, Viacom, Disney, and NBC Universal are taking the TV shows and movies that they own back for their own streaming services.

What that has led to is a proliferation of small-time and niche streaming service alongside the whales, but that model is unsustainable. Though subscribers were tired of rising cable bills a decade ago that included 700 channels you’ll never watch, now the price of (for example) Netflix, Disney+, AcornTV, Starz, HBO Max, and Apple TV+ might rival what you used to pay to TimeWarner or Comcast. It’s just that now we have to piece together our own packages.

Some of the piecemeal approach may be dwindling down with the announcement that AT&T is divesting itself (ish) from its WarnerMedia brand, which will now be merging with Discovery, Inc. What does that mean for you, a TV watcher and subscriber to HBO Max and/or Discovery+? And what does it mean for the future of the streaming? We explain below:

1. It Will Create a Mega-Corporation

HBO Max is owned by WarnerMedia which is owned by AT&T which is owned by the Sheinhardt Wig Company. Wait, scratch that last part. But forget AT&T for just a minute. HBO Max is already the streaming service of a media conglomerate; Warner is home to HBO, yes, but also DC, Warner Bros movies, and Turner cable properties (TNT, TBS, CNN, Adult Swim, etc). Discovery (which launched its streaming service, discovery+, in December of 2020) is also a combo of smaller brands: HGTV, Food Network, Animal Planet, etc. The merger, if approved (more on that in a moment) would seek to combine all of these networks in one place.

According to the LA Times, the deal is worth $43 billion, and would see AT&T holding 71% of the new company, and Discovery holding 29%. Basically, there is a lot of money and a lot of programming at stake.

2. It May Kickstart a Consolidation Trend

As noted in the intro, the last few years have seen a boom of streaming services, some more successful than others, some more niche than others. There are a handful of major players, though, that seem poised to gobble up the smaller streamers as they continue to expand their market share (or number of subscribers).

This was something that Discovery Chairman John Malone predicted several years ago: That smaller streamers would not be able to compete in a marketplace with tech giants like Apple and Amazon. Though those two have not actually made a huge impact in the streaming marketplace yet (neither have Facebook or YouTube), Malone—an exceptionally shrewd businessman who has a keen eye to evolving TV marketplaces—still had the right instinct that things would change in this direction. We have seen Disney break off into its own streaming service and spend $71 billion dollars buying up most of FOX, alongside the rise of huge, IP-focused streamers like HBO Max, Peacock, and Paramount+. Meanwhile, popular TV shows from smaller streamers are getting a second life on the majors, like Cobra Kai’s move from YouTube Premium to Netflix. Expect a lot more of this to come.

3. The Merger Won’t Happen for Awhile

Though the boards of AT&T and Discovery have voted in favor of the merger, don’t expect to see much more about it until 2022 or beyond. Firstly, it has to be approved by government regulators, which could take up to a year. Together, the two streaming services currently have about 60 million worldwide subscribers, a number that jumped up considerably once WarnerMedia made the decision to release all of its 2021 blockbusters movies on the HBO Max streaming service as part of its regular, very low subscription rate (something that is, by the by, totally unsustainable moving forward).

Secondly, the merger won’t be easy on either company. There are a ton of networks within the Warner and Discovery umbrellas that don’t necessarily combine well, and there are also sure to be layoffs, perhaps particularly on the Warner side (which already saw cuts after the AT&T buyout).

However, if approved, Discovery CEO David Zaslav (who has been at the helm since 2007) will run the combined company. Zaslav saw Discovery grow and expand exponentially, including key purchases and acquisitions, that might serve both brands very well. Hopefully, anyway. Lord only knows that Warner/HBO Max could use some help with branding….

4. Telecom Companies Owning Content Creators Is Not the Way Forward

There was a time when the people who owned the actual cables and wires wanted to also own the stuff that came across it (AOL/Time Warner, Comcast/NBC Universal). None of this has worked out particularly well. Despite a desire for “synergy,” running a company that is both literally building cellular networks and creating new hourlong dramas is ultimately just too diverse to make sense. AT&T, looking to divest itself of some of debt accrued since it spent $85 billion dollars acquiring TimeWarner/WarnerMedia, will now be focused more on its actual telecom business—though it will still own a majority share of this new mega company, of course.

5. Yes, It’s Basically Recreating Cable

If you’ve been reading between the lines here, you’ll see that what all of this really means is that we’re just recreating cable. Ultimately, these bundled streamers will be back to cable rates, you’ll only have a handful of options, and most of the stuff that is available to stream won’t be shows you care about. “A la carte” was always a fantasy; it’s nearly impossible to fund the making of TV shows that way. If you want to really get specific about the TV that you consume, you can (in some cases) by individual episodes or seasons on iTunes or Amazon, or a DVD case off ebay. But even that is becoming less common. For the most part, to access your past favorites and find new shows of interest, you’re going to have to subscribe to a variety of streaming services that each have a variety of paid (or free, ad-supported tiers). Kinda like having a ye olde cable package that includes broadcast, basic cable, and a few premium add-ons, but scattered throughout various apps.

Some streaming services, like Hulu and YouTube, now have live-TV versions that are essentially exactly that: a streaming cable package with add-ons. So no, you will never break free from cable or “cut the cord” unless you just use an antenna to watch broadcast, or turn your TV off completely. For now, anyway. And one day, the broadcasters may go fully into streaming services as well.

Is this progress?

Allison Keene is the TV Editor of Paste Magazine. For more television talk, pop culture chat and general japery, you can follow her @keeneTV

For all the latest TV news, reviews, lists and features, follow @Paste_TV.

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