The combination of AT&T Inc.'s Warner Media LLC and Discovery Inc. will create a streaming behemoth, but AT&T CEO John Stankey sees the potential for the offering to get even bigger with different types of content.
Speaking at J.P. Morgan Global Technology, Media and Communications Conference May 24, Stankey said he could see the biggest streaming platforms — Netflix Inc., The Walt Disney Co.'s Disney+ and Warner Media's HBO Max — starting to aggregate more than just TV shows and movies.
"If you have one of those platforms, why wouldn't you be stepping back and asking what else you could use to aggregate and distribute on it? I think it's entirely possible that those platforms that have very attractive customer bases and a large number of hours of engagement a day can ultimately aggregate other types of content and distribute them," Stankey said.
Possible other content types might include music and gaming, Stankey added.
The CEO also believes that there is a role for wireless carriers like AT&T to play in aggregating and distributing content.
"I think it will be a natural point if you have a wireless subscription to possibly get some things aggregated at a discount in the new form of bundling moving forward," Stankey said.
But carriers do not need to be content owners to aggregate, and Stankey said Warner Media will be stronger on its own, separated from AT&T's communications holdings. In the streaming age, "what’s become clear is that the opportunity for direct relationships with customers is truly going to be a global opportunity," Stankey said. Conversely, most of AT&T’s connectivity focus is on the U.S.
As such, AT&T concluded that it was "time to unleash the media assets" and to let them pursue a multi-hundred million subscriber opportunity via the merger with Discovery.
Discovery President and CEO David Zaslav said during a May 17 conference call that the combined entity could ultimately count between 200 million and 400 million subscribers, though he did not give a time frame.
Warner Media reported a combined 44.2 million HBO network and HBO Max streaming customers in the U.S. and 63.9 million globally at the end of the first quarter, while Discovery executives told analysts that the company had 15 million global paid streaming subscribers as of April 28.
AT&T agreed May 17 to combine Warner Media's entertainment, sports and news operations with Discovery's nonfiction and international entertainment and sports businesses to form a stand-alone company. The deal will see AT&T receive $43 billion in cash, debt securities and Warner Media's retention of certain debt.