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Oprah and CNN: AT&T is merging media business with Discovery

ap photo In this 2014 file photo, people pass an AT&T store in New York’s Times Square. AT&T will combine its media operations that include CNN HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.

NEW YORK — The merger of Discovery and AT&T’s WarnerMedia operations, marrying the likes of HBO and CNN with HGTV and Oprah Winfrey, is another illustration of the head-spinning speed in which streaming has transformed the media world.

The companies are essentially placing a $43 billion bet that they’ll still be in the mix when consumers decide how to spend their monthly entertainment budgets.

The agreement was announced Monday after AT&T CEO John Stankey and his Discovery counterpart, David Zaslav, worked out the details in Zaslav’s Manhattan brownstone over the past two months.

“I think, together, the combination makes us the best media company in the world,” said Zaslav, who will run the new company if approvals are granted, probably sometime next year.

The deal also represents a strategic retreat for AT&T.

The hope for the newly merged company is that, with a wider array of material than either can offer on its own, it can join Netflix, Amazon and Disney in the widely acknowledged top tier of streamers.

Analysts say it also makes it imperative that services below that tier — think Paramount+ or Peacock — find some way to ramp up or risk being left behind.

WarnerMedia and Discovery both launched their own streaming services, HBO Max and Discovery+, within the past two years. It’s still not clear whether the merger will result in a single streaming service or several bundled together, but it will have a vast array of content to offer: scripted and reality TV, movies, sports including the NBA and NCAA men’s basketball tournament, and news with CNN.

With consumers figuring out which streaming services they use regularly and which they can give up, that depth means a better chance they will use this new one regularly, said Raj Venkatesan, professor of business administration at the University of Virginia. The average U.S. household spends $40 a month on streaming services.

“It either has something for everyone in the family, or is so diverse that it is hard to explain,” said Jim Nail, an analyst for Forrester Research.

David Schweidel, a business professor at Emory University, questioned whether consumers will be better off with the deal.

“If I do decide to cut the cord and I need three to five services to get what I had before, that bill could easily approach what I was paying for cable before,” Schweidel said. “This may end up hurting consumers.”

HBO Max and HBO have a combined global subscriber base of about 63.9 million, and Discovery+ has about 15 million subscribers. That compares with Netflix, which has more than 200 million subscribers worldwide, and Disney+, which counts over 100 million.

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