WarnerMedia-Discovery deal: Not much impact on India’s M&E industry, say experts

Earlier this week, AT&T’s WarnerMedia and Discovery Inc. announced the creation of a standalone company by combining operations to form a new global leader in entertainment. While AT&T will hold 71% stake in this company, Discovery’s stake will be 29%.

The new company will have significant scale and investment resources with projected 2023 revenue of approximately $52 billion, adjusted EBITDA of approximately $14 billion, and an industry leading Free Cash Flow conversion rate of approximately 60%. It will create at least $3 billion in expected cost synergies annually for the new company to increase its investment in content and digital innovation, and to scale its global DTC business.

WarnerMedia and Discovery Inc. Will form one of the largest global streaming players, bringing compelling content to DTC subscribers across its portfolio, including HBO Max and the recently launched Discovery+.

While the global implications of this development is seen to be major, what impact will this have on the media & entertainment industry in India?

Both WarnerMedia and Discovery do not have presence in the key genres like GEC and Movies. WarnerMedia had two English movie channels – HBO and WB – which have shut shop in India.

With WarnerMedia and Discovery coming together, it will strengthen their Kids portfolio as well as presence in the Infotainment & Lifestyle genres. WarnerMedia has three Kids channels in India – Pogo, Cartoon Network and Cartoon Network HD, besides English News channel CNN International. Discovery’s bouquet of channels includes Infotainment & Lifestyle channels Discovery Channel, Discovery HD, Animal Planet, Animal Planet HD World, TLC, TLC HD, Investigation Discovery, Investigation Discovery HD, Discovery Science and Discovery Turbo; as well as, Kids channel Discovery Kids and sports channels DSPORT and DSPORT HD.

Speaking to Adgully, industry experts said that no major impact was expected with WarnerMedia and Discovery coming together since the share and scale of their presence in the M&E market was relatively small.

Shailesh Kapoor, Founder & CEO, Ormax Media, remarked, “The digital and linear offerings of both these players are very small in India. There will be no impact on TV at all. They are too small, with less than 2.5% share of the viewership combined.”

Agreeing with this, a senior India leader with a leading global consultancy, said, “Both WarnerMedia and Discovery have a small presence in India. Both would have around Rs 250 crore business each. So far, WarnerMedia does not have a production set-up in India, they are only licencing their content. However, if WarnerMedia parks its content exclusively on Discovery, then they can look at gains/ advantage in the Indian market.”

He further said that while Discovery has launched their app in India, its size is much smaller and added that they are still trying to find their feet. “Hence, there won’t be much impact in India for a year or two,” he added.

A senior executive with a leading research organisation, too, said that there will be no impact on the Indian M&E market as the digital and linear offerings of both WarnerMedia and Discovery are very small in India.

The industry experts believed that should the new company decide to launch OTT streaming platform HBO Max in India, then it would have a significant effect, especially in the online video streaming space.

Ormax Media’s Kapoor pointed out, “Only if HBO Max comes to India will there be an impact. HBO Max launched globally in 2020, and between that and Discovery+, they have the opportunity to create a premium service worldwide as well as in India.” According to him, consolidation in the ecosystem is the way ahead. “Linear TV is already consolidated,” he added.

The senior India leader with the global consultancy said, “I see synergies in operations, better bouquet of content, and a stronger TV opportunity. Merging of ad sales could happen, which would have a positive impact on the ad revenues.”