The announcement of the megamerger between Discovery Communications and WarnerMedia on Monday underscored several things: that AT&T, which spent $85 billion just three years ago to acquire TimeWarner in an attempt to seamlessly marry entertainment and mobile communications had arrived at the conclusion that that effort was anything but seamless, and was now spinning off its entertainment assets. (Offloading some of AT&T’s $160 billion debt was also a motivating factor.) Consolidation in Hollywood is the way forward. (Unless regulators block tie-ups like this.) And the future, more than ever before, is all about streaming. As the companies stated in a press release on Monday, a crucial reason for the marriage is to become “a stronger competitor in global streaming.”
Key to the latter strategy is turning HBO Max into a superpower on the level of Netflix and Disney Plus. The former, of course, is the streaming original that now has over 200 million subscribers and is plowing $17 billion into content this year. The latter is the fast-rising upstart, which, thanks to in-house brands like Star Wars, Marvel, and Pixar—and Disney’s clever and incessant reimagining of those brands—has racked up over 100 million subscribers in less than two years.
Then there’s HBO Max, which launched last year and has been beset by a number of hurdles, including a price—$15 a month—that is nearly double that of Disney Plus, and a confused identity. Though it bears the name of one of the most pedigreed brands in television, WarnerMedia sold the streamer more on its Max-ness than its HBO-ness, the pitch being that you can find nearly everything under the sun on the service, from old episodes of Sesame Street to Harry Potter movies to, yes, the latest season of Succession. The service, which has just 44 million subscribers (one-quarter of Netflix’s), was also beset by COVID-19, which brought some productions to a standstill, slowing down the rollout of original content.
So! Now what?
David Zaslav, newly anointed president of the proposed mega-company and Discovery’s former president and CEO, has said he plans to blend WarnerMedia and Discovery’s assets as a way to “compete globally in the fast-growing direct-to-consumer business.” So just as Disney Plus has become the home to National Geographic and 20th Century Studios content, thanks to Disney’s $71 billion acquisition of Fox, HBO Max will presumably become the home to Discovery content, including its deep trove of non-scripted programming, including series like TLC’s 90 Day Fiancé and Food Network’s Diners, Drive-Ins and Dives. Discovery can also give HBO Max a boost internationally, where HBO Max has yet to launch and where Discovery has a strong foothold.
Then there’s the fact of just how much content would now be housed under one roof. Nearly 200,000 hours of it, according to the press blitz on Monday, amounting to “over 100 of the most cherished, popular, and trusted brands in the world, including HBO, Warner Bros., DC Comics, CNN, Cartoon Network, HGTV, Food Network, the Turner Networks, Animal Planet, TLC, and more.” If this mostly sounds like the cable-TV bundle you jettisoned for streaming, you would not be wrong, and there is a counterargument that this proposed merger, which could take a year to be approved, is really about taking advantage of the cash that the declining, but still lucrative, cable business can generate while feinting at competing for the future of streaming.
As Netflix has shown, more can definitely be more. But with Netflix, Amazon, and Hulu already in the we-have-whatever-you’re-looking-for business, how much more room is there for another all-things-to-all-people streamer? As Disney has shown, the future is more about careful curation and a solid, easy-to-understand pitch to consumers. Even Apple is increasingly making a name for itself as a new destination to go for top-notch original programming with shows like Ted Lasso and Mythic Quest, as it simultaneously resists the urge to buy up libraries. Indeed, Apple has arguably stolen the title of “the HBO of streaming” from . . . HBO, before it went to the Max.
Zaslav and his team’s challenge will be bringing together all those hundreds of thousands of hours of programming and making them work together in a way that makes sense to consumers. Without smart curation, Mare of Easttown sitting next to Fixer to Fabulous feels hugely dissonant. As for what happens to Discovery Plus, the streaming service that launched this past January and that has gotten off to a good but not Disney-fied start with 15 million subscribers, it’s not yet clear whether it will live on as a separate entity or be subsumed by HBO Max.
Zaslav has already suggested that the efficiencies created by the merger will free up more money to create content—which is a good and necessary thing. (Another Netflix lesson.) Partly what has held HBO Max back is how tightly AT&T has held on to the purse strings. While Netflix devoted $17 billion to original content last year, HBO Max’s budget was $2 billion. Reportedly, when executives at the company asked to double that figure, they were rebuffed. Originals, after all, are what get subscribers in the door, even if Harry Potter and Sex and the City get them to hang around.
How all this is executed depends to a large degree on who Zaslav selects to pull it off. WarnerMedia CEO Jason Kilar is reportedly negotiating his exit. Given how long it took Discovery to get its own streaming service up and off the ground, one hopes the future of HBO Max won’t be entirely in Discovery’s hands. But whoever ends up being in charge: Please, don’t confuse us.