The streaming content that will result from the merger of WarnerMedia and Discovery Inc. will be valuable enough to earn significant continuing subscriptions, Discovery CFO Gunnar Wiedenfels told a press conference this week. Bank of America Conference.
The entity resulting from the merger of the two giants of the entertainment industry will focus on premium direct-to-consumer subscription services, a priority area for Discovery for several years, Wiedenfels noted.
In May, AT&T announced plans to combine its content unit, WarnerMedia, with Discovery. AT&T said the deal would net it a total of $ 43 billion, in a combination of cash, debt and WarnerMedia’s debt retention, CNBC reported at the time.
The merger, which is expected to be finalized in the middle of next year, will create a combined company called Warner Bros. Discovery.
“We believe this will be the best and most exciting place in the world to tell big, important and impactful stories across all genres and across all platforms: film, TV and streaming,” said David Zaslav, CEO of Discovery. said in a June statement.
Wiedenfels and his team are focused on the lucrative streaming industry. “I have no doubt that we are creating one of the greatest content powerhouses in the world,” he said.
The combined company will implement a streaming strategy whose outlines are “pretty much ready” as much as possible before the deal is closed. “We worked hard here over the summer,” he said without sharing the details. Details of the deal will be finalized and unveiled in the future, he said.
Wiedenfels declined to tell investors what networks and services the merged company would offer, but the two companies would prioritize subscription streaming services as the main offering, he said.
Discovery and AT&T both offer “average revenue per user, high value products” with high engagement, he said.
“Basically, we believe… the content of the combined company will be valuable enough to merit a subscription payment on an ongoing basis,” he said. “This [will] continues to be the priority.
Discovery launched its first U.S. streaming service, Discovery +, in January. Subscribers can access it monthly for $ 4.99 with ads or $ 6.99 without. Discovery last month reported that 18 million people had subscribed to its direct-to-consumer services, including Discovery +, an increase of 1 million from June.
“Now, with our direct-to-consumer marketing strategy for the combined company essentially completed, [we are] is going to be able, frankly, to spend a little less on marketing right now, ”said Wiedenfels.
The ability to re-evaluate Discovery’s positioning and programming for the merger “created a better product,” said Wiedenfels. “And that’s great for the consumer, for our affiliate partners and for our advertising partners who put their brands in the right environment. And we certainly hope that between WarnerMedia’s portfolio and ours, there [will be more] the good sides.
In the months leading up to the deal closing, Wiedenfels and his team are working to ensure Discovery’s balance sheet is as strong as possible, he said.
Wiedenfels, who joined Discovery as CFO in 2017, was involved in the company’s acquisition of Scripps Networks Interactive in 2018. He helps steer the company’s backbone towards a direct-to-consumer model.
On Tuesday, Pascal Desroches, chief financial officer of A&T, said he “could not be more satisfied” with the regulatory review process for the proposed merger.
“There is no reason why this merger should not be approved,” he said, according to the Hollywood Reporter. “We are not at all concerned that this could be challenged from a regulatory point of view.”
“We are exactly where we thought we were at this point in the process,” Desroches added, Deadline reported. “Here is the reality. When you look at the rules around competition, there is no reason why this merger should not be approved, especially given the changes in the competitive landscape and the involvement of large tech companies in the media.
“Our go-to-market strategy is practically ready”, Wiedenfels noted. “We have our ducks lined up here [but] obviously, we are not in a position to talk about it at the moment.