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Warner Bros. Discovery May Already Be Eyeing Another Merger

Speculation is growing that CEO David Zaslav is eyeing a huge competitor for a sale.
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This Spring, the long-awaited $43 billion merger between Warner Bros. and Discovery was finalized, and the new CEO David Zaslav, who previously oversaw the Discovery portfolio, wasted no time in making his presence felt. 

Zaslav made it clear he was intent on making Warner’s  (WBD)  streaming platform HBO Max more competitive with Netflix  (NFLX)  and Disney+  (DIS) . In its second quarter the service had 92.1 million subscribers, an impressive total that makes it the third largest streaming service, but it still doesn’t have the triple-digit totals of the big two. 

Part of Zaslav’s plans is to begin migrating all of the programs from Discovery’s portfolio of channels, which includes Animal Planet, TLC and HGTV, over to the platform. This will take a while, and no date for the programing merger has been announced, but eventually HBO Max will be able to offer its existing and new customers programs from the likes of the Property Brothers and Guy Fieri, as well as various shows from what’s been deemed the “90 Day Fiancé Universe.” 

These shows might not seem like a natural fit for the existing HBO customer, who is more likely drawn in by titles such as the new “Game of Thrones” spin-off “House of the Dragon,” and catalog titles like “The Sopranos” than the fixer-upper programs that Discovery is known for, but to grow their numbers Zaslav wants to reach out to a new customer base. 

Zaslav has come under quite a bit of criticism in the industry and among social media film lovers for, in some estimations, not quite understanding the draw of HBO and diluting the brand in the process. 

A recent corporate presentation that touted HBO fare such as “Sex and the City” and the “Game of Thrones” and Warner Bros. shows such as “Friends” and “The Big Bang Theory,” (i.e. the very broadly popular hits) above the more prestigious fare felt tone deaf to many. 

Zaslav has also been widely criticized for the decision to not release the planned direct-to-HBO Max DC comics-based film “Batgirl,” and for taking several, reportedly underperforming, series and direct-to-HBO Max films off the platform with little warning. 

These steps were all part of cost-cutting measures to reduce the new company’s reportedly $50 billion in debt, as “Batgirl” was seen by Zaslav as more valuable as a tax write-off than a proper release.

But according to a new story, it’s rumored that Zaslav might have even bigger plans for Warner Bros. Discovery, including a move that not everyone is going to love.

Zaslav Is Reportedly Eyeing Another Merger

HBO Max is the third largest streaming service, if you take into account that while many people have Amazon Prime Video  (AMZN) as part of their Amazon Prime subscription, it’s unclear how many people actively sign-up for the service just for the streaming platform.

While HBO executives might not be content to be the third biggest streaming service, that’s a position that many other media companies would kill for. 

While Comcast’s Peacock  (CMCSA) , the streaming extension of the NBC Universal brand, has produced critically acclaimed cult hits like “Girls5eva,” it has not been able to produce the sort of breakthrough hits that a streaming service needs to bring in large amounts of new customers. As of the second quarter of the year, it only has 27 million subscribers.

In a recent feature from The Hollywood Reporter, “it has become accepted wisdom at the highest levels of the industry that another deal waits in the wings for Warner Bros. Discovery.”

Warner Bros. Discovery can’t begin any negotiations until 2024 due to the “complicated structure of that merger,” but once that is settled, many insiders believe that Comcast CEO Brian Roberts and Zaslav might look to merge NBCUniversal and Warner Bros. Discovery into one, even more giant media company.

“‘Obviously Peacock sucks’,” says one exec with knowledge of both companies,” in the article, which adds “I think that’s Zaslav’s endgame. Get the place sold.” 

Is A Merger A Good Thing?

Of course, this is all rumors and speculation, and a WBD spokesperson responded in the piece that: “We are building Warner Bros. Discovery for the long term.” 

It’s also a deal that would have to gain the approval of federal regulators, who might have concerns about antitrust issues.

From the CEO’s perspective, it makes sense. HBO Max would get even more TV shows and films for its library, including popular hits like “The Office” and “Parks and Recreation,’ and it would also have one less competitor for subscriber’s eyeballs.

But while consolidation might be great for companies, it’s often not great for customers. When Disney purchased 21st Century Fox in 2019, many observers feared a monopoly in which, overall, fewer films and television shows are made, and the more medium budget films that Fox Searchlight produced would fall by the wayside in the quest for franchise hits.

While it’s too soon to begin gnashing teeth, the potential loss of another studio is already making some observers nervous, with an unnamed studio head saying “It’s going to be so depressing to lose another major studio [after Disney bought Fox]. And Warners was the Tiffany studio.”