Discovery Ended 2021 With 22 Million Paid Streaming Subscribers
Discovery, Inc. hit 22 million paid streaming subscribers worldwide by the end of 2021, with the vast majority being Discovery Plus customers, the company revealed Thursday.
The Q4 numbers show a modest sequential gain for Discovery Plus, after the company reported in November that it grew to 20 million paid direct-to-consumer subscribers by the end of Q3. For comparison, Discovery previously said it had 18 million streaming subscribers as of Aug. 3, ended its second quarter of 2021 with 17 million subs, and the first quarter with 13 million.
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Discovery Plus launched last January. The streaming service costs $4.99 per month with ads or $6.99 without ads and accounts for the bulk of Discovery’s streaming sub total, the rest being some international direct-to-consumer products. But Discovery Plus is about to be far from Discovery most popular streamer, as the company is set to own WarnerMedia and its HBO Max service by the end of Q2.
As Variety reported Wednesday, insiders say Discovery is preparing to close its $43 billion acquisition of WarnerMedia from AT&T to create new company Warner Bros. Discovery as early as mid-April.
Discovery’s shareholder vote on the deal — which has already received regulatory approval from the Justice Department — is set for March 11, the two companies are prepping for a close somewhere between April 11-28.
“Warner Bros. Discovery will stand on incredibly solid footing, creatively and financially,” Zaslav said during the company’s conference call with Wall Street analysts. “This is a real company.”
Zaslav will become president and CEO of Warner Bros. Discovery upon deal close, with WarnerMedia CEO Jason Kilar expected to exit. One of Zaslav’s first major post-merger hires will likely be a leader for CNN, following the ousting of Jeff Zucker after a company investigation found he hadn’t disclosed a consensual relationship with now-exited CNN marketing chief Allison Gollust.
During the call, Zaslav praised CNN as a bastion of global newsgathering and highlighted the importance of its work at times of crisis such as Russia’s invasion of Ukraine which began late Wednesday and has jolted global markets. But Zaslav did not address any of the behind-the-scenes drama at CNN — which was no surprise given that the merger is not complete and Zaslav still has no formal say in WarnerMedia operations.
“There’s no other news organization in the world looks like CNN and can do what CNN does,” Zaslav said. As the world nervously watches the situation in Ukraine, CNN is “on the ground with journalist in bullet proof vests and helmets, doing what journalists do best: fight to tell the truth in dangerous places so we can all be safe and assess what is going on in the world.”
JB Perrette, Discovery International chief, observed that operations in Russia and Ukraine are “very immaterial” to Discovery’s overall bottom line.
During the 75-minute call, Zaslav focused on the growth opportunities ahead as Discovery and WarnerMedia combine their content arsenals. Zaslav talked up the potential of the lifestyle giant and the Hollywood heft of Warner Bros. and HBO. But he also sounded a clearly cautionary note about how the combined company will be “careful and judicious” in how it ramps up content spending in the coming years.
Discovery ended 2021 with $4 billion in cash on its books and it generated some $2.4 billion in free cash flow for the year. Warner Bros. Discovery will shoulder significant debt after the transaction is complete, with Discovery executives vowing to reduce the leverage ratio from about 4.5 times earnings immediately after the deal closes to 2.5 to 3 times earnings within two years.
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