HBO Max, Discovery+ services to be combined into single offering

HBO Max and Discovery+ will be combined into a single streaming platform once the Discovery-WarnerMedia merger is complete, although it won’t happen immediately.

Gunnar Wiedenfels

Discovery’s chief financial officer (CFO) Gunnar Wiedenfels outlined more details of the merged entity’s integration strategy during an appearance at Deutsche Bank 30th Annual Media, Internet & Telecom Conference on Monday.

“The main thrust is going to be harmonising the technology platforms and building one very strong, combined, direct-to-consumer product and platform. That’s going to take a while,” said Wiedenfels, who was formerly CFO at ProSiebenSat.1 Media before joining Discovery in 2016.

In the interim, Warner Bros Discovery will bundle HBO Max and Discovery+, potentially under a single sign-on, suggested Wiedenfels, who will also serve as CFO of the combined company.

While it has long been predicted that the two streaming offerings would be combined, the CFO’s remarks represent the first time that an exec from either Discovery, WarnerMedia or its parent company AT&T have said concretely that a combined streaming service will be offered. Wiedenfels did not give an indication of timelines for the launch of a combined service, saying only that he hoped it would be “several months.”

After Discovery’s shareholders approved the deal on Friday, the deal is now in its very final stages.

On the streaming front, the close of the transaction will bring Discovery+, which has around 22 million subscribers, under the same roof as HBO Max. While WarnerMedia does not break down the total subscriber number for HBO Max, the company divulged most recently that HBO and HBO Max have a combined total of 73.8 million global subscribers.

Wiedenfels said the eventual combination of the streaming services would create a “blowout [direct-to-consumer] product.”

As the completion of the transaction has inched closer, Discovery president and CEO David Zaslav and his executive team have been able to divulge greater amounts of detail about the post-merger plans.

Two weeks ago, during Discovery’s year-end investor call, Zaslav said the company is likely to take a three-pronged approach to its streaming business, providing both an ad-free and ad-light offering, in addition to a free service.

The mega-merger will see AT&T spin off WarnerMedia and combine it with Discovery. AT&T will receive around US$43bn in a combination of cash, debt securities and WarnerMedia’s retention of certain debt. Meanwhile, AT&T shareholders will receive a 71% stake in the new company and Discovery shareholders will receive the remaining 29%. The company has previously said that it expects the merger to achieve around US$3bn annually in cost synergies.

There remain many unanswered questions about the combined service, including what it will be called, how it will be branded and how much it will cost. As it stands, in the US, Discovery+ costs US6.99 per month without ads and US$4.99 with ads. HBO Max is US$14.99 without ads and $9.99 with ads.

Wiedenfels did not discuss pricing but said, as Zaslav has said many times before, that bringing together the factual might of Discovery with the scripted strength of WarnerMedia will create a formidable force that can take on Netflix and Disney.

“We believe that the breadth and depth of this content offering is going to be a phenomenal consumer value proposition,” he said.