John Malone sees WarnerMedia-Discovery as No. 3 streamer behind Netflix, Disney+

John Malone

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The blockbuster deal with WarnerMedia-Discovery is particularly good news for HBO Max, billionaire media mogul John Malone told CNBC’s David Faber.

In an interview that aired Monday, Malone said his previous reservations about HBO Max’s ability to be a dominant player in the crowded digital streaming landscape will be addressed once AT&T becomes its own service is under the same roof as Discovery.

“I thought they would have a hard time getting the growth in subscribers they were hoping for in the US, and I think they are,” said Malone, a Discovery board member who has more than 25% of the voting rights in the company.

Malone believes the new company could join Netflix and Disney + as a true global powerhouse.

“I think we will not only be the third platform of its kind, but I think we will be very competitive with the other two when it comes to meeting the world’s entertainment, curiosity and information needs, basically worldwide Platform, “said Malone.

According to the company, Disney + ended the second quarter of the fiscal year with 103.6 million subscribers. Netflix announced last month that it had nearly 208 million subscribers worldwide.

AT&T announced in April that HBO and HBO Max combined had 44.2 million subscribers in the US and nearly 64 million worldwide.

WarnerMedia’s flagship streaming flagship HBO Max debuted in the US last May and plans to expand internationally. Malone believes that Discovery’s global expertise will support this advance.

“For me, the problem with HBO Max is that at that point it wasn’t possible to go international. Combining it with Discovery, given Discovery’s existing presence, was a huge presence in 200 countries around the world with a great brand,. .. for me, that’s the big plus, “said the cable television pioneer and longtime chairman of Liberty Media.

Malone opened up in a comprehensive interview with CNBC about AT & T’s deal announced last week with Discovery and WarnerMedia, which the telecommunications giant acquired less than three years ago.

If the transaction receives regulatory approval, WarnerMedia’s various media and entertainment properties, including CNN, HBO and the Warner Bros. studio, will be spun off from AT&T and combined with Discovery’s brands such as HGTV, Food Network and Discovery Channel .

It would position the new company – which hasn’t been renamed yet – as a stronger competitor in the highly competitive streaming video wars. In addition to WarnerMedia’s HBO Max, the Discovery Signature direct-to-consumer platform Discovery + was launched in January.

Malone trusted in David Zaslav’s leadership

David Zaslav, CEO of Discovery, told CNBC last week that the combined company could ultimately attract 400 million subscribers to streaming video worldwide – significantly more than any other competitor.

“Netflix is ​​a great company, Disney is a great company, but we have a portfolio of content that is very diverse and generally engaging,” said Zaslav, who will lead the new company.

Malone said he has confidence in Zaslav’s management skills and generally believes the connection between Discovery and WarnerMedia is beneficial. He also said he had no qualms about giving up his Discovery shares with super-voting as part of the deal.

According to FactSet, Malone owns more than 93% of the Class B shares of Discovery, which equates to 10 votes per share compared to one vote per share for Class A. His ownership of these shares enables his significant voting rights in the company. Discovery also has a third class of stocks known as Series C.

The combined WarnerMedia Discovery will only have one type of warehouse.

“My reaction was okay that I thought the alphabet soup we had served its purpose had protected the company and given it a long term for several years. It was time when its usefulness ran out, I agreed “said Malone, whose Liberty Media spun off its stake in Discovery Communications in 2005 into a separate entity.

Malone on the “brave decision” made by John Stankey, CEO of AT&T

AT & T’s decision to outsource WarnerMedia marked the end of any attempt to link a content producing asset to a wireless company.

Malone praised John Stankey, CEO of AT&T, for pulling the plug on this built-in experiment, which some observers questioned from the time the deal was first announced in 2016. AT&T completed the acquisition of Time Warner in 2018 following a regulatory and judicial dispute.

“John Stankey showed a hell of a lot of courage in making this decision at this point because he was really chasing two capital-intensive, very competitive rabbits,” said Malone.

Stankey replaced Randall Stephenson as AT&T CEO in July 2020. He was President and Chief Operating Officer.

“”[Stankey’s] The idea of ​​focusing AT&T on its primary, traditional business and allowing other managers to pursue direct consumer opportunity with a different balance sheet was a bold move, “said Malone.

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