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Discovery is preparing as much as possible for the planned merger with AT&T’s WarnerMedia, CEO David Zaslav said Tuesday, highlighting that its success will depend on a “strong Warner Bros.,” which is key to attracting the “best talent” and content, and quickly rolling out the streaming strategy for the combined company.
While the go-to-market strategy for the merged company’s streaming offerings has been decided, he said his team would only unveil it at a later point. But Zaslav promised a “shock and awe global strategy when you look at the menu” and diversity of content offered and a fast rollout to get to 200 million global subscribers within about two to three years, given the global reach of Netflix and Disney+. “We will do it quickly once we close,” he said.
Speaking during the virtual Goldman Sachs Communacopia Conference from Los Angeles, he said he has been spending “about two weeks a month” out West to learn about the “substantial” history of Warner and its successes and to “meet as many people as I can” within the company to “understand all the different points of view about where the industry is.”
But he said he was also meeting people, including old friends, from outside the company, because “we also need to bring some more great people into the company” after the merger. Describing a busy schedule, he said: “This week I am meeting with over 50 people in the business,” also sharing that “I met with Chuck Lorre the other day.” After all, “this business starts with great IP … and terrific content.”
The Discovery CEO also shared that “we did have an off-side [meeting] for several days; we did have some real-time with some of the strong Warner leaders going through their business.” Due to rules for mergers, “there were lawyers there; there was a lot that we couldn’t see and that we couldn’t talk about,” but the company is preparing for the deal close as much as possible.
Touting WarnerMedia’s content success, he mentioned the likes of Ted Lasso and The White Lotus. “Warner has some of the most explosive content in the world,” Zaslav said. At a dinner Monday night, “people were talking about White Lotus for half an hour, episode by episode. … HBO is getting stronger and stronger” and generating “cultural heat,” he lauded.
Overall, he said that while others Hollywood giants are “pickers” of content, Warner’s TV production arm is “the strongest maker of television in the world” and can sell content for a lot of money when there are several bidders or make it for the company’s own platforms.
The planned megamerger of Discovery and AT&T’s WarnerMedia is still on track to close during the first half of 2022, Zaslav said.
In early August, the company said that it had reached 18 million paying streaming subscribers worldwide after ending June with 17 million. The Discovery+ streaming service launched in the U.S. on Jan. 4 with a monthly price of $4.99 with ads and $6.99 without ads. It has also been rolling out in international markets.
Zaslav said in August that Discovery and WarnerMedia are moving through the regulatory review process of their planned merger without problems so far, seeing “broad support” for it. He also predicted that the merged firm would become the third big, sustainable global streaming platform, together with Netflix and Disney. “There will be a lot of consolidation,” he also argued. “And some of that may be opportunities for us, but right now, I really like where we are.”
Speaking during another investor conference last week, Discovery CFO Gunnar Wiedenfels said that the direct-to-consumer strategy of the merged Warner Bros. Discovery would remain focused on premium subscription services. The combined company will use a streaming strategy whose basic go-to-market strategy is “pretty much ready” as much as is possible before the deal closes, he said without sharing details, which he said would be finalized and unveiled in the future.
Wiedenfels didn’t directly answer a question about whether the merged company would offer the HBO Max and Discovery+ streaming services separately or bundle or combine them. But he did say that subscription streaming services will be the priority, with both firms currently offering “products that are very much average-revenue-per-user-focused, high-value kinds of products” with high engagement.
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