Commentary
Another Possible Merger Involving Warner Bros.? Please Stop The Insanity
- by Wayne Friedman , Staff Writer, December 22, 2023
Media mergers? Maybe we should just yawn. This doesn’t necessarily equate to long-term strength and leverage in the marketplace.
Ask Netflix why. Over the last decade it has been able to outwit the big legacy TV-movie-based media companies -- that have merged or transitioned -- at their own game: offering consumers lots of different “quality” TV shows.
Netflix helped promote a new way for consumers to access many new and library TV series and movie content without the need for “channels,” fancy high-cost "cable TV bundles," and all the rest.
Netflix, for all intents and purposes, has won this game at least for the near term.
With their backs against the wall, Warner Bros. Discovery and Paramount Global are now reportedly in talks for a possible merger.advertisement
advertisement
Richard Greenfield, partner and media analyst of LightShed Partners, believes that creating an even bigger streaming entity for these companies -- via their respective platform Max and Paramount+ -- is the wrong approach.
The "bigger isn’t better" scenario has not worked for some time in legacy TV-movie media -- apart from Comcast’s purchase of NBCUniversal over a decade ago.
Unfortunately, Warner Bros. has seen far too many variations on a corporate ownership theme.
This started with the Warner Communications-Time Inc. merger in 1989. Transitioning to Time Warner Entertainment (1992-2001). Moving on, a decade later it became AOL Time Warner (2001-2003). Then went back to Time Warner (2003-2018).
It was then on to AT&T’s purchase of the company in 2018 -- under its WarnerMedia thing -- only to last four years. And now to Warner Bros Discovery (2022).
Longtime Warner Bros. employees must be exhausted with yet another possible company-wide combination.
To an extent, Greenfield's point is to abandon all this corporate maneuvering. WBD should just go back to the focus on a well-known identifiable consumer high quality brand that everyone knows -- HBO.
Greenfield says the HBO name remains a clear TV winner -- a TV brand still garners major Emmy nominations and awards. A broader view says this renewed focus should apply to all legacy TV and movie product competitors -- just focus on “quality” entertainment.
He may have a point in that regard. Think one key Warner Bros. big of intellectual property it released this past year, a kind of out-of-the-box entertainment:
Yes, that may sound crazy. But this isn’t just a frivolous movie by any stretch. It's a whimsical re-imaging of a popular young girl doll/toy.
And not just any doll/toy. “Barbie’ has become Warner Bros.' best-selling theatrical movie of all time. The theatrical movie monster hit, “Barbie,” now at $1.4 billion globally.
Sounds crazy when you think the movie company has been around for 100 years. It sounds even more crazy that it is not an action/adventure movie with no superhero.
Consider that Warner Bros. also makes top flight TV shows -- all this in increasing competitive streaming age. Top quality entertainment repairs all missteps, lasting longer than any transitory media merger.
Wall Street investors are rolling their eyes over the latest news. A day after this news of this possible merger both stocks --Warner Bros. Discovery and Paramount Global -- were down 3% in mid-day trading. End of story.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, many of the early mergers cited just didn't make much sense---which uis why they didn't pan out. In the current environment---with not enough viewing to support so many individual ad sellers and CTV ad-free services---some mergers make sense. As linear TV isn't going to fall to zero penetration but will remain a major source of content and ad messages for up to half of all TV homes, it makes sense for a Warner Bros/Discovery---which is vested in cable channels but has no presence in broadcast TV---- to merge with Paramount which tilts in the opposite direction---strong in broadcast but weak in cable. This assumes that whatever deal is worked out is predicated on a realistic plan for the streaming part of the equation.
It seems to me that the folks at Warner Bros--Discovery are on the right track in realizing that it doesn't pay to spend huge sums on over priced Hollywood "original" content when many subscribers would be perfectly happy with the huge amount of broadcast/cable fare as well as other non-premium content in a bundled library offer----providing the price is right. The trick is to create a bundle that is economically attractive and offers a wide variety of content---which is what this merger would do. The second part of the trick is to fully integrate the ad-selling and programming procurement aspects within the bundle---broadcast TV nationally and locally, cable and streaming---to maximize usage and ad revenues. Finally, there is no need to be the biggest service in terms of users or subscribers---no matter what the cost. Just find your natural usage level---based of a mix of content that you can exploit profitably and you should do well.