HBO Max and Discovery Plus to Merge Into One Service

The WarnerMedia and Discovery merger has been finalized. The new company, dubbed Warner Bros. Discovery, will bring significant changes to HBO Max and Discovery+ streaming and will affect the CNN+ streaming app. It’s expected that all the content will be aggregated into one streaming service, but it won’t happen immediately.

Discovery CEO David Zaslav first led the merger discussions in May 2021. The new service will combine WarnerMedia’s scripted, theatrical, and TV content with Discovery’s massive library of unscripted and documentary specials and series from the Discovery + family, including HGTV, TLC, ID, Food Network, OWN, Cartoon Network, and Magnolia Network.

At the end of 2021, Discovery had 22 million streaming subscribers, and HBO Max had nearly 74 million. At the onset of the merger, Discovery CFO Gunnar Wiedenfels, who will also serve as CFO of the newly combined Warner Bros. Discovery, acknowledged the challenge of merging the two services: “Close to 100 million people are going to be affected as we make those changes. So that will need some very, very detailed and disciplined planning.”

Wiedenfels continued, “The question is, in order to get to that point and do it in a way that’s actually a great user experience for our subscribers, that’s going to take some time. Again, that’s nothing that’s going to happen in weeks — hopefully not in years, but in several months — and we will start working on an interim solution in the meantime. So right out of the gate, we’re working on getting the bundling approach ready, maybe a single sign-on, maybe ingesting content into the other product, etc., so that we can start to get some benefits early on. But the main thrust is going to be harmonizing the technology platform. Building one very, very strong combined direct-to-consumer product and platform, that’s going to take a while.”

Discovery Plus currently costs $4.99 per month with ads or $6.99 without ads. HBO Max is $9.99 per month with ads, and its ad-free tier is $14.99. Nothing has been said about how much Warner Bros. Discovery will cost, though there have been hints about ad-free and ad-lite subscriptions.

Zaslav hopes to reach 200 million subscribers and is looking to reach “300, 400 million subscribers at some point in the future." In comparison Netflix ended 2021 with nearly 222 million, Disney+ with nearly 130 million. And he plans on getting there with a “broad menu of content to super-serve every demo and every family member.” Zaslav added that “we have a content library as big as Netflix’s.”

“To date, we have yet to see evidence of any media company being able to compete with Netflix and the other major streaming services without spending a lot more on content,” Analyst Michael Nathanson of the Wall Street Research firm, MoffettNathanson noted. “Warner Bros. Discovery will likely look at re-allocating some of their combined content spend, which in addition to the cost synergies, should provide the company with more to invest in HBO Max going forward.”

Zaslav discussed plans to spend $20 billion on content. In an interview with Variety, he called theatrical films “the top of the funnel” and plans to overhaul DC Entertainment that includes Batman, Superman, and Wonder Woman. There are DC Films already in the works including sequels to Shazam, and Aquaman, the third Wonder Woman with Gal Gadot and the anticipated franchise Black Adam starring Dwayne Johnson.

Once the merger closed, Zaslav sat down with Oprah Winfrey on the Warner Bros. Lot in Burbank, California, where he discussed the future of CNN. With all of the scandals in the past years, he said he wants CNN to focus on facts and set itself apart from other cable news that have become “advocacy networks.” After the review of CNN and CNN+, they have decided to shut down the CNN+ premium streaming service as of April 30.

Where HBO Max is in the United States, Discovery is available in 220 countries and 50 languages. Its global channels include Discovery Channel, TLC, ID, automotive brand Turbo, Animal Planet, and Science Channel, along with building the reach and relevancy of HGTV, Food Network, and Travel Channel.

In a statement at the merger's close, David Zaslav declared, “With our collective assets and diversified business model, Warner Bros. Discovery offers the most differentiated and complete portfolio of content across film, television, and streaming. We are confident that we can bring more choice to consumers around the globe while fostering creativity and creating value for shareholders. I can’t wait for both teams to come together to make Warner Bros. Discovery the best place for impactful storytelling.”

The merger brings promise on two fronts. First, it provides AT&T with a much-needed $43 billion cash infusion that the company plans to pay off its increasing debt in recent years and invest in 5G networks. And, pulling together the theatrical library of WarnerMedia, including the content on HBO Max and the thousands of shows of unscripted and documentary series from Discovery, will position the company to compete with the big three—Netflix, Amazon Prime Video, and Disney+.

Traveler's picture

Dropped HBO on cable. Might pay for a combined ad free if the price isn't outrageous.