According to research, the global Smart TV market was valued at $135.51 billion in 2016 and the figures were expected to go up to $300 billion by 2021. This gigantic leap in the TV industry makes a lot of giants hustle for everyday success. And sometimes to make that happen, giants shake hands! The AT&T-Discovery merger story is the latest of all such lucrative deals in the world of television entertainment.
Recently, negotiations between a possible merger took place between WarnerMedia and Discovery. The pact, which supposedly combines HBO and WarnerBros with Discovery and its host of channels, can come as early as Monday evening. It was reported, that AT&T is nearing a $150 billion merger with Discovery, and other than that the Harry Potter-maker Warner Bros could soon be seen joining hands with Discovery’s palette of diverse lifestyle channels like TLC, HGTV, etc.
What Could This Mean for the TV Industry?
If the speculative AT&T-Discovery merger goes through successfully, we could potentially see two of the biggest giants in the media industry come together on one stage. This move comes 3 years after AT&T spent over $85 billion to buy Time Warner and had to shell out millions more just to avoid government interference. So if we were to put things this way – we’re in for a lot of sporting fun and entertainment, while having the leisurely options to watch the sea, check out some gourmet recipes, and even travel wild-wild Africa under the same package.
Counting the AT&T-Discovery Assets
What are the kind of assets the AT&T-Discovery deal would bring together?
AT&T – the renowned American multinational conglomerate – is one of the world’s largest telecommunications companies. Venturing into the streaming business, they’ve acquired some major companies like DirecTV & Time Warner – the parent company of WarnerBros and HBO. With revenues close to $181 billion, they’re one of the most profitable holding companies in the world; and quite unchallenged so far.
Discovery Network – the other contender in this lucrative deal – is also an American multinational television network, which is massively popular for its unique and out-of-the-world experiences, captured through their ultra-HD and ultra-expensive lenses. While Discovery may not make a stellar move into the streaming world, and may well be without the blockbuster movies and their share of OTT shows, they’ve gradually overcome the barrier in their own sweet style. First by incorporating a host of sister channels like HGTV, TLC, DIY Network, Animal Planet, etc., and then by expanding to the new forms of media by venturing successfully into streaming portals with Discovery+.
From the Harry Potter series, the Game of Thrones franchise, and the path-breaking Breaking Bad to the hard-hitting productions like Man vs Wild, A Perfect Planet – With David Attenborough, the famous BBC broadcaster – the two TV industry giants have given people what they have cherished for ages. Now, we can expect the same but under one big package! Exiting isn’t it?
Bigger Than Netflix?
The deal, reported first by Bloomberg, talks about the possibility of making money at the scale of overtaking Netflix; the biggest giant in the TV industry. WarnerMedia & Discovery’s joint profits will estimate close to $41 billion in sales in 2020. With over $10 billion in profits – had the merger taken place earlier – the duo would’ve surpassed Netflix and sat behind just, you know it, Walt Disney.
This deal could also possibly take the TV streaming platforms well above Facebook, Instagram, YouTube, Snapchat, and other trending junctures like TikTok. The scales have never been weighed so heavy, the bar has never been raised so high. And considering how much the world has changed since the COVID-19 pandemic, the rise of the TV industry may even soar up further in the coming ages.
What Can Be Expected Next in the TV Industry?
A representative, who was quoted by CNBC on conditions of anonymity, has revealed that the discussions are being held privately and that a conclusive deal can be possibly announced by today’s end. Though he also revealed that the talks are not final and can be called off in case the pointers don’t align for both the companies.
The structure of the deal will, likely, combine Discovery with all of WarnerMedia, which will then become a new publicly-traded company co-owned by AT&T & Discovery shareholders. It is believed that AT&T and its shareholders will have the majority of stakes and will have an upper hand, which may create some problems for WarnerMedia and its expansion plans.
Considering HBO & WarnerBros represent a distinct brand of WarnerMedia’s representation in the TV industry, their inclusion in the deal can be the sole reason for it to be called off. But again, who are we to speculate? Let’s wait for what’s on the plate for us viewers.
Who Profits Out of this Gigantic AT&T-Discovery Partnership?
While heavy investment is essential to compete with the top-drawn bull, we’ve seen some jaw-dropping numbers being pulled out by both AT&T and Discovery in the past to compete with the towering names like Netflix and Disney. Though an essential lifeline for both, the merger is a face-saving opportunity for AT&T – better known for its telecommunication lines, fiber servers, and mobile applicability than how to entertain the people of America.
AT&T’s daring purchase of Time Warner and now a possible deal with Discovery could finally see it competing for the top spot and together they can quest for a change in the hierarchy that’s been quite the same for a while now.
Though Brian Wieser, a long-time Wall Street analyst, believes that AT&T had no clue what they were doing back then and that the AT&T-Discovery collaboration may be a recent development. He said, “AT&T didn’t know what they were buying. The strategy was underpinning, probably flawed. They were genuinely reorganizing the business to give it the clarity to be able to compete with Netflix.”
As for Discovery, the deal could finally give them the size and scale they’ve always wanted. After, what looked like a change of heart, being the decision taken not to partner with CNN, Discovery saw light with the AT&T deal and believes it can change the scheme of things for them in the long run. The deal could also benefit Advance Publications, the publisher of Condé Nast, as Discovery’s biggest shareholder and may be the perfect homecoming for a few like John Malone, a media pioneer and Discovery’s biggest investors.
For Malone, the deal may bring him back to his old premise – where he was an associate with Bell Labs division of AT&T before switching over to Discovery.
Whether the homecoming for Malone and many others like him, actually prosper or not we will see when there’s an update in this whole sage of TV industry giants collaborating to take on the already established giants.
Let us know what you think about the AT&T-Discovery merger possibility in your comments below.