# REPORT: Comcast Wants to Buy Warner Bros. Discovery, Merge With NBCUniversal



## b4pjoe

REPORT: Comcast Wants to Buy Warner Bros. Discovery, Merge With NBCUniversal


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## harsh

It seems to me that this could only be acceptable from a regulatory standpoint if this includes Comcast divesting itself of NBC Universal.

I would at least hope that there would be serious headwinds given how lax Comcast was about following the terms of the NBC Universal merger.


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## b4pjoe

Nothing happening until at least 2024. Probably would be 2025 by the time they have to deal with regulators and they will probably have a more favorable administration (to them) to deal with.


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## NashGuy

harsh said:


> It seems to me that this could only be acceptable from a regulatory standpoint if this includes Comcast divesting itself of NBC Universal.


DOJ should probably never have allowed Disney to buy the Fox studios and content library. Maybe that was allowed because of the (in retrospect) over-estimated threat of Netflix? But now that DOJ has allowed one Hollywood mega-merger to happen, it's hard to see how they would stop a Universal/Warner merger to create a counterweight to Disney. Universal/Warner would probably be required to divest a few cable networks (as Disney had to do with the Fox Sports RSNs due to them already having ESPN) but, as long as Comcast offered to spin off the entire thing (which net neutrality advocates would applaud), I suspect it would pass under the Biden admin. And I do think that would be the plan.

Comcast is guaranteed to receive _at least_ $27.5 billion from Disney when they sell them their stake in Hulu. Meanwhile, WBD's market cap has fallen nearly 50% since the merger this spring and is now down to only $31 billion. The Fed's ongoing interest rate hikes to subdue inflation will likely usher in a transitory 2023 recession, causing a further downturn in stock values. And WBD, of course, has a huge debt burden, so interest rate hikes are the last thing they want to see. So it isn't hard at all to see how Comcast would be in a position to use their proceeds from a 2023 sale of Hulu to buy WBD lock, stock and barrel in 2024. And then Universal, at that point containing the assets of WBD, would be spun off and floated as a new separate stock, with Comcast shareholders getting X shares of Universal for each share of Comcast they own (i.e. a stock split). A cash buyout of WBD would have the benefit of getting major WBD shareholder John Malone (the power behind Zas's throne, and probably the reason for WBD's attempt to turn CNN rightward) out of the picture.

[CORRECTION: _The total minimum valuation for Hulu is guaranteed to be $27.5 billion, so Comcast's 1/3 stake would have a minimum valuation of only about $9.17 billion. Although Comcast reportedly believes that Hulu will be valued at significantly more than $27.5 billion given its size and profitability._]

I imagine Zas and most of the Discovery brass would be shown the door while of course the entirety of Casey Bloys's HBO team would be kept. (That'll be about all of the Warner team that'll still be intact and have much value by then.) DeLuca and Abdy, the former MGM honchos whom Zas is bringing in to run the WB film studio, will probably be gone. It'll be the Universal team running the show overall. (Pour one out for WB, which used to be seen as Hollywood's crowning studio, reduced to a shadow of its former self and living on only as an imprint label under Universal Studios.) WBD's forthcoming FAST would probably just be folded into Peacock, which itself would be completely free and ad-supported (no more subscription tier), while HBO Discovery or whatever it's called gets turned into the unified SVOD, "Universal+" or whatever, which would contain all the stuff currently in Peacock's premium SVOD tier. It would contain all the live sports and news from across their many broadcast and cable nets and probably have new episodes from those networks available same-day (i.e. this would be a full replacement for their part of the basic cable bundle). Would also include recent theatrical films plus a line of Universal Originals. HBO (at this point just its library of originals plus some additional older Hollywood films) would probably be an optional ad-free add-on for an extra $5-7/month.


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## JoeTheDragon

harsh said:


> It seems to me that this could only be acceptable from a regulatory standpoint if this includes Comcast divesting itself of NBC Universal.
> 
> I would at least hope that there would be serious headwinds given how lax Comcast was about following the terms of the NBC Universal merger.


and comcast is not allowd to have any caps + they must let you use your own router with any plan / can't lock content as part renting there router.


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## NashGuy

JoeTheDragon said:


> and comcast is not allowd to have any caps + they must let you use your own router with any plan / can't lock content as part renting there router.


Yeah, hopefully if the DOJ approved a deal for Comcast to acquire and spin off WBD, they would impose some concessions with regard to their core broadband business. That's what happened when Charter got permission to acquire Time Warner Cable and BrightHouse Cable. That's why Charter still has no data caps.


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## CraigerM

I thought NBC/Universal was interested in buying Viacom/CBS and merging Peacock with Paramount+? If not, where would that leave Paramount+? If not, who would want to buy Viacom/CBS? Could that be too much if they bought Warner Bros/Discovery and Viacom/CBS? Imagine an all in APP like that?


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## Bender The Lab

CraigerM said:


> I thought NBC/Universal was interested in buying Viacom/CBS and merging Peacock with Paramount+? If not, where would that leave Paramount+? If not, who would want to buy Viacom/CBS? Could that be too much if they bought Warner Bros/Discovery and Viacom/CBS? Imagine an all in APP like that?


If Comcast bought Paramount, they would have to get rid of NBC or CBS, no way the Government will let them keep both.

Warner does not have a broadcast channel.


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## b4pjoe

NashGuy said:


> Yeah, hopefully if the DOJ approved a deal for Comcast to acquire and spin off WBD, they would impose some concessions with regard to their core broadband business. That's what happened when Charter got permission to acquire Time Warner Cable and BrightHouse Cable. That's why Charter still has no data caps.


Charter/Spectrum data caps can can end in May 2023 if they decide they want to do that.


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## NashGuy

CraigerM said:


> I thought NBC/Universal was interested in buying Viacom/CBS and merging Peacock with Paramount+? If not, where would that leave Paramount+? If not, who would want to buy Viacom/CBS? Could that be too much if they bought Warner Bros/Discovery and Viacom/CBS? Imagine an all in APP like that?


I've speculated that a merger of NBCU and Paramount might be a good idea but I haven't read any rumors lately about that being a possibility. If you're NBCU, I think you would definitely see WBD as the stronger merger partner given that they have HBO, DC, and a huge library of movies, classic TV, and all that reality/lifestyle stuff. 

If NBCU and WBD merge, I imagine it will mean that Paramount ends up remaining solo. I doubt Paramount+ would survive long-term. Paramount just isn't big enough to compete against the giants, so they'd probably drop out of the streaming wars and just license their content out to other services like Sony does.


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## CraigerM

NashGuy said:


> I've speculated that a merger of NBCU and Paramount might be a good idea but I haven't read any rumors lately about that being a possibility. If you're NBCU, I think you would definitely see WBD as the stronger merger partner given that they have HBO, DC, and a huge library of movies, classic TV, and all that reality/lifestyle stuff.
> 
> If NBCU and WBD merge, I imagine it will mean that Paramount ends up remaining solo. I doubt Paramount+ would survive long-term. Paramount just isn't big enough to compete against the giants, so they'd probably drop out of the streaming wars and just license their content out to other services like Sony does.


How much longer do you think Paramount+ has? Could they also just have their first run streaming series be on the Paramount Network if Paramount+ went under?


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## harsh

NashGuy said:


> DOJ should probably never have allowed Disney to buy the Fox studios and content library.


That may have actually started when Sony was buying up studios.

My objection is that content delivery companies shouldn't be allowed to buy the content companies (much as Sinclair tried to do).


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## NashGuy

CraigerM said:


> How much longer do you think Paramount+ has? Could they also just have their first run streaming series be on the Paramount Network if Paramount+ went under?


A few more years, probably. Paramount+ is still very much in expansion mode right now, launching in major European markets like the UK and Italy. I don't think we see what the streaming wars (and cable TV) endgame looks like until maybe 2026 or so. Assuming Paramount doesn't get swallowed by a bigger fish, then by that point I'd expect them to pull the plug on Paramount+, at least internationally but probably also in the US. They may very well continue to operate Pluto TV but wouldn't compete in subscription streaming. Instead they'd just license out the higher value content from their library, plus same-day or next-day access to new content on their dying linear channels, to the surviving SVODs: Netflix, Prime Video, Disney+, Universal+, and Apple TV+ (although I doubt that Apple will ever be interested in showing anyone else's "reruns"). Likewise, Paramount's studio operations will continue to create new originals for those SVODs, as they already do (e.g. HBO Max's Station Eleven was made by Paramount Studios).


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## harsh

CraigerM said:


> How much longer do you think Paramount+ has?


I can't imagine it has anywhere to go but up.

As more of the contracts with carriers and syndication expire, more content can be moved to the streaming product.


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## NashGuy

Rough days over at WBD.

*Warner Bros. Discovery Marriage Hurt by High Debt, Low Morale*

Key quote: 
_“We think Warner Bros. Discovery has one of the best assets in media coupled with one of the worst balance sheets in media,” Wells Fargo analyst Steven Cahall said._

And the story concludes:
_And while the Hollywood gossip machine has a theory that Mr. Zaslav is stripping the company down for a sale, he said at a companywide meeting earlier this fall that Warner Bros. Discovery has the strongest hand in the business. 
“We are not for sale, absolutely, not for sale,” he said._

Oh, I think they'll be ready to sell the company come 2024, once that option is legally on the table again.


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## harsh

I certainly hope that the FTC and Justice think extra, extra hard before they allow anything that even looks a little bit like a Comcast merger.


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## NashGuy

harsh said:


> I certainly hope that the FTC and Justice think extra, extra hard before they allow anything that even looks a little bit like a Comcast merger.


IMO, they never should have allowed Comcast to have bought NBCU in the first place. That kind of deal -- vertical integration between a content supplier and a distributor -- is more controversial than horizontal integration between two side-by-side competitors in the same industry (assuming that such a deal wouldn't reduce competition too much). Net neutrality advocates were outraged about the Comcast/NBCU deal.

So if the government were to allow a merger of NBCU and WBD at all, it should only be on the condition that the entire thing is spun off from Comcast as its own separate publicly traded corporation, with none of the current major shareholders (e.g. Comcast CEO Brian Roberts) having any controlling votes in the merged company, making it completely free and independent of Comcast. (Likewise, when AT&T spun off Warner to merge with Discovery, Discovery's largest shareholder John Malone had to relinquish voting rights for his stock in the merged WBD as a concession to get the deal done.)

On the one hand, yeah, mergers are generally anti-competitive and not great for consumers. But on the other hand, I think an NBCU/WBD merger is probably the best hope for creating one more powerhouse out of traditional Hollywood -- aside from Disney (which, remember, the government allowed to acquire most of 20th Century Fox) -- that can compete globally against Netflix, Amazon, and Apple. If that fails to happen, then I think pretty much all of Hollywood ends up just being content suppliers to those big 4.


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## harsh

Merging pretty much anything with Comcast creates one or more bigger monsters in several possible categories:

Content creation
Video distribution services
Broadband services
That said, I wonder how the regulators are going to view Rupe's proposed re-joining of News Corp and Fox.


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## NashGuy

harsh said:


> Merging pretty much anything with Comcast creates one or more bigger monsters in several possible categories:
> 
> Content creation
> Video distribution services
> Broadband services
> That said, I wonder how the regulators are going to view Rupe's proposed re-joining of News Corp and Fox.


I can't imagine that a News Corp and Fox tie-up would get any real push back. Those are relatively small companies, both of which already have the same family as the main owners and managers. Similar situation to Viacom + CBS, which sailed through.

And as for Comcast, as I say, I think that any tie-up they orchestrate between their NBCU and WBD would involve them spinning it all off as a separate company, just as AT&T (another broadband company that had a media arm) spun off Warner to merge with Discovery.


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## NashGuy

Another article about how the best long-term options for the debt-ridden Warner Discovery may be a merger with either Paramount or NBCUniversal (which are, let's face it, the only potential dance partners left on the floor). It concludes what seems to be the conventional wisdom in Hollywood and Wall Street, which is that a tie-up with NBCU would be the better scenario; the author estimates such a merger would result in a business with debt at only 3.0x EBITDA while a Paramount/WBD merger would create a business with 3.5x debt. Currently, WBD by itself has a debt load at a whopping 5.0x EBITDA. Yikes.









Breakingviews - For your consideration: Warner-Discovery part two


David Zaslav is finding that big may not be big enough. The Warner Bros Discovery boss has encountered a series of problems since his splashy merger in April. Another deal with a similarly undersized peer might produce a rare sequel that improves on the original.




www.reuters.com





The difficult thing for WBD, though, is that another round of M&A can't happen until 2024 per terms of the most recent merger. Until then, Zas will have to cut, cut, cut while hoping that Bloys can continue to crank out hits at HBO. The bigger challenge, I think, will be their theatrical movie business...


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## Bender The Lab

NashGuy said:


> The difficult thing for WBD, though, is that another round of M&A can't happen until 2024 per terms of the most recent merger. Until then, Zas will have to cut, cut, cut while hoping that Bloys can continue to crank out hits at HBO. The bigger challenge, I think, will be their theatrical movie business...


They need a massive hit, it will not be Black Adam, it needed to make $600 million to break even, now at $245 Worldwide and fading fast.

While they will have guaranteed hits in Aquaman and others next year, will they even have to money to market them, all the news stories were they had enough cash for marketing of 3 movies this year and they need them to be hits, hoping Black Adam would hit $1 Billion, now all they have left is a House Party movie which will not do enough to bail them out.

Too bad they have to wait until 2024.

All the inside info I get from investment newsletters says Warner/Discovery is in massive trouble and they can see a bankruptcy middle of next year, it is that bad.


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## NashGuy

Bender The Lab said:


> All the inside info I get from investment newsletters says Warner/Discovery is in massive trouble and they can see a bankruptcy middle of next year, it is that bad.


Wow. That's more dire than I thought. I did reach out to an expert industry analyst back in Aug. and asked him if he thought WBD would end up in bankruptcy under an unsustainable debt load. (The rising interest rate environment is cruel to debtors.) His reponse: "Nah. They will burn all the furniture to stay alive even if destroys long term strategy."

But if he's wrong, and WBD does crash into bankruptcy next year, then I imagine we could see Comcast making a play for it at that point. Being able to do that, though, may necessitate Comcast getting Disney to agree to purchase their 1/3 stake in Hulu early rather than waiting until 2024, when either side can force the sale.


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## Bender The Lab

NashGuy said:


> Wow. That's more dire than I thought. I did reach out to an expert industry analyst back in Aug. and asked him if he thought WBD would end up in bankruptcy under an unsustainable debt load. (The rising interest rate environment is cruel to debtors.) His reponse: "Nah. They will burn all the furniture to stay alive even if destroys long term strategy."
> 
> But if he's wrong, and WBD does crash into bankruptcy next year, then I imagine we could see Comcast making a play for it at that point. Being able to do that, though, may necessitate Comcast getting Disney to agree to purchase their 1/3 stake in Hulu early rather than waiting until 2024, when either side can force the sale.


Well, the previous management did not help, for example the rumors are they would of received $750-1 Billion from Netflix for streaming rights to the Big Bang Theory, instead they are basically paying themselves ( producers and cast also) $500 Million.

Considering those deals have yearly pay offs, that would be cash they badly need right now, for example, if a five year deal, that is $200 million a year they could get.

Covid did not help with the Movie Releases, their biggest movie in the 3 years was The Batman at $770 Million, their last $1 Billion hit was The Joker in 2019.

My guess, instead of burning the furniture, they are going to make a lot of cheap content deals since they have such a great catalog, what else do they have to make quick cash?

The only other thing they have is the Discovery Networks, I know they cannot make a deal with Warner, maybe they can split if off and just sell the Discovery part off, that would bring in a bunch of Billions.


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## NashGuy

Bender The Lab said:


> Well, the previous management did not help, for example the rumors are they would of received $750-1 Billion from Netflix for streaming rights to the Big Bang Theory, instead they are basically paying themselves ( producers and cast also) $500 Million.
> 
> Considering those deals have yearly pay offs, that would be cash they badly need right now, for example, if a five year deal, that is $200 million a year they could get.
> 
> Covid did not help with the Movie Releases, their biggest movie in the 3 years was The Batman at $770 Million, their last $1 Billion hit was The Joker in 2019.
> 
> My guess, instead of burning the furniture, they are going to make a lot of cheap content deals since they have such a great catalog, what else do they have to make quick cash?
> 
> The only other thing they have is the Discovery Networks, I know they cannot make a deal with Warner, maybe they can split if off and just sell the Discovery part off, that would bring in a bunch of Billions.


Eh, I'm not so sure how much value exists in those Discovery nets long-term as cable TV continues to fade away. It's not appointment TV, for the most part. It's the kind of stuff that will ultimately end up on FAST linear channels like at Pluto TV. But more practically, I think the terms of the current deal preclude Zaslav from selling the company in part or whole to anyone before 2024. So I don't think they can sell off Discovery next year.

If the game plan really is to hold things together until WBD can merge into Universal in 2024, then yeah, make some short-term content deals. Cut some stuff, e.g. kids' content, out of HBO Max and license it out to competing SVODs and/or multiple FASTs to bring in more revenue. Makes no sense to try to get their own WBD FAST off the ground next year (which will incur lots of marketing costs to raise awareness and get people to download it) if WBD isn't going to be around for several more years. Better to just make ad-revenue-sharing deals with Peacock, Pluto TV, Tubi, Roku and/or Freevee and get a lot of your older content playing in those places.

Also, I can't see any sense in folding Discovery+ into HBO Max if WBD is likely to sell off a year or so later. Why destroy the Discovery+ revenue stream? If anything, try to attract more cord-cutters to that service by putting live streams of all the Discovery cable nets in there (as Hallmark is now doing with their channels in Peacock). I don't know if that's permissible under their current MVPD carriage deals but, if so, why not, and raise the price of D+ a buck or so at the same time. Meanwhile, they might be able to share select back seasons of various Discovery shows and put them on other companies' FAST linear channels to pull in that ad revenue.


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## Bender The Lab

NashGuy said:


> Eh, I'm not so sure how much value exists in those Discovery nets long-term as cable TV continues to fade away. It's not appointment TV, for the most part. It's the kind of stuff that will ultimately end up on FAST linear channels like at Pluto TV. But more practically, I think the terms of the current deal preclude Zaslav from selling the company in part or whole to anyone before 2024. So I don't think they can sell off Discovery next year.


If they can sell Discovery, now is the time, while the Cable Channels have value, in 2-3 years, you are correct.

If they cannot sell, than a moot point.



NashGuy said:


> If the game plan really is to hold things together until WBD can merge into Universal in 2024, then yeah, make some short-term content deals. Cut some stuff, e.g. kids' content, out of HBO Max and license it out to competing SVODs and/or multiple FASTs to bring in more revenue. Makes no sense to try to get their own WBD FAST off the ground next year (which will incur lots of marketing costs to raise awareness and get people to download it) if WBD isn't going to be around for several more years. Better to just make ad-revenue-sharing deals with Peacock, Pluto TV, Tubi, Roku and/or Freevee and get a lot of your older content playing in those places.


Which is basically the fire sale to fend off Bankruptcy.

Even if they had the money, do we really need another FAST service?

Better just sell the content like the old days.



NashGuy said:


> Also, I can't see any sense in folding Discovery+ into HBO Max if WBD is likely to sell off a year or so later. Why destroy the Discovery+ revenue stream? If anything, try to attract more cord-cutters to that service by putting live streams of all the Discovery cable nets in there (as Hallmark is now doing with their channels in Peacock). I don't know if that's permissible under their current MVPD carriage deals but, if so, why not, and raise the price of D+ a buck or so at the same time. Meanwhile, they might be able to share select back seasons of various Discovery shows and put them on other companies' FAST linear channels to pull in that ad revenue.


I been saying that for awhile, all Discovery+ content is stuff on Traditional Channels, so no content budget, just keep showing the stuff already paid for with the per sub fee of Traditional Providers, do not know how many subs they need to cover all the other costs.

But, I think one of the reasons is the fact they will not be producing much for HBOMAX because of the high cost of that material, they need the Discovery content to make it seem like there is a lot on, also quessing a price increase to $19.99 a month.

Q3 report came out today, 50 Billion in debt, also only added 2.8 million global total to both D+ and HBO, while Paramount+ added over 4 million.

Also, they are moving the merge of the 2 services up to spring, it was going to be in the summer.

Here is the report-



https://s201.q4cdn.com/336605034/files/doc_financials/2022/q3/WBD-3Q22-Earnings-Release-Final-11.3.22.pdf


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## NashGuy

Bender The Lab said:


> If they can sell Discovery, now is the time, while the Cable Channels have value, in 2-3 years, you are correct.
> 
> If they cannot sell, than a moot point.
> 
> 
> 
> Which is basically the fire sale to fend off Bankruptcy.
> 
> Even if they had the money, do we really need another FAST service?
> 
> Better just sell the content like the old days.
> 
> 
> 
> I been saying that for awhile, all Discovery+ content is stuff on Traditional Channels, so no content budget, just keep showing the stuff already paid for with the per sub fee of Traditional Providers, do not know how many subs they need to cover all the other costs.
> 
> But, I think one of the reasons is the fact they will not be producing much for HBOMAX because of the high cost of that material, they need the Discovery content to make it seem like there is a lot on, also quessing a price increase to $19.99 a month.
> 
> Q3 report came out today, 50 Billion in debt, also only added 2.8 million global total to both D+ and HBO, while Paramount+ added over 4 million.
> 
> Also, they are moving the merge of the 2 services up to spring, it was going to be in the summer.
> 
> Here is the report-
> 
> 
> 
> https://s201.q4cdn.com/336605034/files/doc_financials/2022/q3/WBD-3Q22-Earnings-Release-Final-11.3.22.pdf


Yeah, I just don't believe the reports you're seeing that WBD may go bankrupt next year. May just be a narrative that bearish investors who are now short the stock are pushing. (Being short WBD has been very lucrative this year!) Yes, situation is bad but if it was that bad, I don't see them pushing forward all-in on a single SVOD next spring. Also, no way that they'll raise the price of it to $19.99/mo. The loss of subs they'd see would easily more than offset the increased revenue from those who stick around.

And while we don't necessarily need another FAST app, any media company with a big library of older content isn't fully monetizing it if they aren't making a lot of it free with ads, whether through their own FAST or other companies'. As we go forward, I think the main selling point of SVODs will be their new/recent exclusive content, plus the ability to watch some of the most popular classic content ad-free. I don't think those huge libraries of old stuff do all that much to attract or retain SVOD customers. I predict as the years go by we'll even see an increasing number of old Netflix Originals turning up on FAST services (even if they also stay on Netflix).


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## Bender The Lab

NashGuy said:


> Also, no way that they'll raise the price of it to $19.99/mo. The loss of subs they'd see would easily more than offset the increased revenue from those who stick around.


Those who just subscribe to Discovery+ for $4.99-6.99 are going to be surprised-









HBO Max Price Will Head Due “North” When It Combines With Discovery+ Next Spring, Warner Discovery Streaming Czar JB Perrette Says; Ad Load On Cheaper Tier Could Also Double


By the time HBO Max debuts next spring as a fortified offering encompassing Discovery+, it will have gone three years without any adjustments to its price or the ad experience on the cheaper subscr…



deadline.com


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## b4pjoe

I've said since they announced the two would merge that the price is going to go up. For both right now with ads is $14.98 and ad free is $21.98. Expect to pay more than either of those prices when they merge into one app. And that is going to piss off the people that only want HBO content and do not want Discovery+ content and the people that want only Discovery+ content and no HBO content. It will be a lesson in how to shoot yourself in the foot.


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## Bender The Lab

b4pjoe said:


> I've said since they announced the two would merge that the price is going to go up. For both right now with ads is $14.98 and ad free is $21.98. Expect to pay more than either of those prices when they merge into one app. And that is going to piss off the people that only want HBO content and do not want Discovery+ content and the people that want only Discovery+ content and no HBO content. It will be a lesson in how to shoot yourself in the foot.


I do not mind having Discovery content, which I never will watch, I can avoid it.

What I do mind is the coming increased price and them cutting out HBO type programming and then using Discovery content to replace it.

If they said we need to increase the price to bring you more HBO type programing and movies, including the 45 days after theaters , I would say ok, I understand, not put a bunch of content you can get for $5-7 dollars a month, get rid of about half of HBO content, get rid of the 45 days after theater, then raise the price to, roughly, $20 a month.

My year is up in July, we will see then what things are like.


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## b4pjoe

Bender The Lab said:


> I do not mind having Discovery content, which I never will watch, I can avoid it.


Yes you can avoid it but you will be paying for content you want to avoid. Sounds a lot like a cable/sat subscription.


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## Bender The Lab

b4pjoe said:


> Yes you can avoid it but you will be paying for content you want to avoid. Sounds a lot like a cable/sat subscription.


Well, they will not get any extra out of me since my year is up next July.

The take away of the 45 days after theaters is what pisses me off the most.

Have noticed movies are still for sale 45 days after theaters on Vudu and the likes, then on HBO 90 days after theaters.


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## Bender The Lab

They just canceled Westworld after 4 Seasons, probably because it was expensive to produce, I can just imagine what they are thinking there-

_ We got rid of Westworld which costs $10 million a episode to make, but we will soon have 98 Seasons of Diners, Drive-Ins and Dives instead, which costs $1.32 a episode to produce._


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## Bender The Lab

Reading more of that 3rd Quarter Conference Call, where David Zaslav said the planned cost savings will be $3.5 Billion.

With that, I strongly believe HBO will be more Discovery+ with some HBO, scripted programing is expensive, Discovery programing is not and is still largely paid for by Traditional Providers per sub fees even before it is online.

Then the fact they are going to increase the price, Warner is just a slow moving disaster, making all the wrong decisions based on money.









Warner Bros Discovery Stumbles In Q3, Falling Short Of Wall Street Targets Due To Ad Slowdown, Pay-TV Losses And Restructuring Charges


Warner Bros Discovery stumbled in the third quarter, falling short of Wall Street expectations due to a slowdown in advertising and merger-related restructuring charges. Total revenue came in at ab…




deadline.com


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## NashGuy

Bender The Lab said:


> Those who just subscribe to Discovery+ for $4.99-6.99 are going to be surprised-
> 
> 
> 
> 
> 
> 
> 
> 
> 
> HBO Max Price Will Head Due “North” When It Combines With Discovery+ Next Spring, Warner Discovery Streaming Czar JB Perrette Says; Ad Load On Cheaper Tier Could Also Double
> 
> 
> By the time HBO Max debuts next spring as a fortified offering encompassing Discovery+, it will have gone three years without any adjustments to its price or the ad experience on the cheaper subscr…
> 
> 
> 
> deadline.com


I remember reading a comment from WBD awhile back that they plan to phase in the price increase for Discovery+ subs after the two services merge. But even so, I have to think that the vast majority of them jump ship. Supposedly there is very little overlap in the subscriber bases between D+ and HBO Max (which makes sense), suggesting that D+ subs aren't generally interested in HBO Max content at its current price points, much less higher ones.

Based on Zas's recent comments, I think the combined service will see its entry-level price, with ads, remain at $9.99. They know that those are the more price-sensitive customers. And keep in mind that Disney will soon start selling their "Disney Bundle Duo Basic" containing Disney+ and Hulu, both with ads, for $9.99/mo. WBD needs to be price competitive with that. And breaking that $10 price barrier is psychologically important. All reasons why I think the HBO/Discovery combo service keeps a $9.99/mo staring price.

Zas said that the way they're going to make the ad-supported plan more profitable is by increasing the number of minutes of ads per hour so that it's closer to the amount D+ currently has versus the industry-low ad load of HBO Max. Still though, for current D+ subs on the plan with ads, you're talking about raising their price from $4.99/mo to $9.99/mo. and I suspect most won't stick around. Maybe they give them the first month of the combo service still at $4.99, then jump to $7.49 for the next 2-3 months, then go to the full $9.99/mo. Try to get them hooked on the additional HBO Max content before charging them fully for it.

It's the ad-free plan where Zas is specifically saying he thinks they have pricing power to raise the cost. But as I've said multiple times, I don't see the price going up more than a couple dollars, to maybe $16.99/mo. because more than that risks running off too many subs. Keep in mind that everyone getting HBO traditionally, via a pay TV provider, is automatically on the more expensive ad-free plan, and those folks still constitute a majority of HBO Max subs in the US. HBO Max is nowhere near as popular as Netflix, whose most popular ad-free plan is only $15.49/mo. I can't see HBO/Discovery selling their only ad-free plan in the $18-20/mo range. Could they switch from two plans to three, e.g. $9.99 HD with ads, $15.49 HD ad-free, $19.99 4K HDR ad-free? Maybe. But if they're going to keep it a simple two-tier thing like HBO Max is now, I don't see the ad-free tier jumping above $16.99/mo. They'd risk losing more revenue from lost subs than they'd gain from the extra money per month, IMO.

All this raises other questions in mind, though, surrounding ads. It's unknown what the combo service will be named. One early leak said they were leaning toward HBO Discovery while a more recent one said they might keep the name HBO Max. And I think the name comes down to what they do with those Max Originals, i.e. the original content inside HBO Max which is made by the HBO team headed by Casey Bloys but _which contains ads in the cheaper plan_. Yes, the Max Originals brand does signify content with a somewhat different tone than HBO (often aimed at a younger, more female audience) but it also signifies "This is a show that will have ads on the $9.99 plan, unlike HBO Originals which are always ad-free."

We know Zas is hot to increase ad revenue on the $9.99 plan, so it seems very unlikely that they do away with the Max Originals moniker and rebrand that content as ad-free HBO Originals. _*Unless he goes the other way and introduces ads in HBO Originals too*._ I'm not predicting that will happen but I think it's plausible. Maybe they do away with the Max branding and call those shows "HBO+ Originals" to signify that they're exclusive to the app but not on HBO linear cable channels. But everything in the entire app would have ~6 minutes of ads per hour, even the HBO stuff.

My annual sub to HBO Max ends in Dec. and then I'm switching over to ad-free Hulu for a few months. By the time I come back to HBO in the spring, it'll probably be the combined service. If the price of the totally ad-free tier goes up a lot, I might just get the $9.99 month plan if all the HBO content remains ad-free. But I think there's a decent chance that won't be the case, which would make the decision harder.


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## b4pjoe

NashGuy said:


> It's the ad-free plan where Zas is specifically saying he thinks they have pricing power to raise the cost. But as I've said multiple times, I don't see the price going up more than a couple dollars, to maybe $16.99/mo. because more than that risks running off too many subs. Keep in mind that everyone getting HBO traditionally, via a pay TV provider, is automatically on the more expensive ad-free plan, and those folks still constitute a majority of HBO Max subs in the US. HBO Max is nowhere near as popular as Netflix, whose most popular ad-free plan is only $15.49/mo. I can't see HBO/Discovery selling their only ad-free plan in the $18-20/mo range. Could they switch from two plans to three, e.g. $9.99 HD with ads, $15.49 HD ad-free, $19.99 4K HDR ad-free? Maybe. But if they're going to keep it a simple two-tier thing like HBO Max is now, I don't see the ad-free tier jumping above $16.99/mo. They'd risk losing more revenue from lost subs than they'd gain from the extra money per month, IMO.


I get HBO Max as part of HBO through DirecTV Sat. But if I didn't I would still have the ad-free plan at $14.99. I also pay the $6.99 for Discovery+ ad free. So for people that subscribe to both ad-free packages now it would be a price cut to be able to get it in the combined plan for $16.99 so that would be great for them. Sorry but I just can't see WBD cutting the price to where they are making less than they are now. Even if they would do it for $16.99 they are going to lose D+ subscribers that don't want HBO anything and they aren't going to pay $16.99 for their Discover+ that they were getting for $6.99. They might not lose as many HBO subscribers that don't want Discover+ content for the extra $2.00 per month but they would lose some.

Soon I am going to have to evaluate my DirecTV Premier subscription since HBO Max is merging with Discovery+ content and Showtime is probably going to die. I don't watch a whole lot of Starz or Cinemax so I could probably move down a notch or two on my DirecTV plan and just get the Showtime stuff through Paramount+ and get the Discovery+ along with HBO in one plan. Depends on if DirecTV takes away price promos if I switch plans. If they do it might be time to switch to DirecTV Stream.


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## the2130

b4pjoe said:


> Soon I am going to have to evaluate my DirecTV Premier subscription since HBO Max is merging with Discovery+ content and Showtime is probably going to die. I don't watch a whole lot of Starz or Cinemax so I could probably move down a notch or two on my DirecTV plan and just get the Showtime stuff through Paramount+ and get the Discovery+ along with HBO in one plan. Depends on if DirecTV takes away price promos if I switch plans. If they do it might be time to switch to DirecTV Stream.


That's what I did. I had the Premier package for almost 20 years, but there is so little new content on Showtime and Starz these days, and none on Cinemax, that it just isn't worth paying for the Premier package any longer. If those channels should have a show or two I want to watch, I can always sign up for a month through Amazon Channels and then cancel. With the Choice package, I still get the RSN for my area and I didn't lose any cable channels that I watch on a regular basis. And the difference in price offsets the cost of almost all of my streaming subscriptions combined.


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## NashGuy

b4pjoe said:


> I get HBO Max as part of HBO through DirecTV Sat. But if I didn't I would still have the ad-free plan at $14.99. I also pay the $6.99 for Discovery+ ad free. So for people that subscribe to both ad-free packages now it would be a price cut to be able to get it in the combined plan for $16.99 so that would be great for them. Sorry but I just can't see WBD cutting the price to where they are making less than they are now. Even if they would do it for $16.99 they are going to lose D+ subscribers that don't want HBO anything and they aren't going to pay $16.99 for their Discover+ that they were getting for $6.99. They might not lose as many HBO subscribers that don't want Discover+ content for the extra $2.00 per month but they would lose some.


At the end of last year, Discovery had 22 million streaming subs globally. The vast majority of those were Discovery+, which at that time was operating through most of Europe (where it rebranded earlier services that Discovery had previously been operating there) plus N. America and India. And it got a big boost in the US thanks to a launch partnership here with Verizon, who included it for free with certain plans for 6 months or a year. But Verizon isn't doing that any more and I don't think any of their customers are getting Discovery+ for free now, so many of them have surely dropped the service. Meanwhile, a bit of the D+ content (Magnolia, plus Planet Earth) is now already on HBO Max.

So all that to say, how many subs do we think D+ has in the US now? I'd be surprised if it was more than 10 million. Meanwhile, HBO/HBO Max has about 50 million US subs now. Let's assume that monthly ARPU for D+ subs is $7 (because the ad-free version costs $7 and the version with ads costs $5 but also brings in ad revenue, let's say $2 on average). Now imagine that all those customers go away once D+ ceases to exist. That's a loss of $70 million per month ($7 x 10 million).

Now assume the monthly ARPU for HBO Max is currently $15 but increases by $2 (ad-free plan price goes up from $15 to $17 while the cheaper version stays at $10 but has more ads, enough to generate an average $17 total revenue per user). That would represent an increase of $100 million in revenue per month ($2 x 50 million). Yes, a few HBO subs would cancel because of the price increase but then it's also likely at least a few D+ subs end up taking HBO Max after that service goes away, so let's call that a wash.

When we subtract the $70 million loss of revenue from the destruction of D+ from the $100 million increase of revenue at HBO Max, we get a net $30 million increase in revenue per month.

Not saying that my numbers are all accurate but I think they're plausible and in the ballpark.


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## b4pjoe

LOL….that is a lot of assuming there.


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## NashGuy

b4pjoe said:


> LOL….that is a lot of assuming there.


Not really too much assuming going on in terms of current sub numbers. Point is to illustrate how it could easily be more profitable for them to essentially lose all their US D+ subs in exchange for just a modest price increase in the much larger HBO customer base. But they can't jack up the price of HBO too much or it'll result in significant customer losses. Which is why it's crazy when you see folks say "HBO Max costs $15 and Discovery+ costs $7, so they're going to charge over $20/mo when they combine the two because they're not going to make less money than they do now." But the result of doing that is not only would they lose all the D+ subs but they'd probably lose enough HBO subs that their overall revenue would be lower than it is now.


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## b4pjoe

Corporate greed what it is these days I can’t see it being any less than $19.99 which would match the Disney+ Premium bundle and the top tier of Netflix pricing. But we will see.


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## JoeTheDragon

NashGuy said:


> Not really too much assuming going on in terms of current sub numbers. Point is to illustrate how it could easily be more profitable for them to essentially lose all their US D+ subs in exchange for just a modest price increase in the much larger HBO customer base. But they can't jack up the price of HBO too much or it'll result in significant customer losses. Which is why it's crazy when you see folks say "HBO Max costs $15 and Discovery+ costs $7, so they're going to charge over $20/mo when they combine the two because they're not going to make less money than they do now." But the result of doing that is not only would they lose all the D+ subs but they'd probably lose enough HBO subs that their overall revenue would be lower than it is now.


They can keep the HBO cable / sat price at $15 as most subs are paying for the main Discovery channels as part of there basic non HBO package.


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## NashGuy

b4pjoe said:


> Corporate greed what it is these days I can’t see it being any less than $19.99 which would match the Disney+ Premium bundle and the top tier of Netflix pricing. But we will see.


Well, let's both hope you're wrong. If the price of HBO Max ad-free and HBO via cable jumps from $15 to $20, there are going to be a lot of folks thinking more carefully about just how much good stuff will be coming up in the next month and then deciding to drop it.


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## NashGuy

JoeTheDragon said:


> They can keep the HBO cable / sat price at $15 as most subs are paying for the main Discovery channels as part of there basic non HBO package.


HBO via cable automatically comes with the ad-free HBO Max plan (whether you use the app or not). So I don't see how they increase the price of HBO Max ad-free as a standalone streaming service but then keep the price of HBO via cable at a lower price. As for the Discovery content, the stuff on their linear cable channels is somewhat different than what's on Discovery+. As the "+" suggests, Discovery+ is positioned as additive to their cable channels, not exactly a replacement for them.


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## Bender The Lab

NashGuy said:


> As the "+" suggests, Discovery+ is positioned as additive to their cable channels, not exactly a replacement for them.


You must never have subscribe to Discovery+, it is a replacement, if it is on the Cable Channel, it is on D+, either before/ same day / day after.

Also in real 1080P, my wife loved watching Food Network before she passed, I was amazed at how much better the picture looked.


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## b4pjoe

Not everything from the linear channels is on before / same day / day after. For example Alaska the Last Frontier doesn't have any episodes from the current season on D+. And there are some others like that as well.


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## NashGuy

Bender The Lab said:


> You must never have subscribe to Discovery+, it is a replacement, if it is on the Cable Channel, it is on D+, either before/ same day / day after.
> 
> Also in real 1080P, my wife loved watching Food Network before she passed, I was amazed at how much better the picture looked.


Yes, I have subscribed to Discovery+ before and what you're describing was not the case at that time. It was all over the place in terms of when new episodes from their linear channels showed up on D+, but definitely NOT the case that everything showed up either same day or next day. And I doubt it's like that now either as Zaslav is pretty intent on trying to protect his linear channels.


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## inkahauts

If the subscribers between HBO max and discovery plus really are completely separate groups, they wouldn’t need to change the price of max to make up for lost subscribers in general. They’d get more money automatically just by the increase in what d+ subs would be paying. 

I think the key to their longevity is good content and I have a feeling in the next three months we are going to what about a lot of dc comic movies that will be put into action…. That will be their money fix now that they have some hopefully more competent people running that division. 

I believe in the long run between paramount plus and peacock, paramount will be vastly more profitable and popular. And I’m won’t be surprised if they try and grab warners if given the chance. But it’ll depend on if Warner is doing better in a couple years.


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## Bender The Lab

inkahauts said:


> If the subscribers between HBO max and discovery plus really are completely separate groups, they wouldn’t need to change the price of max to make up for lost subscribers in general. They’d get more money automatically just by the increase in what d+ subs would be paying.


The problem is those Discovery+ subscribers might balk at paying the $17-20 a month ( after the price increase) after just paying the $5-7 a month now.

Also, the content does not really complement each other.



> I believe in the long run between paramount plus and peacock, paramount will be vastly more profitable and popular. And I’m won’t be surprised if they try and grab warners if given the chance. But it’ll depend on if Warner is doing better in a couple years.


Paramount+ has proven to be the little engine that could amongst all the streaming services, constantly has great subscriber gains every quarter ( 4.6 Million last quarter).

Paramount Global in general has been doing really well, Pluto TV is the top of all the FAST services, CBS is the number one network which helps P+, Movie Sales are up thanks to Top Gun, Sonic, Lost City, Scream and Smile and has a bright future with Transformers, Mission Impossible and another A Quiet Place.

I think Paramount can surprise us by staying a separate company without the need to merge with anyone.

Still think Universal will end up taking over Warner, Comcast is a monster in revenue compared to Paramount or Warner.


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## MCHuf

NashGuy said:


> Yes, I have subscribed to Discovery+ before and what you're describing was not the case at that time. It was all over the place in terms of when new episodes from their linear channels showed up on D+, but definitely NOT the case that everything showed up either same day or next day. And I doubt it's like that now either as Zaslav is pretty intent on trying to protect his linear channels.


I tried D+ for a month for 99 cents and I found really disappointing. It reminded me of the early days of Hulu with incomplete seasons, only some seasons or other stupid things due to the networks wanting to protect their linear channels. I really like HBOMax. But when the price goes up due to adding content that I feel is second rate, I'll drop it in an instant.


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## NashGuy

Bender The Lab said:


> Paramount+ has proven to be the little engine that could amongst all the streaming services, constantly has great subscriber gains every quarter ( 4.6 Million last quarter).


Yeah, Paramount+ has surprised me this year in terms of their subscriber growth. And they're making a big expansion push in the UK and Europe. They've done well at the box office too.

But their stock price is down 44% year-to-date versus -18% for the S&P 500. I think there's a growing sentiment on Wall Street that Paramount should be a content "arms dealer," licensing their stuff out to the established global big boys of streaming -- Netflix, Amazon, Disney, etc. -- rather than trying to build their own competitor in Paramount+.









Why Paramount's Streaming Strategy Places It in a Precarious Position | Charts


The company's short-term profitability is taking a hit, but will playing the long game pay off




www.thewrap.com





Even the larger Warner Bros. Discovery -- who I think everyone would agree has a far richer content library and IP trove -- is backing away from being all-in on their own streamer. Zaslav seems to be hedging the big bet on HBO Max that Kilar had enacted. I think he's trying to sort of have it both ways, shifting somewhat in the direction of being an arms dealer. In WBD's case, that's because the balance sheet is such a mess. Huge debt at 5x EBITDA. So he's looking at any way he can to cut costs and juice revenue, even if it's to the long-term detriment of their DTC streamer.

Paramount, OTOH, is doing the opposite. They're willing to incur costs now, and forego licensing revenue, in order to build up Paramount+. But I remain skeptical about the long-term viability of Paramount+ as a standalone global DTC streamer. In the US, maybe, as here they can embed the most-watched broadcast net, CBS, in it. And they could eventually do the same with all of their linear cable channels. (Although does anyone really care about that content aside from Yellowstone and kids' shows on Nickelodeon? Generally speaking, Paramount's linear cable nets seem mostly indistinguishable from the free channels they program on Pluto TV.)

Will be interesting to see how it plays out the next couple years, whether Paramount sticks with their current strategy or ultimately bows to shareholder pressure to bow out of the global DTC race and be an arms dealer like the similarly sized studio Sony.


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## harsh

inkahauts said:


> I think the key to their longevity is good content and I have a feeling in the next three months we are going to what about a lot of dc comic movies that will be put into action…. That will be their money fix now that they have some hopefully more competent people running that division.


The current DC schedule involves a new movie released in theaters every three or four months. I don't think that's enough to support more than an on and off streaming subscription. Here are the theatrical releases on the docket:

10/22 Black Adam
3/23 Shazam!: Fury of the Gods
6/23 The Flash
8/23 Blue Beetle
12/23 Aquaman and the Lost Kingdom
10/24 The Joker: Folie a Deux
TBA The Batman 2, Wonder Woman 3, Zatanna, Supergirl (again) and an unnamed Superman reboot with a black lead.









Upcoming DC Movies: From Aquaman 2 to The Flash


A complete list of every upcoming DC movie currently in the works, from The Flash to Aquaman 2 to the Joker sequel and beyond.




www.thewrap.com


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## Bender The Lab

harsh said:


> The current DC schedule involves a new movie released in theaters every three or four months. I don't think that's enough to support more than an on and off streaming subscription. Here are the theatrical releases on the docket:
> 
> 10/22 Black Adam
> 3/23 Shazam!: Fury of the Gods
> 6/23 The Flash
> 8/23 Blue Beetle
> 12/23 Aquaman and the Lost Kingdom
> 10/24 The Joker: Folie a Deux
> TBA The Batman 2, Wonder Woman 3, Zatanna, Supergirl (again) and an unnamed Superman reboot with a black lead.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Upcoming DC Movies: From Aquaman 2 to The Flash
> 
> 
> A complete list of every upcoming DC movie currently in the works, from The Flash to Aquaman 2 to the Joker sequel and beyond.
> 
> 
> 
> 
> www.thewrap.com



That is from August, before James Gunn was put in charge of DC Films, all of these-Wonder Woman 3, Zatanna, Supergirl (again) and an unnamed Superman reboot with a black lead have been cancelled or put on hold-Wonder Woman 3.

They are basically starting over, Aquaman, Flash, Shazam, Blue Beetle are already filmed, the Joker 2 is separate from the DC Films.

By the way, Black Adam is a flop, costs 200 Million + Marketing, so roughly over $250 Million, that means it needs to make $700 Million at least to break even, it is now at $353 Million Worldwide after 4 Weeks, there is no way streaming and Disc Sales are going to save it.

here-

_But the future of “Black Adam” is not written quite yet, though it’s earned $250 million worldwide. The Warner Bros. film carried a *hefty price tag of $200 million, not including marketing and promotion costs,* and a sequel has not been officially greenlit._









‘Black Adam’ takes top spot at box office again


'Black Adam,' the Dwayne Johnson-fronted DC film, kept its hold on the No. 1 spot at the North American box office in its second weekend in theaters.




www.latimes.com




.









James Gunn Takes Charge of DC Movies and TV


Along with producer Peter Safran, the Guardians of the Galaxy, Peacemaker and Suicide Squad director is officially DC's answer to Marvel's Kevin Feige.




www.cnet.com




.


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## okvist

What's the story with Paramount+ and the new Paramount Network. I have Paramount+ primarily for Yellowstone. Now with Season 5 of Yellowstone it is not on Paramount+ but just on Paramount Network with a separate subscription. Paramount Network seems to just have a small amount of other stuff from Paramount+. Wow how much of a shaft job is this?


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## b4pjoe

Current seasons of Yellowstone has always only been on Paramount Network. Seasons 1 - 4 are on Peacock.


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## NashGuy

okvist said:


> What's the story with Paramount+ and the new Paramount Network. I have Paramount+ primarily for Yellowstone. Now with Season 5 of Yellowstone it is not on Paramount+ but just on Paramount Network with a separate subscription. Paramount Network seems to just have a small amount of other stuff from Paramount+. Wow how much of a shaft job is this?


Paramount Network (on cable) is completely separate from the Paramount+ streaming app. The only hit show that Paramount Network has (and to be honest, just about the only hit scripted show on all of basic cable TV) is Yellowstone. They want new episodes of that show to only be on their cable channel, not on a streaming service, for at least a few months in order to give people a reason to subscribe to a cable TV package that includes Paramount Network.

As already noted, back seasons of Yellowstone are available on the premium tier of the Peacock app ($5/mo with ads or $10/mo ad-free, although there are lots of deals to get the $5 tier cheaper or even free). Season 4 of the show premiered last year on Paramount Network on 11/7/21 and became available on Peacock just under five months later on 3/28/22.

So if you can wait a few months, you can probably catch season 5 on Peacock next spring. (Not entirely sure about the timing, though, because it looks like they're breaking up season 5 into two parts?) If you don't want to wait, you can buy season 5 from Apple, Amazon or Google and get access to new episodes the day after they premier on Paramount Network. Looks like Apple is charging $39.99 for the full season pass. But, of course, you'll own the show and be able to stream it whenever you like, ad-free.


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## Bender The Lab

Also want to point out, if you buy it from Vudu, for one example, it is available in 4K.


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## Bender The Lab

Bender The Lab said:


> By the way, Black Adam is a flop, costs 200 Million + Marketing, so roughly over $250 Million, that means it needs to make $700 Million at least to break even, it is now at $353 Million Worldwide after 4 Weeks, there is no way streaming and Disc Sales are going to save it.
> 
> here-
> 
> _But the future of “Black Adam” is not written quite yet, though it’s earned $250 million worldwide. The Warner Bros. film carried a *hefty price tag of $200 million, not including marketing and promotion costs,* and a sequel has not been officially greenlit._


Guess it was a bigger flop then I thought, woke up to find it is already for sale on Digital Formats.


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## harsh

Bender The Lab said:


> Guess it was a bigger flop then I thought, woke up to find it is already for sale on Digital Formats.


$19.99 PPV on Amazon Prime (UHD), $24.99 for streaming purchase.

Wakanda Forever is a juggernaut (no Cain Marko reference intended).


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