WarnerMedia-Discovery Merger Will 'Probably' Close Before the Upfront

Warner Bros. Discovery is becoming closer and closer to a reality, with the upcoming Discovery and WarnerMedia merger on track to close in early Q2—and "probably" ahead of the upfront—Discovery executives said Thursday morning during the company’s fourth quarter earnings call. "Hopefully, we'll be closed before the upfront, it looks like that'll probably be the case," said Discovery CEO David Zaslav—who will lead the combined company—during what he noted would probably be Discovery's final solo earnings call. . "And then we'll be able to start to put together an upfront strategy." Currently, Discovery and WarnerMedia have scheduled separate events during upfront week in May—Discovery's will be Tuesday morning, May 17, and WarnerMedia's is set for Wednesday morning, May 18—but those plans could change if the deal closes ahead of that. Streaming is set to play a large role in the combined company, but there’s still room for linear. “Our goal is to compete with the leading streaming services, not to win the spending war,” said Zaslav. “Perhaps most importantly, we are not solely dependent on one business model as we reach across multiple platforms and touchpoints. Every leg of the stool, from linear, to direct-to-consumer to content production and modernization.” Discovery Latest Upfront Week Presenter to Set In-Person Plans Zaslav went on to say that the new company plans on being “careful and judicious,” and that the companies’ combined content spending doesn’t have to significantly increase after the deal closes. “We want to compete against Disney and Netflix, but we're a very different company,” he said. The new company will rely on its “very identifiable” IP, saying it will be “much broader” than Disney, using HBO’s Euphoria, Succession and The Gilded Age as examples. Discovery spent more than $4 billion last year on content, which CFO Gunnar Wiedenfels said put the company at peak spending levels. Wiedenfels said he sees “a lot of monetization opportunity” left in linear, and said that learnings from the previous Discovery and Scripps merger showed the company how to optimize across a portfolio of networks. “We were able to look at the ratings trends to outperform the industry on a global basis for several years following that combination,” he said. “I think that's a general theme that I would hope to get some traction out of when we combine these two fantastic portfolios as well.” 22 million global streaming subscribers As for Discovery, the company reported 22 million global direct-to-consumer subscribers in the fourth quarter—which includes Discovery+ and other platforms—up two million from a quarter ago. Discovery+ debuted in January of last year with two price points: an ad-supported tier for $4.99 a month, with five minutes of ads per hour, and an ad-free tier that costing $6.99 a month. “We’ve thoughtfully and tactfully managed our rollout, and will continue to do so while sharpening our focus and gaining perspective for the next leg of our direct-to-consumer journey with WarnerMedia and HBO,” said Zaslav. There’s a lot of opportunity for streaming in the combined company between Discovery+, HBO Max and the upcoming launch of CNN+. Zaslav said in the near term the Discovery team will sit down and develop a “real business plan and discussion” with the team at CNN and CNN+, but noted those talks haven’t yet begun. “This is where you see the difference between a new service that has real has meaningful resources globally,” Zaslav said. “Here we are waking up this morning with a war and seeing CNN is going to multiple correspondents and journalists risking their lives in Ukraine, in Poland, in Russia, on the ground. And there's no news organization in the world that looks like CNN that can do what CNN does. He also talked about "our eventual merged offering" when it comes to the merged company's streaming services—Discovery+ and HBO Max—but did not elaborate on whether those platforms will ultimately be bundled or combined.