- Sep 10, 2017
- 2,896
- 3,949
There's definitely benefits (international expansion is another, Discovery has a big presenxe overseas) but I feel like from T's point of view this is mostly a convenient way of getting some debt off its ledger.
AT&T has so much debt right now and frankly, HBO Max hasn't clicked with people and they havent been willing to spend the money to roll it out worldwide de.I admit that I'm more surprised about this too, even more for the indication of going after ViacomCBS for Comcast.
The reason I think it's evidence for a glaring issue with Peacock is that do you really think that AT&T would spin off/sell off HBO Max in this way if it was working (i.e. if HBO Max had taken off like Disney+ had)?It's highly likely that a WarnerMedia+NBCUniversal tie-up would've involved some form of spin-off that Comcast was just not willing to countenance. Discovery is paying less than Comcast ever would but AT&T still owns 70% of the company.
At the end of the day I don't see how a tie-up between Discovery and WarnerMedia is evidence that NBCUniversal+Sky is subscale, especially given the latter's pole position in Europe. If Warners ever dominates the streaming market like Disney+ and Netflix, I'm pretty sure it won't be the Discovery content that's make or break, as nice to have as it is; it'll be better usage of its existing assets and properties.
Side note: 55 billion in debt is a little high for a media company that's about to ramp up spending for the streaming wars. Yeah that's where Disney is, but their FCF in 2018 was 9.83 billion. Also 3 billion in synergies is kinda nuts and a little scary when Disney only promised 2 billion in their merger with Fox.
It’s actually not at even almost half of that, it’s way lower. The 44M or wherever it’s at number is total people that had access to Max through AT&T + paying subscribers. They only had something like 20M “activated” accounts.The reason I think it's evidence for a glaring issue with Peacock is that do you really think that AT&T would spin off/sell off HBO Max in this way if it was working (i.e. if HBO Max had taken off like Disney+ had)?
The reality is that HBO Max probably needs around $10 billion in content per year to compete with Amazon/Netflix/Disney+ to be a global streamer.
To justify that budget, it needs to have a clear and quick path to 100 million+ subs. It's currently at half that number and given it's higher price point, just looks unlikely to jump fast to the range it has to get to... And AT&T clearly doesn't have the financial capability to just take on a lot more debt spending on content while waiting for the subs to come.
Sky's position in Europe is strong, but I really do think you need a global service well situation in all 3 of Americas/Europe/Asia to work into the future. Amazon, Netflix, and Disney+ have all 3 and have content paths mapped out in all 3.
The problem for Comcast is that it hasn't really committed to streaming; yes they made Peacock, but Peacock is sorta just there as mostly an add on for Comcast cable subscribers at the moment.
It can't stand on its own.
I think the changes in media businesses have made clear that unless you can support a broad sustainable streaming service, there's no guarantee that your studio/channels have a path to future relevance.
AT&T didn't want to sit on HBO/Warner and risk another DirecTV situation where they bought an asset at a premium and basically spin it off worth nothing. At least there's still a ton of value in HBO/Warner at the moment.
I think NBU needs a real global streaming plan and other than a merger with this HBO/Warner/Discovery combo or CBS/Viacom, I just don't see how it gets from here to there.
And the fact that the Comcast executives haven't figure out how NBCU fits into a streaming world is a key problem. Like I said earlier, the best outcome might just be Discovery manages to really take HBO Max to another level with all of their unscripted content and gets it over 100 million subscribers and to the point where Comcast feels that it has to merge NBCU with that combo (either in a spinoff like AT&T or buying the whole combo for Comcast stock).
The reason I think it's evidence for a glaring issue with Peacock is that do you really think that AT&T would spin off/sell off HBO Max in this way if it was working (i.e. if HBO Max had taken off like Disney+ had)?
Sky's position in Europe is strong, but I really do think you need a global service well situation in all 3 of Americas/Europe/Asia to work into the future. Amazon, Netflix, and Disney+ have all 3 and have content paths mapped out in all 3.
The problem for Comcast is that it hasn't really committed to streaming; yes they made Peacock, but Peacock is sorta just there as mostly an add on for Comcast cable subscribers at the moment.
And when you add the fact that they lost nearly the entire value of DirecTV to that (around $60-67 billion), you come upon just how disastrous the past decade has been for AT&T.The amount of value AT&T lost over just a 3 year span on Warner is crazy. They bought Time Warner for a whopping $85 billion, and now are selling it for pretty much half of the value at only $43 billion.
That's an insane loss in value.