Discovery and WarnerMedia Merge, as Streaming War Consolidation Heats Up

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Discovery and WarnerMedia Merge, as Streaming War Consolidation Heats Up

AT&T has decided to shed its entertainment assets in exchange for $43 billion and intends to merge them with Discovery into a new entertainment company, the companies announced Monday. The deal, which is expected to close in mid-2022, will still need to be approved by regulators.

The new company will combine streaming services HBO Max, which falls under AT&T's WarnerMedia subsidiary, and Discovery Plus, into a publicly traded parent company that is yet to be named.


Together, the new company will control nearly 200,000 hours' worth of programming and will invest about $20 billion per year in making more, said David Zaslav, the Discovery boss who will run the new firm. That level of spending will outpace the current content investment plans of two of the new service's biggest competitors: Netflix (which plans to invest $17 billion per year) and Disney ($8 billion to $9 billion on Disney Plus and $14 billion to $16 billion across Hulu, Star and ESPN Plus).

Warner Media and Discovery

It is not yet clear the extent to which consumers will notice a change. Subscribers to HBO Max may receive a discount to Discovery Plus, and vice versa. Or a new service combining the companies' assets may yet launch. WarnerMedia's brands include HBO, TNT, TNN, CNN, Cartoon Network and Warner Bros Studio. Discovery's include HGTV, Food Network and Animal Planet.

Whether they are combined or remain separate, analysts say the content offerings of the two companies are complementary; Discovery's focus on reality television is an area where Warner's cupboard is relatively bare.

Among other implications, the move brings some foreseen consolidation to the streaming market. The nature of entertainment makes bundling content an economically advantageous strategy; that's partly why it's so hard for a niche streaming platform to succeed.

With over 200 million and 100 million subscribers respectively, Netflix and Disney have a big lead over a combination of HBO Max and Discovery Plus, which together serve around 60 million subscribers. Yet both of those leading platforms have been experiencing slowinggrowth and declining share prices following a banner 2020 that saw subscribers climb quickly amid the pandemic.

The merger will see some collateral damage ripple throughout the entertainment industry. In the announcement of the deal, the two companies boasted it would save the combined company $3 billion in "cost synergies" which, as with most mergers, will likely mean substantial amounts of people losing their jobs.

WarnerMedia's boss Jason Kilar is reportedly negotiating his exit. The former head of Hulu has become somewhat of a symbol of the move-fast-and-break-things approach to modernizing traditional entertainment, to the chagrin of many. Discovery's boss, David Zaslav, has been tapped to run the new company, according to the companies' statements.

Other players in the streaming market are also on notice. There are still likely more services in existence than consumers are willing to pay for, according to industry analysts.

Sony has seemingly committed to retaining its "arms dealer" strategy. NBCUniversal and ViacomCBS' platforms, Peacock and Paramount Plus, appear to have more ground to make up in a market that is even more competitive.

If the deal is approved, AT&T's shareholders would receive 71% worth of the new company's stock, with Discovery's shareholders receiving the remainder. The name of the new company is expected to be announced next week.

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Henrik Fisker Says Tesla Price Cuts Haven’t Fazed Ocean Rollout

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

A Fisker electric vehicle.​
Courtesy of Fisker

Last week in the dot.LA newsletter I wrote about Tesla’s decision to slash prices by as much as 20% on their vehicles and how the decision might impact Southern California’s EV startups. I called the price cuts a “tough pill to swallow” for Fisker in particular since they would make many of Tesla’s price points more competitive with Fisker’s first production model, The Ocean.

The Ocean is currently undergoing homologation, but Henrik Fisker, the company’s CEO, confirmed to dot.LA that the company hopes the process to be completed at the end of February. From there, it could take several weeks to ship the SUVs from Austria to the United States.

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Office Hours: Former Lawyer Turned CEO Diankha Linear on Cultivating Community

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

​Diankha Linear
Diankha Linear

On this episode of Office Hours, Community CEO Diankha Linear joins host Spencer Rascoff to discuss her foray into the startup world and the strategic approaching to scaling up.

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admin@dot.la

LA Tech ‘Moves’: Dreamscape, LinQuest and PetDX Gain New CEOs

Decerry Donato

Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

LA Tech ‘Moves’: Dreamscape, LinQuest and PetDX Gain New CEOs

“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.

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