PremiumMonday’s merger of WarnerMedia’s entertainment, sports, and news assets with Discovery’s non-fiction, international entertainment and sports businesses promises to create a new global streaming giant challenging incumbents across the world.
The deal will create substantial value for WarnerMedia’s parent AT&T Inc. and Discovery Inc. shareholders by accelerating plans of both companies to lead direct-to-consumer (DTC) streaming services for global consumers, according to a joint statement released on Monday night. The combined entity could become a powerful competitor in Indian web streaming, media experts said, though details are sketchy on how the deal would pan out for specific geographies.
Premium Premium Among streaming services, Disney+Hotstar is the leader in India with 34 million subscribers (including Indonesia), Amazon at 17 million and Netflix at 4.6 million.
Warner’s streaming service HBO Max is currently unavailable in India and discovery+ launched in the country only last year and is yet to find its feet, a media analyst said on condition of anonymity. “The new entity may be seen as a bit of a premium proposition but will need local content to survive," the analyst said.
HBO Max is popular in the US where it recently released films such as Wonder Woman 1984 and Godzilla vs Kong online along with their theatre release. WarnerMedia Entertainment Networks did not respond to Mint’s queries. The streaming service discovery+ has the advantage of a catalogue from Eurosport, a pan-European television sports network that is a subsidiary of the company, but is nowhere close to properties such as the Indian Premier League that Disney has. Discovery India did not comment on the global deal and its impact on India.
Warner owns TV channels such as CNN International and children’s channels Cartoon Network and POGO in India, and distributes Hollywood movies. Warner will own stock representing 71% of the new global entertainment company and Discovery will have the remaining 29%, the two said. The Warner-Discovery deal may seem inspired by Walt Disney’s acquisition of Rupert Murdoch’s 21st Century Fox Inc. in 2017, but Star network in India was entrenched and profitable in the broadcasting and streaming sectors, the media analyst said. Star operates several entertainment channels in Hindi and other Indian languages.
In contrast, Discovery may have seen its revenue hit after the new tariff order of the Telecom Regulatory Authority of India in 2018, which mandated unbundling of channels and reduced the reach of niche, infotainment channels. Discovery operates channels such as Discovery Channel, TLC and Animal Planet. Last year, Warner closed down HBO standard definition and high definition linear movie channels in India and Pakistan, though it had hinted at the significance of the Indian market earlier.
“If you want to be a strong global player, you have to be strong in Asia-Pacific. In India, we don’t have the scale that we want and where we have to be. In order to get there, the workhorse will be HBO Max," Gerhard Zeiler, head of international, WarnerMedia had said in a fireside chat at the APOS Summit 2020, an event curated in September by Media Partners Asia, an independent provider of research, advisory and consulting services in media, telecom, and technology.
Warner already has a foothold in countries such as China and Japan. The company wants 70% of its revenue coming from international markets in 10 years, as opposed to 30% at present, Zeiler had said. Warner and Discovery TV channels, which belong to the English entertainment and infotainment genres, remain niche channels in India, said Karan Taurani, research analyst at Elara Capital Ltd. The big space to capitalize on remains digital. “Bundling their content together makes sense and can be a good boost to both companies. Media consolidation is the only way to go, especially in a market such as India, which is so fragmented because of multiple regional languages," Taurani said.
It also bodes well for the content ecosystem, the media analyst quoted earlier said. “Just like the entry of general entertainment channels such as Colors in the late 2000s had brought in experimentation in TV shows, this could also compel over-the-top (platforms) to up their game," the person said.
Netflix did not comment on the possibility of fresh competition in India.
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