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Combined HBO Max and Discovery + Warner Bros. to launch in 2023. Discovery rejects AT&T strategy

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Warner Bros. Discovery revealed more about its plans to combine streaming services HBO Max and Discovery+ into one offering, as the company seeks a more disciplined strategy to succeed in the streaming wars amid wild speculation about its future .

Executives speaking with analysts on Thursday said the merged version of the two streamers will debut in the US next summer and expand to other countries during the next two years. The company did not specify what the new service would be called.

Comments from executives including chief executive David Zaslav amounted to an outright disapproval of the WarnerMedia strategy under the studio’s former owner, AT&T. Zaslav was blunt in favoring a more disciplined strategy, in contrast to the growth-at-any-cost strategy that had become common in the streaming business.

“Content that really resonates with people is much more important than being too content,” Zaslav said during a call with analysts. “In other words at a time when almost every content ever created for consumers is available for any number of free and paid services. Duration, quality and brand have never been more important.”

Combining HBO Max and Discovery+ won’t be an easy task, as the services have very different types of content. HBO Max has plenty of iconic TV dramas, DC movies, and oldies like “Friends.” Discovery+ is known for unscripted home makeover shows and Dish reality programming.

The company estimates that the combined service will reach 130 million customers globally in 2025. Executives also said that an ad-based streaming service is in the works.

Warner Bros. Discovery reported 92.1 million streaming subscribers for its services, including HBO Max and Discovery+, an increase of 1.7 million from the end of the first quarter. In the US and Canada, the company lost nearly 300,000 customers, with 53 million to end the quarter. Internationally, membership increased by 2 million to 39.1 million.

Meanwhile, the company is working on content sharing plans for HBO Max and Discovery+.

The company said Thursday that it will put original CNN programming on Discovery+ to expand that streamer offering. Plus, HBO Max is getting content from next month’s “Fixer Upper” stars Chip and Joanna Gaines from Magnolia Network, in a preview of what the combined streaming service might look like. Gaines’ new “Fixer Upper: The Castle” will launch simultaneously on Magnolia Networks cable outlet, HBO Max and Discovery+ in October.

HBO Max is one of several streaming services trying to compete with Netflix and Disney+. In July Netflix said it lost 970,000 subscribers during its most recent quarter. Paramount Global on Thursday said Paramount Plus added 3.7 million subscribers during the quarter to cross the 43 million mark.

As Warner Bros. Discovery switched strategies from the AT&T era, the company’s decisions proved disruptive to some talent.

Warner Bros. this week canceled the release of the DC superhero film “Batgirl,” which was designed to be distributed through HBO Max as part of a broader plan to increase subscribers. The $90 million film had completed shooting and was in post-production, but Discovery Inc. The studio fell victim to a new corporate mandate after its merger with Warner Bros.

Discovery’s chief executive David Zaslav has clarified in his belief that movies made for direct streaming make little sense financially, and that movies tend to do better on streaming services, especially once they debut in theaters. Huh. Still, the decision to postpone the largely completed film is highly unusual for the studio. Batgirl directors Adil El Arabi and Bilal Falah issued a joint statement on Wednesday, saying they were “saddened and shocked” by the decision. “We still can’t believe it,” he said.

“Batgirl” starring Leslie Grace was commissioned while Warner Bros. was under control of AT&T and led by WarnerMedia CEO Jason Keeler, who wanted to use the original films to increase HBO Max’s subscriber count. AT&T spun off WarnerMedia, which merged with Discovery in a $43 billion deal that closed earlier this year.

The company released an animated “Scoob!” also ended. Sequels that were planned for HBO Max and inadvertently removed several direct-to-streaming films from the service, including Seth Rogen’s “An American Pickle” and Robert Zemeckis’ “The Witches”.

Zaslav emphasized his belief in the theatrical box office as the best way to make money from movies and build a sustainable business.

“We will fully embrace theatrics, as we believe the interest it generates and demand provides a great marketing tailwind and generates word of mouth buzz as movies transition to streaming and beyond. ,” They said.

Zaslav, one of the highest-paid executives in Corporate America, is seeking $3 billion in cost savings from the merger and more layoffs are expected as HBO Max continues to restructure.

He’s a bit hesitant when it comes to mothballing projects green-lighted by his predecessor, as he showed when he quickly killed streaming service CNN+. Last week, the company canceled the TBS political comedy show “Full Frontal with Samantha Bee.”

Warner Bros. Discovery reported second-quarter revenue of $9.83 billion, missing analyst estimates. Wall Street estimated sales of $11.8 billion, according to FactSet data. On a pro forma basis, revenue was down 3% from the combined revenues of both companies during the same quarter last year.

The media giant reported a loss of $3.42 billion, or $1.50 per share. Analysts had forecast a profit of 12 cents per share. Losses included $1 billion in restructuring fees and $983 million in expenses related to the companies’ transaction and amalgamation.

Shares were down 11% in after-hours trading.

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