Discovery-WarnerMedia merger getting no pushback, CEO says

Warner Bros. Discovery
Discovery’s direct-to-consumer business has been growing rapidly since the launch of Discovery+ in January. (Warner Bros. Discovery)

Discovery and WarnerMedia’s blockbuster deal to merge their entertainment and streaming businesses appears to be smoothly sailing toward final approval.

During today’s earnings call, Discovery CEO David Zaslav said he was recently in Washington, D.C. and didn’t pick up on any potential headwinds for the deal that will bring together HBO Max and Discovery+ under one banner.

“There’s broad support for this transaction. We haven’t heard any pushback, we haven’t seen any public pushback,” he said. “Right now, it feels for us on every level like we’re seeing green lights. We’re not seeing any yellow or red lights.”

Zaslav added though that Discovery and WarnerMedia can’t control the timing around certain regulatory approvals from the IRS and the U.S. Justice Department. When the companies first announced the merger in May, they predicted the deal would close in mid-2022.

“Ultimately it could be significantly sooner. It could be a little later. We’re just not in charge of the timing,” he said. “But we feel very good about it at this point. We’re still hoping that we could really get lucky and it will happen a lot sooner and that’s what we’re all pushing for.”

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Based on meetings he had during last month’s Sun Valley Conference, Zaslav predicted that the entertainment industry will see more consolidation in the future as major players continue to build up more content and IP.

“Disney and Netflix have gotten across the lake and we think that [Warner Bros. Discovery] will be the third global streaming service that’s successful and sustainable. That’s our mission and a lot of the other IP that are subscale will probably be raising their hand. There will be a lot of consolidation and some of that may be opportunities for us but right now I really like where we are,” he said.

Discovery’s direct-to-consumer business has been growing rapidly since the launch of Discovery+ in January. The company had 17 million total global paid streaming subscribers at the end of the second quarter and today said that total is 18 million.

Discovery CFO Gunnar Wiedenfels said that most of Discovery+’s international subscriber growth runway is still unfolding with more launches in markets like Brazil, Canada and the Philippines coming later this year. Zaslav said Discovery is looking at launching in international markets with the Discovery+ ad-supported product to gain more traction and possibly more revenue. The company said it will price its service higher in international markets where it has live sports rights.

While the service works on expanding its global distribution footprint, it’s also still filling in some holes in the U.S. The company said that Discovery+ will launch on the Cox Contour pay TV platform and Vizio smart TVs in the coming weeks.