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Discovery and AT&T’s WarnerMedia are moving through the regulatory review process of their planned merger without problems so far, seeing “broad support” for it, Discovery CEO David Zaslav said on Tuesday.
On the company’s second-quarter earnings conference call, he predicted that the merged firm would become the third big, sustainable global streaming platform together with Netflix and Walt Disney. Other “sub-scale” content companies will in the coming years likely raise their hands for deals, Zaslav said. “There will be a lot of consolidation,” he suggested. “And some of that may be opportunities for us, but right now, I really like where we are.”
Zaslav declined to comment on reports that Discovery could look at a possible bid for U.K. broadcaster Channel 4, but said the company’s “singular” focus right now is on closing the WarnerMedia deal.
In mid-May, Discovery unveiled the mega-merger with AT&T’s WarnerMedia, with Zaslav set to lead the combined company. The merged firm is expected to have $52 billion in revenue in 2023, and the companies are targeting $3 billion in cost synergies through the deal. “Consumers want choice and simplicity,” Zaslav said. “We believe that the combined company will be able to offer more of both,” leaving the merged firm “well positioned to compete in the global streaming marketplace.”
Zaslav on Tuesday commented on regulators’ merger review, saying: “The regulatory process continues to move forward as planned, giving us confidence in our previously stated time frame of mid next year to close.” He added: “I was in DC last week. I met with (people) across the board, spent the full day. There is broad support for this transaction.” The good news so far: “We haven’t heard any pushback,” he said. “We have seen green lights. … Everything so far is extremely positive.”
Since the companies can’t control the IRS and Justice Department’s timing, a regulatory decision could come “significantly sooner” or “a little later” than targeted, the CEO said, adding that Discovery is hoping to “really get lucky” and close “a lot sooner” rather than later. “And that is what we are all pushing for.”
And he lauded WarnerMedia for doing “a terrific job” and being “the greatest creative company in the world.”
“We continue to fire on all cylinders, and I am very pleased with our momentum as we work to complete our transformational WarnerMedia transaction,” Zaslav said in the earnings report on Tuesday. On the call, he added that after the deal close he has two key missions: driving the direct-to-consumer business to 200 million subscribers worldwide and “having the best creative company in the world.”
About the future of cinema, Zaslav said: “The motion picture business is not going away,” with the big screen being “where stars are made” and “where the magic happens.” The singular focus on great content will “drive a great culture” at the combined company.
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