Last updated on June 14th, 2022
Surprising news from the media world came in on Monday: telco giant AT&T is spinning off WarnerMedia (home of DC Comics, Cartoon Network, CNN, TNT, etc.) into its own standalone company. Said company (yet to be named) is also merging with Discovery—the home of TLC, Food Network, the Discovery Channel, “Shark Week,” and various reality shows (“90 Day Fiancee” and the like). Supposedly, this is being done to make HBO Max more competitive with Netflix and Disney+.
I’m not surprised about AT&T spinning off WarnerMedia: AT&T’s heavily in debt (to the tune of $169 billion as of March 31; the deal’s expected to net them $43 billion), and they apparently learned little from the similarly short-lived and ill-fated AOL/Time Warner merger from 20 years ago. I am surprised at the Discovery merger news, however.
Below I look at what each company involved gets out of this deal…
Ma Bell clearly bought Warner to avoid just being a plain broadband-offering company, and give it something unique to offer along with its cellular and Internet services. (“AT&T! We’ve got Batman movies! Verizon, not so much!”) Unfortunately, while AT&T managed to make Warner a more integrated company (versus its individual divisions previously lacking much in the way of corporate synergy), they also didn’t bring much to the table outside of launching HBO Max.
Buying WarnerMedia also just burdened AT&T with even more debt. Spinning off WarnerMedia helps relieve some of this, as well as let AT&T focus on shoring up their telco offerings (5G rollout, etc.). Checking my 2018 posts on this merger, pre-AT&T, everything Warner owned—Looney Tunes, CNN, Cartoon Network, TNT Sports, DC Comics, any and all video games, etc.—only brought in slightly more revenue than AT&T’s cellular business. In other words, Ma Bell was just as well off selling iPhones versus going to the trouble of buying the home of Bugs Bunny.
Never mind all the trouble AT&T went through to make this short-lived merger happen: the debt accumulated; fighting the feds and the ire of Donald Trump (the latter wanting to revoke CNN’s non-existent FCC license); the clash of telco vs. media cultures; the initial launch problems with HBO Max (and the fact they just tried to turn HBO into their streaming service, versus launching a service named “Warner Max” or something); and so on. All adding up to… throwing in the towel and spinning WarnerMedia off three years later?
That said, AT&T will retain 71% of stock in the new Warner/Discovery company, so I assume they’ll still have some influence. Presumably they also still get to keep ties with HBO Max to promote on their broadband/cellular offerings.
Discovery has instantly gone from being a mid-sized cable channel outlet to being part of one of the biggest media empires in the country. Presumably Discovery’s shows will now be free to air on WarnerMedia’s cable and streaming outlets, giving them higher exposure. In turn, Discovery’s cable channels could also air some Warner programming; Discovery Family did such in the 2010s when it was “The Hub,” airing reruns of “Tiny Toons” and “Animaniacs.”
Discovery’s current head will also be in charge of the new company; that means someone with media experience will presumably be calling the shots, not a telco head.
WarnerMedia will be getting out from under the direct influence of AT&T, and back to being mostly its own media company. Warner’s also free to carry some Discovery programming on HBO Max.
Otherwise, I don’t see things changing much otherwise for Warner. Fans in a panic about any of this somehow affecting the Batman movie- or comic-du-jour can relax; we’ll still get a metric ton of material about an angry rich guy throwing bat-shaped boomerangs, just like he’s done since FDR was President.
There was some talk about how Warner should’ve merged with NBC Universal. This would’ve been a much bigger deal in my opinion. Universal has an IP library including: DreamWorks Animation (the home of “Shrek”); DreamWorks Classics (“Rocky and Bullwinkle,” “Underdog”); Woody Woodpecker; the classic Universal monster movies; “Jurassic Park”/”Jurassic World”; and “The Fast and the Furious” films. That said, I think it would’ve ran afoul of the feds on antitrust grounds given the amount of assets involved. Discovery, meanwhile, isn’t likely to evoke much of a reaction.
I’m also not sure how much the Discovery merger will help HBO Max (and presumably Discovery+) compete with Disney+. As popular as Shark Week might be, it’s not exactly “Star Wars” or the Marvel Cinematic Universe.
As usual, I’m not in favor of such large media mergers. The state of US media’s already consolidated enough as it is. That said, given Discovery’s now a corporate sibling of WarnerMedia, perhaps we can see some crossovers between properties:
- A “Shark Week” crossover between DC Comics’ King Shark and the (plain old) Shark, Hanna-Barbera’s Jabberjaw, and Discovery’s old show “Kenny the Shark?”
- A HGTV home makeover show set in the DC Universe? (Makeovers of Wayne Manor, Clark Kent and Lois Lane’s apartment, the Justice League’s headquarters, etc.?)
- Future “Puppy Bowl” airings on Animal Planet featuring cameos by Scooby-Doo?
- A “Mythbusters” revival starring DC Comics’ myth-busting Roy Raymond, the “TV Detective?”
- A revival of Discovery Channel Canada’s old show “Daily Planet?”