How the WarnerMedia-Discovery Merger Will Affect the Upfront

While Covid-19 remains the ultimate upfronts week disruptor—entirely wiping out the traditional May week of presentations last year—AT&T and Discovery are still making a strong run at the title. The companies upended this year’s upfronts week before it even began on Monday morning by announcing a merger that will radically reshape the media landscape: they will combine their media assets, WarnerMedia and Discovery, to create a new streaming-centric media company. The deal isn’t expected to close until mid-2022, but it has immediate reverberations for the companies as well as marketers, given that Discovery and WarnerMedia are scheduled to hold their upfronts presentations over the next two days—events that were conceived and finalized prior to this morning’s bombshell news. WarnerMedia’s upfront presentation is set for Wednesday morning, the company’s first under new ad sales chief JP Colaco, who arrived at last October. Discovery, led by ad sales chief Jon Steinlauf, also has an upfront first of its own: The company is making its upfronts week debut Tuesday morning, a move first announced almost two years ago. Discovery will address today’s news at the beginning of Tuesday’s upfront presentation, but did not comment on how the merger would affect its upfront talks. Meanwhile, WarnerMedia will go ahead with its presentation as scheduled and said the news will have no impact on the company’s upfront negotiations or 2021-22 ad sales financial commitments. Each company will keep its presentation focused on its messaging: Discovery will spotlight Chip and Joanna Gaines’ upcoming Magnolia Network (the subject of this week’s Adweek cover story, which also features Steinlauf previewing his upfront strategy for the network) and its new Discovery+ streamer, while WarnerMedia will tout its ad-supported tier of HBO Max, which is coming in June. Day-and-Date Film Releases Are Biggest Driver of HBO Max Sign-Ups But good luck getting marketers to focus on many of those details in the wake of that merger announcement. Instead, the feeling will likely be similar to what transpired at the NewFronts earlier this month, when Verizon Media went ahead with its already-filmed presentation, just one day after its parent company Verizon—another telecom behemoth that has struggled with its media assets—said it would sell the business to Apollo Global Management for $5 billion. Business as usual in upfront talks That said, when it comes to this year’s upfront negotiations, marketers expect it will be business as usual—at least until the merger is finalized. “I would guess for this year, it doesn’t change any plans. We’re already in discussions with both properties, so I would have to believe that this upfront proceeds as usual,” said David Campanelli, co-chief investment officer, Horizon Media. In other words, it will be similar to how buyers proceeded during the 2018 upfront, conducting separate talks with Disney and Fox ahead of that merger closing in March 2019. Marketers made their deals with Disney and Fox’s ad sales teams, and then those upfront agreements were honored once the deal was finalized and the companies—and the networks—were combined. As for how buyers will approach the new company, Campanelli said, “we’d look at the combined company the same way we evaluate the rest of the market: We always take a bottoms-up approach, selecting the properties [networks and streamers] that are the right environments for our brands, at the right cost, delivering the right audience, regardless of parent companies or mergers.”

TV Upfronts

How the WarnerMedia-Discovery Merger Will Affect This Year’s Upfront

The companies will unite next year, but are conducting business separately

Jason Lynch

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Jason Lynch