What Analysts are Missing in the Discovery WarnerMedia Merger

Missing in the Discovery WarnerMedia Merger

Analysts reviewing the newly merged Warner Bros. Discovery are looking at the wrong thing. They are all opining about what kind of leader David Zaslav will be, what movies they will make, whether HBOMax and Discovery+ will remain separate, and how many layoffs to expect. No one is examining the nuts and bolts of combining their content value chains.

The new WBD empire is now almost unfathomably huge. It spans multiple film, television, and animation libraries, classic licensable characters (Batman, Bugs Bunny, Scooby-Doo, The Flintstones, Harry Potter), news, sports, etc. How will programmers, distributors, and licensors know what they can do (what is available for use or sale), let alone what they should do? How many systems will they need to bring together to operate seamlessly? How large of an army of accountants will need to perform their monthly close?

If they can get the basic operations right—if they can merge the different parts of the new organization working together seamlessly—studios, programming, distribution, licensing, marketing, and finance–if they can tap into the potential synergies, drive out inefficiencies, and get their value-chain firing on all cylinders—the company will have nearly unstoppable success. That’s what the analysts should be saying.

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