Jon Steinlauf on Warner Bros. Discovery's Upfront Strategy

Upfronts season is upon us, and even though Warner Bros. Discovery is less than three weeks old, the company's ad sales team is preparing for what's expected to be a record year. Jon Steinlauf, who was named ad sales chief for the new company just prior to the WarnerMedia-Discovery close on April 8, spoke publicly for the first time post-merger during Adweek’s Convergent TV Summit Wednesday, outlining his upfront and ad sales strategy for the company. “When you merge with a competitor you get infinitely more knowledgeable about the marketplace, you get to understand what advertisers have done with the other portfolio,” he told Adweek TV editor Jason Lynch. This is the second time Steinlauf has navigated a merger just ahead of upfront season. Discovery and Scripps finalized their deal in 2018, and Steinlauf is using those learnings for merging two ad sales teams on the fly four years later. “In terms of the presentation, Warner is taking the lead,” said Steinlauf, noting that WarnerMeda has been in the traditional broadcast upfront week for over 10 years, and in the venue at Madison Square Garden for over seven years. “They know the ins and outs, they were very much ready,” he said. “Now we move in as Discovery, but we move in with our new partners who are familiar with how things work.” As for actual upfront plans, Steinlauf said the combined company will highlight the best offerings from all the networks, featuring the highest rated shows, including news, sports, scripted and lifestyle. “It’s going to be a formidable player at the highest level of this marketplace, and affordable,” he said. Closing the deal There was no communication between WarnerMedia and Discovery during the closing process due to regulations, which forced Steinlauf to improvise as he tried to prepare for the merger. “All I could do was just study,” he said. “I watched those networks carefully, a lot of CNN, a lot of TBS, a lot of TNT, a lot of Adult Swim, a lot of truTV and getting to know the programming. The advantage you have in our business is you can go home at 8:00 at night and you can see everybody’s air, and then you see the streaming services.” A big emphasis of the combined company will be streaming, focusing on each company's major streaming service, HBO Max and Discovery+. CFO Gunnar Wiedenfels confirmed last month that both platforms will ultimately be consolidated into a single service, but offered no details about when and how that might occur. The company will offer both ad-free and ad-lite products for the combined streamer, and will first offer the services as a bundle while it figures out how to combine the two platforms. Steinlauf also emphasized the two platforms on Wednesday, particularly the AVOD offerings. HBO Max with Ads launched last June, and Discovery+ debuted January 2021. “Let's not forget the importance of the streaming business. The AVOD layer of HBO Max is all of 11 months old, and the AVOD layer of Discovery+ is all of 15 months old,” said Steinlauf. “So these are two babies, and while I couldn't talk to anybody and our team couldn't talk to anybody, we had access to everything that the world sees.” Streaming is expected to play a big role in the upfront, with Steinlauf noting that about 20% of every ad sales dollar coming in is nonlinear. HBO Max and Discovery+ represent about 20% of every nonlinear dollar, with the other 80% coming in from VOD, authenticated TV Everywhere apps, social and digital, including CNN.com. “There’s 42 million homes in America that don’t subscribe to cable, that’s really the frontier,” he said. “Really what the advertisers are asking for is get those 42 million homes, extend my reach, because those homes may not watch a ton of set top box television.” While "the leadership team" will decide if HBO Max and Discovery+ are completely merged or bundled a la Disney's streamers, Steinlauf said "we're very happy to have this whole menu of digital video and digital offerings going into an upfront where the streaming and digital budgets are through the roof.” In this upfront, Steinlauf said he’ll be expanding his Discovery Premiere offering, which is always a top upfront priority for him and allows advertisers to buy a mix of the 30 most-watched shows from across the Discovery portfolio. That offering will be broadened to include WarnerMedia inventory, including entertainment, sports and news, he said. Merging the team As he prepares for the upfront, Steinlauf is also focused on merging the WarnerMedia and Discovery ad sales teams. “These companies have been through layoff after layoff, after merger, after integration, after spinoff. What we have in this organization is an all-star team at every level in every city,” said Steinlauf. “The question really is how do you take two great sales organizations and make one great sales organization holding on to the best of the best.” As the company prepares for an upfront that could be earlier than last year, Steinlauf said that Warner Bros. Discovery is working to figure out what the best organizational design that will satisfy the needs of the clients and the internal needs of the company. “I think if there’s one quality that we’re looking for in a great ad sales executive into the future of this business, it’s team player. Somebody who puts the organization's needs first above the individual needs or the network needs or smaller group needs,” he said. “The most important thing is the power of the combined portfolio and the power of the combined ad sales organizations,” he added. “I’ve seen just about everything there is to see in cable ad sales. I really think of this is a merger of three great cable network groups. Throw an HBO Max and Discovery+ as the new babies, and we can do anything, we have everything, we can do anything.”