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The streaming landscape moves with the $ 43B AT&T Discovery deal

NEW YORK (AP) – AT&T announced Monday that it will combine its WarnerMedia media mass assets, which include HBO և CNN, with Discovery Inc. to create a new $ 43 billion media outlet. :

The deal, which is not expected to be completed until next year, will create a new public trading company that will enter the streaming arena, which has been flooded with new players for the past two years, including AT&T և Discovery’s HBO Max. respectively և Discovery +. Greater established services such as Netflix, Disney and Amazon remain to win. Netflix has more than 200 million subscribers worldwide and Disney has more than 100 million subscribers.

It’s a big step forward for AT&T, which struggled with the Department of Justice less than three years ago in an antitrust dispute when it sought to acquire Time Warner Inc. for more than $ 80 billion. It notes that for the second time this year, AT&T is launching a business that is not directly related to its core broadband business. In February, the company ousted DirecTV for part of the $ 48.5 billion it paid for satellite TV service in 2015.

The deal has yet to be approved by Discovery shareholders: regulators before it can be finalized. AT&T shareholders do not need to vote on the deal.

Here’s a look at how the combination can affect viewers, investors, employees and competitors.

WATCHES:

Nothing will change for HBO Max և Discovery + subscribers yet. AT & T executives told investors that their plans for HBO Max remain in place. That includes the $ 10 monthly advertising version of the service, which is scheduled to be announced this week, in June in Latin America, in the Caribbean.

Going forward, the services can be combined with a number of horses. They can be part of the package, as Disney has done with its separate services – Disney +, Hulu և ESPN +. They could stay separate or merge into one mega service. Geography will also be a factor. Discovery CEO David Aslav told investors that the company would find out what to do in each market, “We will probably experiment in many markets.”

Pivotal Research Group chief analyst Jeff Wlodarczak says he believes the combination of the two services is a possible outcome, but that will not happen for several years.

“You don’t want to potentially disqualify Discovery + customers իրավունք to be fair և To be fair, the average HBO Max customer and Discovery + subscriber are probably quite different,” he said as Discovery + focuses on reality applications. և HBO Max has more script shows. ,

Pricing is also a big question mark. HBO Max costs $ 15 a month and Discovery + costs $ 5 a month, or $ 7 a month without ads.

INVESTMENTS:

If the deal goes through, AT&T shareholders will have 71% of the new company and Discovery shareholders 29%.

AT&T, which has long been known for its large dividends, said it plans to “restore” dividends after the deal is completed. This will reduce the dividend payout ratio, which is the percentage of net income paid to shareholders per share, from about 60% to 40%.

That means there will be no immediate redemption for shareholders, says Neil Begley, senior vice president of Moody’s Investors Service. But it will save AT&T money by investing in other 5G այլ other broadband initiatives, which will lead to better results in the long run.

“If you are there to earn (dividends), you probably will not be impressed,” he said. “But in the long run it is better for the shareholders.”

WORKS

AT&T և Discovery said the combination would save $ 3 billion a year to invest in content և streaming service. This probably means dismissal, as the departments are merged and reorganized.

“Certainly there will be some cuts,” said CFRA analyst Tuna Amobi.

Since its acquisition by AT&T, WarnerMedia has already gone through two rounds of layoffs, including a 5% to 7% cut in November, with around 1,000 jobs.

On the other hand, being the head of a media company after being run by a company with little entertainment experience could be a welcome change for WarnerMedia employees, said Begley, a Moody analyst.

“They will feel the traditional media culture again,” he said.

RECOMMENDATIONS:

Netflix still dominates the streaming service, being the most established player in the world with more than 200 million subscribers. Amazon and Disney + are in the top three.

The WarnerMedia և Discovery combination could make it the “big 4” of total entertainment streams, said Tim Hanlon, CEO of The Vertere Group.

“I think this combination is a legitimate opportunity for these two streaming services to rise to a ‘mandatory’ level,” he said.

This is likely to lead to greater consolidation with smaller players, including NBCUniversal’s Peacock, ViacomCBS ‘Paramount + and others. There are about 200 to 200 niche streaming services in the United States alone, Hanlon said.

“I do not think that seeing deals is over yet. “There is still a lot more consolidation in the flow area,” Hanlon said.

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