The looming Discovery WarnerMedia mega merger is like a giant zeppelin rising over the media horizon. When the $43 billion deal lands — and it is expected to be completed by mid-year, despite antitrust concerns raised by several Democratic members of Congress (including Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez) — it will have implications for global media on macro and micro levels.
Discovery chief executive officer David Zaslav, who could previously be dismissed by Hollywood’s creative community as the tightwad purveyor of cheap reality shows, is now being courted by top players and getting a profile in Vanity Fair, which detailed regular poker games with Jimmy Buffett and tequila shots with Bono. Zaslav is precluded from strategizing officially with his soon-to-be-direct reports at WarnerMedia until the deal is consummated. But he has nevertheless had informal conversations with many of them, including studios and networks group chair Ann Sarnoff, HBO president Casey Bloys and of course, news and sports chair (and golfing buddy) Jeff Zucker.
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Zaslav also revealed last November, that he had brought on Kevin Mayer, chairman of sports streamer DAZN, as a consultant. The executive behind the launch of Disney+ will be charged with positioning the new streaming service that combines the disparate assets of Discovery+ and HBO Max into a user-friendly interface that has enough appeal to consumers already paying for Netflix, Disney+ and a handful of other streaming services. Mayer has ample experience with windowing and packaging, owing to his work at Disney+, and Zaslav has boasted that the combined companies’ assets across news, sports, kids, scripted and unscripted, not to mention Hollywood studio Warner Bros., would come to market with “the most complete and balanced portfolio offered in one service in the world.”
That’s a very ambitious benchmark.
Speaking during Discovery’s third-quarter earnings call, Zaslav said he expects the direct-to-consumer offering to rival Netflix. For perspective, Netflix has 214 million global subscribers; HBO Max has a little more than 70 million and Discovery+ has about 20 million, according to digital market forecaster Statista. Whether, or when, Zaslav can achieve his goal of market domination remains to be seen, but the new company will be second only to Disney in terms of revenue. As the mediascape continues to adjust to an imperiled cable bundle and the reality of a near-exclusive d-to-c future, there are likely to be more mergers. NBCUniversal (Peacock) and CBSViacom (Paramount+) are prime targets. At the moment, Apple TV+ appears to be content as a high-end niche player (think HBO before the Max), and the company’s staggering revenue ($84 billion in fourth-quarter), means it doesn’t need to rush to bulk up. Even with instant scale of the merger, the macro question heading into 2022 may be, will Discovery WarnerMedia be big enough in a future that is almost assured to see more scale-aspirational acquisitions?
Of course, one of the first issues Zaslav and Mayer will have to deal with is how to position CNN+ in the Discovery WarnerMedia firmament. The d-to-c service set to launch later this year, joins a crowded space while the entire cable ecosystem is confronting a future of dwindling linear reach. The twin disasters of the pandemic and Donald Trump’s efforts to overturn the results of the 2020 presidential election gave cable news networks a buffer as they headed into a year of assured declines given the predictable peaks of an election year that capped the end of the ratings bonanza that was the Trump administration.
But legacy media (in this case what was previously known as broadcast and cable networks) is also careening into a future without the assured lucrative revenue streams derived from the cable bundle.
And while Fox News finished 2021 (its 25th anniversary year) as number one in all of cable, for the sixth year in a row, it’s reasonable to ask what these rankings will even mean going forward. Will news personalities that are pulling in the biggest audiences on broadcast and cable continue to have the cachet of a linear world when the industry goes digital in a d-to-c content glut? The year ahead could offer some clues.
The three major cable news networks are weathering talent upheavals. CNN executives fired Chris Cuomo in early December, something they arguably should have done in August, when disclosures of Cuomo’s journalistically unethical behavior in his effort to help his older brother, former Gov. Andrew Cuomo, unsuccessfully fend off a harassment scandal, first surfaced. Even before he was fired, Cuomo, once the network’s most-watched host at 9 p.m., had seen his audience decline precipitously in the months since he was conspicuously not mentioning the scandal engulfing his brother.
Meanwhile MSNBC is facing down a future with far less of Rachel Maddow, its most watched host and the face of the left-leaning network. Last summer, NBCUniversal finalized a deal to keep Maddow in exchange for letting her exit the grind of a daily show for a multifaceted pact that lets her produce documentaries, podcasts and other multimedia projects for NBCUniversal platforms. Worth a reported $30 million annually, the deal will see Maddow wind down her 9 p.m. program this spring and transition to a weekly show, but not every week, only about 30 weeks a year.
At Fox News, anchor Chris Wallace, a stalwart of the network’s news operation, surprised viewers and media watchers by announcing his departure from Fox News on the Dec. 12 edition of “Fox News Sunday,” a show he has been hosting since 2003. Minutes later, CNN announced that it had hired Wallace for CNN+. It was the first major talent announcement for the platform, which is set to launch early next year. (CNN previously poached Kasie Hunt from NBC News, for CNN and CNN+.)
Wallace, holder of obfuscating pols’ collective feet to the fire, had long exuded appropriate journalistic skepticism, so notable now because it’s in increasingly short supply on both sides of the political divide. But his willingness to push back on the falsehoods peddled by Trump and his supporters (including among his Fox News colleagues) probably made him an exceedingly attractive hire for CNN boss Jeff Zucker. Especially after Liberty Media chairman John Malone — a leading shareholder at Discovery, a member of its board and an architect of the WarnerMedia deal — made news by pointedly complimenting Fox News for its “news news” while lamenting that CNN should get back to news and cut out so much opining.
“I would like to see CNN evolve back to the kind of journalism that it started with, and actually have journalists, which would be unique and refreshing,” he told David Faber of CNBC.
The comment likely did not sit well with the many actual journalists at CNN. But it’s not clear what exactly the Wallace hire portends for the overall programming strategy at CNN+. In a vacuum, it could signify a focus on unbiased, capital-J journalism. But before the Wallace announcement, Zucker went after Maddow, one of the left’s leading voices.
There may be a market in the d-to-c space for a truly global news service, one that doesn’t rely on opinionated hosts peddling polemical talking points to get viewers in the door. Or CNN+ could just be a place holder for when the industry one day shifts to an exclusively d-to-c environment.
For Fox News, the loss of Wallace is more symbolic. The network has previously weathered all manner of high-profile talent defections and implosions, and none have dented its dominance. The 7 p.m. hour has been without a permanent host for months, and it’s made little difference in terms of the hour’s audience. Its highly engaged audience is unique in the cable news market, and has allowed it to seamlessly launch a streaming platform (back in 2018). Catering to the Fox News super fan, the service has more than one million subscribers and very low churn, according to analyst Michael Nathanson.
(For the year, Fox News averaged 2.3 million viewers in primetime and 1.3 million in total day, compared to 1.5 million in primetime and 905,000 in total day at MSNBC and 1.0 million in primetime and 773,000 in total day at CNN.)
There may come a day when d-to-c platforms become the dominant news platforms, with enough reach to mint stars. Or the shift to d-to-c platforms could further commoditize the video news industry, essentially dismantling the star system that has driven it since the days of Edward R. Murrow.
At the moment, the industry is in an interregnum period; cable is declining but so far streaming has not become ubiquitous enough to take its place. How Wallace fares and whether Maddow can hang on to her star wattage without a daily television platform, will be a tell for the future of the news.