Report: Nordic implications of Discovery, WarnerMedia merger

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This week saw yet another mega merger announced in the world of TV and streaming. In a multi-billion deal, AT&T will combine its WarnerMedia with Discovery. The aim is to form a premier, standalone, global entertainment company.

Mediavision asks: what would the impact be today on the Nordic SVoD market of a merger between HBO Nordic (soon to be HBO Max) and Discovery+ services?

Mediavision’s Nordic Q1 analysis shows that the two services together would obtain an aggregated market share of 15 per cent. Such a new service would not outperform Netflix or Viaplay in number of subscribers, but it would substantially improve the position against Disney+.

Looking at content offering, Mediavision’s content supply analysis shows that Discovery+ has a strong focus on non-fiction content, while HBO Nordic’s supply is skewed towards foreign fiction. Hence, bringing the two together would mean that the combined service would better match the demand of Nordic streaming consumers, according to Mediavision data on viewing by genre. But as we know, “everything else” will not be equal… Lot’s of action can be anticipated, also in the Nordics following this.

The deal between WarnerMedia and Discovery has been described as a forceful move by AT&T to compete more directly with large rivals like Netflix, Walt Disney and NBCUniversal. In a press release, Discovery stated that the new company is projected to bring in revenues of approximately $52 billion in 2023, with an adjusted EBITDA of approximately $14 billion, and operating with a free cash flow conversion rate of approximately 60 per cent.

Big media mergers have been frequent in the US during the past years and competition between traditional, legacy, media actors and digital, streaming-focused actors is increasing even further with this announcement. We have seen a multitude of traditional media actors venturing into streaming (NBCU’s launch of Peacock, ViacomCBS revamp of Paramount+ to mention a few). This move could indicate that measures to counteract competition takes a new form. In the Nordics, competition is not only limited to traditional vs new media, but also entails a dimension of local versus global actors. For example, as seen in Mediavision’s Q1 analysis of the Swedish market, local services have gained market shares on the SVoD market in the past 3 years – primarily at the expense of global behemoth Netflix.

The planned merger of WarnerMedia and Discovery demonstrates that the international media market is ramping up its competitive game. Speculation on Amazon’s possible acquisition of MGM further boosts this notion. Simultaneously, several of the local players are announcing new investments, for example NENT’s upcoming venture into the US. Another interesting topic to follow will be the possible disintegration between distribution (AT&T) and media (WarnerMedia).

Mediavision concludes that we are in for an interesting ride.


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