Perhaps at any other time the recent news of
Paramount Skydance’s move to buy Warner Bros. Discovery would seem to be blockbuster news.
But considering the longtime projections (starting about 10 years ago)
among analysts of a decline among live, linear TV networks -- amid talk of consolidation -- the Paramount-WBD news may seem a bit less dramatic.
A bigger story is that the fast all-cash bid (with no
share price information) was rushed to counter possible offers from companies “such as Amazon and Apple,” per the Wall Street Journal report. That kind of news would really turn
heads.
While strong positive cash flow does continue for linear TV networks, the declining trend continues. So what would be the plan for those two digital-first companies? We can
only guess.
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Both those companies would benefit from WBD’s strong respective movie/TV studio operation -- a core business that is crucial for future content generation.
For Apple, think about the prospects for Apple TV+ -- somewhat of a laggard in terms of growing streaming share -- with WBD. The Apple streaming service would jump up with the addition of
HBO Max.
That would add around 58 million U.S subscribers. This could be complementary to Apple TV+, which is estimated to have 25 million to 45 million subscribers. (We are unsure
of the overlap -- the subscribers who have both these services).
In addition, Apple could see benefits. One report suggests Apple TV+ is registering $1 billion in annual losses,
according to The Information.
At the same time, HBO Max and its movie/TV studios are now in a regular positive cash flow situation.
For Prime Video, WBD could add more
traditional linear TV businesses.
Although declining, linear TV is still expected to hang around for the long term -- leveling off around 30 million pay TV U.S subscribers (down from 60
million currently).
Is there some value Amazon would extract from those U.S. consumers that isn’t entirely clear presently? Is it the same for Apple in this regard?
Analysts believe the quick Paramount Skydance move was to also thwart WBD’s effort to spin off its studios/streaming business from the cable TV networks -- which as a separately public
company could see rising share pricing.
Is anyone else looking to jump on this sudden sprint to the finish line?