After a few months of speculation, there will be even more consolidation of the media landscape in the United States, as Warner Brothers Discovery will sell the Warner Brothers studio, including its archival assets, and HBO to Netflix for a staggering $82 billion. This purchase is just three years after Warner Brothers merged with Discovery, which resulted in the repackaging of the HBO streaming service on a few different occasions. The sale itself isn’t necessarily shocking, as it was reported that WBD was carrying significant debt the past few years and will lose the rights to the NBA after the current season to a combination of Disney, NBC, and Amazon. The traditional cable networks under the WBD banner will remain a part of the company, known as Discovery Global. That means that the news networks like CNN and the channels that air All Elite Wrestling programming, TNT and TBS, will stay under the control of the current Turner umbrella.
The short answer as to why this happened and thus the willingness to sell a few of the biggest pieces of the assets of the organization is the evolving media business, as more entities are willing to take more chances to secure a bigger piece of the pie in the long run. Sometimes, it has worked out for them, and sometimes it hasn’t, with the previously mentioned Warner Brothers/Discovery merger as an example of how the company couldn’t balance the debt that it had from such deals with the competition from other groups to secure the rights to content. Keeping pace, and more importantly in some respects, staying ahead of the curve in terms of viewing patterns and trends of programming is critical in the modern media market.
Yesterday, Paramount,one of the initial bidders alongside Netflix and Comcast, was said to have offered $108 billion in an attempt to take the deal away from Netflix. It has an impact in terms of the media landscape, but from purely a professional wrestling respective, Paramount is a company that does business with TKO so the effect or lack thereof on AEW’s position on TBS would more or less be the same. Outside of that, the fact that such major cash is being thrown around is proof of how corporations are trying to position themselves for the future, and the ripple effect of that scenario has a much bigger domino effect, both for inside and outside of the realm of sports entertainment in the future.
Assuming that Global Discovery stays intact for the time being, the impact on All Elite Wrestling will be minimal. For as many that try to predict the death of traditional television, it’s still the most common distribution method for content, if it wasn’t, TNA wouldn’t need the AMC TV deal to potentially expand their footprint, WWE wouldn’t keep Smackdown on USA in the United States, and AEW wouldn’t have signed with Turner originally when it was set to launch as a new entity in the industry. Tony Khan inked a new TV deal with WBD at the start of this year, which will keep All Elite on the networks through at least 2027, with the option for an additional year.
That being said, All Elite’s current contract is in no danger, but depending on how the dynamics continue to shift in the media business, Tony might have fewer options for their next deal, which is one of the many negative aspects of a possible monopoly in any industry. Right now, Discovery will refocus their business model on traditional television, which isn’t necessarily a bad strategy because as mentioned, TV is still the standard, and regardless of the misguided notion of the collapse of the platform, will remain a fixture of how viewers consume content, if for no other reason than it’s still the most profitable avenue for sports and news networks.
Still, the fact that Discovery was willing to sell it’s archives, which would theoretically be able to be marketed for profit in perpetuity, is proof that the organization had to do something drastic to keep itself a viable commodity, not just today, but in the future. For example, Looney Tunes still has merchandise and stays relevant, including recent films like Space Jam 2 to be an intellectual property to generate cash. The Wizard of Oz is absolutely timeless and similar to Looney Tunes already mentioned, it still has ways to generate revenue going forward. A more contemporary example is Harry Potter, a massive franchise that continues to be immensely popular. Movies, Merchandise, and theme park attractions are all involved in the ownership of such a franchise, which is a prime example of how there can be exponentially more money involved through various licensing deals. The same type of scenario can be stated for the acquisition of HBO with its series and sports library. Everything from The Sopranos and The Wire to the vast amounts of classic fights from the HBO Boxing division could be a part of the Netflix service.
Again, Discovery gave up the long term earning potential of the franchises under their banner in exchange for the possible $82 billion or even $108 billion in the relatively short term. Don’t get me wrong, $100 billion is so massive that at some point it just becomes numbers on the page, but the biggest point being is that it was a move that the company had to make to stay above water.
Why this matters going forward is simple, will this reshuffling of assets truly cement Discovery Global for the future or is this a band aid the way that the WBD merger was a few years ago?
As mentioned, All Elite Wrestling’s TV deal is fine for now, but in the long run, the continued consolidation of the media landscape can ultimately hinder the market. Is this sale to Netflix or Paramount just a step in the direction that will eventually see the television networks sold to a different buyer? It’s difficult to see that Netflix would want to get into the traditional TV business at this point since it’s leading the way in streaming so maybe Discovery Global will look to boost its networks now in an effort to sell them at a higher price to a group like Comcast in the future? If the networks themselves start to be sold in pieces in a few years, that would be something that could have an effect on the long range AEW business plan.
The fewer media owners that they are, there will be less avenues for content to be distributed to consumers. From the ownership stand point, it allows them to maximize revenue and maintain market share, but that’s a situation that serves their interest, not the customers. Let’s be honest, when Warner Brothers merged with Discovery three years ago, nobody would’ve thought that there would be any sale, let alone such a massive sale, by 2025. That’s why I don’t think it’s impossible that the networks could be next if Discovery Global doesn’t fully get off the ground without the foundation of the massive Warner Brothers and HBO archives behind it. The most valuable network still under the Discovery banner is CNN, specifically because how much cable news is a draw with the current political climate so if Discovery wants to dice up a few more of its assets in a few years, CNN would probably be the channel that would garner interest from buyers. That leaves TBS and TNT safe, but that doesn’t mean that they will be owed by Discovery by the time that AEW is ready for its next TV contract. Furthermore, I wouldn’t be shocked, based on the upcoming sale to either Netflix or Paramount, if the Discovery group is eventually completely purchased to be acquired by another media conglomerate, it would just be a matter of who would want to buy the pieces of traditional, which would probably be Comcast. Where this goes from here is anyone’s guess, but I’d say that there’s a legitimate possibility that All Elite Wrestling might have to look for a different media partner by the time that they are ready for their next television contract. It’s the harsh reality of the business world, but the bigger footprint that WWE has, and by some extension that TNA can make with their new TV contract with AMC, it limits the options for AEW in the future.
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Until next week
-Jim LaMotta
Email [email protected] | You can follow me on Instagram, Facebook, & Threads @jimlamotta89
