In a move that will reverberate in Hollywood and streaming media for years to come, AT&T announced Monday it plans to spin off WarnerMedia into a new entertainment company led by Discovery CEO David Zaslov. This has sweeping implications for family entertainment.
Iconic brands such as Warner Bros. Pictures, TNT Sports, boundary-pushing TV network HBO, and consistently low-rated CNN will move under the same corporate roof as Discovery’s lifestyle and nature TV shows like “Property Brothers,” “90 Day Fiancé,” and “Shark Week.”
The deal, expected to clear regulatory approval next year, will result in job losses as roles are consolidated. But the effects on consumer choices and streaming costs are unclear. Formerly an NBC executive who worked alongside newly christened Warner Discovery CEO Zaslov, Tim Winter now heads up the Parents Television and Media Council (PTC) in Burbank.
“This is an ambitious, aggressive move that is going to redefine the media landscape,” said Winter in a phone interview. “But it signals a return to the cable bundle — if you want any of it, you have to pay for all of it. We fear that the combination of mostly family-friendly Discovery with increasingly toxic HBO will put more children and more families at a greater risk of harm.”
Forming the currently unnamed company ends a five-year, $100-billion-plus failed effort by telecom giant AT&T to shake up Hollywood. This new entertainment behemoth will have similar ambitions, intending to rival Netflix, with currently 200 million subscribers, and Disney, with more than 100 million paying for its streaming services.
To ascend in this crowded marketplace, the new Warner-Discovery venture will aggregate dozens of top film and TV franchises, from “Godzilla vs. Kong,” to Chip and Joanne Gaines’s Magnolia network, from Batman to “Sesame Street.”
The mashup of WarnerMedia and Discovery looks like a mismatch to Winter. “We’ve long seen the exploitation of children on HBO, most recently their show ‘Euphoria’ with explicit sexual content,” he said. “Whereas Discovery, my mother and daughter enjoy watching ‘Cake Boss’ together. Combining these two, you scratch your head and wonder about such a mixed bag.”
Many observers expect a one-size-fits-all approach will be used to distribute their combined programs, which amplifies concerns about where streaming media is headed.
The Fight to Unbundle
In the launch announcement, newly minted executive Zaslov noted their various entities will spend $20 billion annually producing content — a pointed shot at Netflix, which reportedly spends $16 billion per year. Anyone, including families with kids at home, could find something to like in the brands being assembled, especially if offered a la carte.
— Discovery Inc (@DiscoveryIncTV) May 17, 2021
Imagine the ability to create a custom bundle — paying only for Warner Bros. films, DC comics-themed shows, Animal Planet, and Science, while leaving aside the rest. No player in streaming video on-demand has yet offered such a consumer-friendly option, although Disney’s current offerings come close (Disney Plus, Hulu, and ESPN Plus remain separate streaming services).
More than a decade ago, PTC fought for and won a similar “unbundling” battle when satellite radio rivals Sirius and XM merged in a high-stakes deal. Winter and his team relayed a proposal to corporate titans through a friend on the FCC, the regulatory body over radio and TV airwaves.
“Can you give us an option for families?” they asked, recalls Winter. “Give us the ability to have a reduced fee and not have to pay for Howard Stern and stations with explicit rap lyrics. They crafted their Family Package, which has music, news, and clean comedy without the explicit stuff.” Winter says he has been a loyal and satisfied Sirius XM subscriber ever since.
Knowing the players involved this time, he doubts the Warner-Discovery venture will be open to a la carte bundling, which PTC has advocated since the early days of cable TV. “Look at the guy who is going to be at the helm,” he said. “David Zaslov has been an architect of an extremely successful using one model over the past two decades, which is cable bundling.”
Twenty-five years ago, when NBC’s cable division made plans to start MSNBC, Winter worked alongside Zaslov — at the time, responsible for getting NBC’s nascent cable channels carried by operators nationwide. Winter recalls how Zaslov pressured these distributors: if they wanted to air the Olympics for decades to come, they had to also agree to carry several NBC-owned channels.
“That’s the way he has built his success,” said Winter. “I just don’t see any other direction this new company would be headed except product bundling.”
Prepare for More Mergers
If the past is any guide, large-scale consolidation among Hollywood media rivals will not end with one deal. Soon after AT&T acquired TimeWarner three years ago, storied film studio 20th Century Fox was subsumed into the Disney empire.
This week, tech giant Apple has offered to buy MGM Studios while NBCUniversal and ViacomCBS are reportedly considering options. It’s not only confusing for consumers and even insiders. When fewer voices are controlling more programming decisions, some see how it leads to homogenous Hollywood groupthink.
“Children and families continue to get squeezed on this corporate merry-go-round,” said Winter. “Disney is now all but dismissive of concerns about harms to children from the content they produce and distribute. Following that last acquisition, the values of FX cable are in their corner offices.” He pointed to Hulu’s show “Pen15” with scenes of sexual content involving teens, deeming it “appalling” to be produced by a company named after Walt Disney.
For the short term, the streaming wars rage on unaffected. WarnerMedia’s HBO Max service has “In the Heights” and “Space Jam: A New Legacy” set to release, while Discovery Plus continues to draw subscribers eager for predictable and mostly family-friendly reality TV.
The two dominant streamers — Netflix and Disney — each missed their quarterly subscriber targets over the past month. After a year of shelter-in-place orders, perhaps it indicates many are “streamed out” for at least a season.
Leading a nonprofit advocacy group, Winter expected last year to be lean as he couldn’t meet with top supporters. Instead, parents’ engagement with their work has spiked. “Kids were forced in front of screens, and parents were better able to look over their shoulder to see what’s going on,” he said. “They reacted: ‘Those [PTC] guys were right. Sex, violence, and profanity really are being marketed to kids.’”
Even as his group seeks to foster a safe media environment, including with perspective on the Warner-Discovery venture, Winter underlines the vital role of parents monitoring what kids watch — which now requires extra effort. “It’s just so important for them to be more engaged, more active, more involved, and use greater discretion.”