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Zaslav talks up Discovery-WarnerMedia merger, vows ‘shock-and-awe’ strategy

Discovery president and CEO David Zaslav says the blockbuster merger of Discovery and WarnerMedia will create the most “compelling menu of IP” for global consumers, as the merged entity prepares to take on the likes of Disney and Netflix.

David Zaslav

Appearing virtually at the Goldman Sachs Communacopia Conference in LA, Zaslav said that when the time comes, the combined company – to be known as Warner Bros Discovery – wants to be in a position to arrive with a “shock-and-awe global strategy” in terms of the “menu, diversity and power of the content that we have in one place.”

Exactly what that strategy will look like remains to be seen, with Zaslav keeping his cards close to his chest on the “go-to-market strategy,” which he said will be revealed in the future.

Part of the reason for his coyness, said Zaslav, is that the company “doesn’t want to be confusing” to investors and consumers, opting rather to wait until the broader strategy is cemented (and the deal approved by regulators) before outlining it to the world.

In terms of whether ads would be part of a potential direct-to-consumer offering from Warner Bros Discovery, Zaslav said it is a possibility and perhaps a likelihood. “I think the ad-light market could differentiate us,” he said, adding that both an ad-free offering and a fully ad-supported one were also possibilities.

When it comes to subscriber numbers, Zaslav said Warner Bros Discovery will be in a good position to compete with Netflix, Disney and others when it officially comes to market, but it will need to move quickly. Globally, Discovery+ currently has around 18 million subscribers while HBO Max has more than 70 million.

“The disadvantage is that Netflix is already at scale, and Disney has gotten off, to their credit, to an extraordinary start and their product isn’t [fully] rolled out but they are scaling. The good news is that [WarnerMedia] is scaling as well. They’re in 48 million homes in the US and Netflix is in 60 [million],” he said.

The transaction, still on course to be completed by the middle of next year, will bring together WarnerMedia’s HBO, CNN and HBO Max with Discovery’s US cablenets and its direct-to-consumer offering Discovery+.

The deal, revealed in May, 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, while AT&T shareholders will receive a 71% stake in the new company and Discovery shareholders will take the remaining 29%.

New York-based Zaslav, who has been tapped to lead the new entity, joined the Goldman Sachs conference from LA where he said he has been “doing everything I can to learn about the history of Warner.”

To date, the transaction has gone according to plan, with Zaslav noting that “nothing in the process has surprised us thus far,” as the Discovery, WarnerMedia and AT&T teams work with regulators to move the deal forward.

Appearing separately at the Goldman Sachs conference, AT&T CEO John Stankey said a primary reason for spinning off WarnerMedia was down to the fact the media company is undervalued by investors due to its current position within AT&T.

By separating WarnerMedia from AT&T, it gives the company’s shareholders a clearer “investment thesis so people can understand the business and find the right place to put their capital, based on the profile of the great opportunities that the media business and the communications business have in front of them,” said Stankey.


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