Here's everything you need to know about the world of television for Wednesday, December 20th, 2023.
PROGRAMMING NOTES
* Assuming there isn't any big breaking news, this will be the last newsletter until next Thursday. I have no doubt that I will continue to crank out things on AllYourScreens, but I really am going to try and rest my brain as much as possible.
* My original plan was to post a piece today on shows that I thought had been overlooked in 2023. I also received some great suggestions from many of you. But because of the merger rumors floating around today, that piece will run next week. Next Friday, I'll have a piece on my media industry predictions for 2024. So if you have any thoughts about that, feel free to pass them along in the comments section.
WHY THE U.S. GOVERNMENT SHOULD BLOCK A WARNER BROS. DISCOVERY/PARAMOUNT GLOBAL MERGER
If there is one thing American CEOs love more than unrestricted stock options, it's a merger that is primarily designed to put money in their pockets.
Mergers can provide the answers to a myriad of problems while washing away the uncomfortable questions about whose strategy was responsible for the problems in the first place. The participating CEOs make the rounds of the cable business networks and major newspapers, selling the idea that their merger plan isn't just a sound business move. It will be a rainbow of happiness for consumers, employees, and share holders. Even though that is rarely the case in real life.
Falling stock prices? A merger between two struggling rivals will provide the shareholder optimism to solve that problem. Flawed business models? The problem isn't that the business model is already taped together like a decades-old love letter from a high-school boyfriend. It's that the company needs to be bigger. Everyone knows that the bigger the company, the larger the profits. Probably. Maybe.
Nearly 25 years ago, I was a financial news journalist covering the merger of AOL and Time Warner, which every stock analyst covering the industry argued was the "synergistic deal of the century." Within a few years, the companies had split apart again, and Time Warner suffered through a string of inept management teams and ineffective owners until it was acquired in a deal with Discovery Communications in 2022.
Now WBD CEO David Zaslav is on the hunt again, with Axios reporting that Warner Bros. Discovery is in talks to merge with Paramount Global.
Now this move isn't a huge surprise to anyone following the industry, given that Zaslav and his team have been hinting for months that they are looking to acquire one or more rivals. In fact, Zaslav has bragged that the ongoing rounds of restructuring and cutbacks at WBD have freed up the money that would allow WBD to pursue a merger.
If you hear that argument and think "Hmm, gutting your company so you can raise money to acquire someone else's dumpster fire seems like a bad idea," then you have hit on one of the reasons why this entire merger idea deserves to be stopped by federal regulators.
Given the difference in size between the two companies, Warner Bros. Discovery would likely acquire Paramount Global (or perhaps its parent company, National Amusements Inc. (NAI)) outright. Zaslav would likely spin off or sell some of that company's assets to help finance the merger and eviscerate what is left of Paramount. Netflix has certainly not been shy about wanting to acquire the Paramount Hollywood studio complex.
To be clear, Paramount Global's days as a stand-alone entity are likely numbered no matter what happens. The company has been mismanaged by parent company National Amusements for more than twenty years and president Shari Redstone has stumbled her way through mergers, unmergers, business reorganizations, and flawed strategies that primarily seem designed to provide the executive with some way to cash out of the company. In a better world, Shari Redstone would lose money as a result of her mismanagement, but given the current business climate, that seems nearly impossible.
I suspect Redstone sees an acquisition by Warner Bros. Discovery as a lifeline. She'll cash out and whatever happens next will be the problem of Warner Bros. Discovery's management team and whatever large banks they can convince to sign onto this no-doubt lucrative if also strategically dubious merger plan.
If you think I am being hard on the executives of both companies, then simply gaze at the scanty details provided to Axios by what I suspect was someone from the Warner Bros. Discovery team.
The duo discussed ways their companies could complement one another. For example, each company's main streaming service — Paramount+ and Max — could merge to better rival Netflix and Disney+.
I am old enough to remember when David Zaslav was claiming that a Warner Media/Discovery merger would allow the combined companies and their streaming services the opportunity to better compete with Netflix and other rivals. I think it's fair to say that hasn't been the case and there is zero indication that adding Showtime's originals and a bunch of Paramount teen titles to Max would make it any less of a subscriber churn machine.
What is more likely is that WBD execs would use the consolidation as an excuse to continue to raise prices as they hope fewer subscribers will leave if they have fewer places to go. But perhaps I am being overly pessimistic. Let's examine some of the other arguments for this deal in the Axios piece:
Between the lines: The deal could drive substantial synergies.
- WBD could use its international distribution footprint to boost Paramount's franchises, while Paramount's children's programming assets could be essential to WBD's long-term streaming ambitions.
- CBS News could be combined with CNN to create a global news powerhouse. CBS' crime dramas, such as "NCIS" and "Criminal Minds," could be combined with Investigation Discovery and TruTV.
- CBS Sports' footprint could be combined with WBD's. For example, CBS and WBD's Turner Sports currently share TV rights for March Madness.
I think it's clear that when Axios mentions "synergies," they are really talking about cost-cutting. Massive layoffs, lessened content spending, and cutbacks on every aspect of the business aside from executive salaries.
But those bullet points are the items to think about closer and they are the reason why this merger should be halted by American regulators.
If there has been one constant in American business over the past thirty years, it has been that despite the claims of executives and Wall Street bankers, mergers rarely have a positive outcome for consumers. Consolidation inevitably means fewer choices and more opportunities to leverage those lessened choices into additional opportunities to hike prices. It's difficult to imagine a scenario in which a consolidation of Warner Bros. Discovery and Paramount Global would bring more choices or a continued reasonable price structure to consumers.
If you read the various breakdowns of the possible deal in outlets such as The LA Times, there isn't an attempt to argue it would be good for consumers. It's all about combining resources in a way that saves the merged company money while simultaneously resulting in fewer options for consumers.
A combined CNN/CBS News would result in fewer reporting resources spread across more platforms. That's not a win for customers. A combined collection of streaming services would allow the new company to spend less on original content, confident that consumers would be trapped by a combination of fewer options and a couple of more franchise titles.
But even more importantly, there is no real business upside to this merger.
I haven't read one articulate argument for this merger idea, aside from "well, the government might approve it" and "probably the consolidated company will have more power in the marketplace." It's a big payday for the Wall Street bankers, Shari Redstone and David Zaslav. However consumers will be faced with higher prices and the increased likelihood that even more titles will disappear from circulation as the new company slashes overhead. There will be thousands of lost jobs and the combined companies will use their market size to push out competitors in any of the countries where they now do business.
And that is the primary reason to stand in the way of this merger. The Federal Trade Commission provides this explanation of the reasons why it might prevent a merger: "The law bars mergers when the effect may be substantially to lessen competition or to tend to create a monopoly." This also turns out to be the primary reason executives of both companies argue this merger is a great idea.
There is no strategic reason to complete this merger. It's all about ego, greed, and fear. And none of those are reasons for the FTC to approve this merger.
Whether or not this particular merger moves forward (and I still have my doubts), it's bad for consumers and the future of the industry.
I am going to be aggressively covering this issue in 2024 and I plan to highlight the dangers of further consolidation in the television industry. If there is one thing that has become clear over the past few years, it's that the industry needs more competition and additional new ideas.
Living in a world with three major streamers each charging $35 a month might be great for the pocketbooks of the industry CEOs. But it would be a disaster for consumers. And government regulators should do everything in their power to prevent that from happening.
ODDS AND SODS
* The two-hour 2024 People’s Choice Country Awards will air live from the Grand Ole Opry House in Nashville on Thursday, September 26th on NBC and Peacock.
* Real Time With Bill Maher will return for its 22nd season on Friday, January 19th on HBO.
WHAT'S NEW OVER THE NEXT WEEK
Rather than adding to the already novella-like length of this newsletter, if you are interested in a complete rundown of upcoming premieres, check out this master list I've compiled on AllYourScreens.com
SEE YOU NEXT THURSDAY AND HAVE A HAPPY HOLIDAY!