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By The Entertainment Strategy Guy
The Warner Bros. Discovery merger/spinoff from AT&T is this close to being official. Last week, Discovery filed paperwork with the SEC announcing that the FTC had approved the merger. This thing is happening. (For thoughts on why I think the FTC cleared this deal but held up the Amazon-MGM pairing, see my strategy column at my website this week.)
Clearing antitrust approval was the biggest threat facing both Discovery and Warner Bros. HBO Max is already the (arguably) fourth largest streamer in the U.S. and Discovery+ keeps adding folks. The standard-bearer of cheap reality TV is pairing up with Harry Potter, the D.C. universe, Looney Tunes, CNN and HBO, the crown jewel of prestige TV. Surely prying Warner Bros. from the cold embrace of the cellphone folks can only help.
Champagne will be popped. Yet, human nature being what it is, existential dread soon follows. What is this company? Who are we? How does this work?
The goal of this column today is to take stock of the current market forces that could help shape (or sink) the potential of the company.
First, Warner Bros. Discovery pales in comparison to its conglom peers:
Warner Bros. Discovery is a minnow swimming among large fish (Disney, Netflix and Comcast) who are swimming among giant sharks (Apple, Amazon and Google). If this merger goes through, and goes well, the dream is for WBD to achieve Netflix and Disney levels of valuations.
If it goes wrong, can you say MGM? And that latter scenario isn’t impossible. Right now, nothing screams quality like HBO. And we can all remember Warner Bros. dominating the 2000s in films. But fate can turn quickly in this business. Ask Disney shareholders in the early 1980s before Eisner. Or ViacomCBS shareholders now.
Now with that fact established, it’s time to grab our Voldemort wand, and turn our eye of Sauron to another behemoth in entertainment in the second installment of our “Worst Case Scenario” series covering the industry’s behemoths. This series is not meant to pick on any one company, but rather to analyze what the vulnerabilities are of the next five years in a business beguiled by the sugar high of big swings. These analyses are about what could happen if everything went wrong. (My first “Worst Case Scenario” was about Disney.)
I. Industry-Wide Risks
Like last time, let’s start with the industry-wide risks. These are the potential forces disrupting the entertainment industry. Read last month’s article for a summary, but here they are again:
This has been a sneak preview of today’s edition of The Ankler, the industry’s secret newsletter. To read the rest of this issue, subscribe today for just $17 a month and don’t miss out on who’s in the hot seat next!
Also on The Ankler:
Jeff Zucker on Allison Gollust: ‘She’s Good, She’s Fine’ The former CNN chief has decamped in LA, and new contributing editor Peter Kiefer caught up with the embattled executive (briefly) at the Four Seasons.
RUMBLINGS: 5 Names Whispered for Warners The crown is coming for the right candidate as Discovery and WarnerMedia head to the altar. Here are the executives that have the town talking.
The Transom on the four paths ahead for Netflix win or lose the Oscar, Batman fatigue and that mysterious dog park deal.
Don’t miss The Ankler’s excerpt of Red Carpet, reporter Erich Schwartzel’s look at Hollywood’s disastrous courtship of China. In this excerpt: fresh off Cutthroat Island, Renny Harlin seeks redemption helping the Middle Kingdom master Hollywood moviemaking.
Podcast: Tom Cruise and how the Mission: Impossible franchise was saved over one very awkward dinner. Christine Peters was Sumner Redstone’s girlfriend, Jon Peters’ wife and helped oust Les Moonves with her #MeToo story.
On The Optionist:
Publishing PR legend Paul Bogaards on the future of Joan Didion’s estate.
Unbelievable stories for option: a Korean boy band that won over Howard University in 1896; a young adult romcom; and a dark thriller à la I May Destroy You.
Subscribe free to The Optionist during its beta period.
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