WarnerMedia and Discovery are joining forces: Here's what you need to know

The companies in the AT&T/WarnerMedia/Discovery Deal
(Image credit: AT&T)

A pretty monster deal has been done in the entertainment space. If you're the sort who cares about the business behind your favorite shows and streaming services, there's a lot to unpack here AT&T is spinning off WarnerMedia — which owns the likes of HBO and HBO Max, CNN, and the Tuner networks — and is combining with Discovery to create a new company that's been described as a juggernaut or a behemoth or any number of other adjectives.

It's a big deal, for sure.

"This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms," AT&T CEO John Stankey said. "It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want."

And it also likely won't have any effect on what you're watching, or the way you're watching it — or, more important, what you're paying — anytime soon.

Here's what you need to know right now.

Wait — we're getting another streaming service?

Nope. Not yet, anyway. Discovery+ is still Discovery+. HBO Max is still HBO Max. AT&T TV is still AT&T TV, and actually already is owned by a different third party company that was set up to get the internet-based video service (which itself comes in two flavors; streaming, and set-top box) off of the AT&T books and has nothing to do with this.

What's happening here is that AT&T will no longer own WarnerMedia and all the companies that fall under that umbrella. (See the image above.)

As of right now there are no plans to combine HBO Max with Discovery+, or bundle one with the other — though that sort of thing certainly isn't out of the question down the road. It'd make sense to at least offer a discount on one if you've got the other.

But right now, this is all about the parent company. 

Why is this happening?

Lots of reasons, but the main one is this: It never really made all that much sense for AT&T — primarily a communications company — to try to be a media company. They're just two very different things, with very different sets of executives and very different skill sets.

Or to put things another way, AT&T gets to go back to dealing with its wireless and broadband services. You know, the things AT&T is actually known for. Discovery, meanwhile, gets to be a part of a much bigger whole than it was before. 

There's a lot of talk about how this will let the new company better compete with the likes of Netflix, which has about 207 million paid subscribers globally. HBO had about 41 million subscribers at last check, and Discovery+ had about 13 million. That math doesn't change the fact that 54 million is still way less than 207 million, but there's no doubt that these two will be better positioned in the direct-to-consumer space now.

That's not actually the full story here. Direct-to-consumer is what we deal with, but both WarnerMedia and Discovery are much bigger players in the traditional linear television space. This new company is expected to do somewhere in the neighborhood of $52 billion in revenue. Netflix did more like $25 billion in revenue in 2020.

So, you see, right now it's all about the numbers.

What's the new company called? 

The new WarnerMedia/Discovery company now has a new name — assuming the deal goes through — "Warner Bros. Discovery."

It'll be run by Discovery president and CEO David Zaslav, at least initially, and will include "executives from both companies in key leadership roles." Missing from the initial press release, however, is any mention of Jason Kilar, the Hulu wunderkind who was brought on to run WarnerMedia. (He's already said to be on the way out, presumably with a fistful of many millions of dollars.)

Phil spent his 20s in the newsroom of the Pensacola (Fla.) News Journal, his 30s on the road for AndroidCentral.com and Mobile Nations and is the Dad part of Modern Dad.