Discovery Adds 3 Million DTC Subscribers in Third Quarter

Discovery Adds 3 Million DTC Subscribers in Third Quarter

Company is considering streaming bundles and combining Discovery’s streaming services with HBO Max upon completion of the merger.

Discovery, Inc. added 3 million subscribers to its direct-to-consumer streaming subscribers base during the third quarter of 2021. This brings their total DTC subscriber count to 20 million. In its November 3, 2021 earnings release, Discovery attributed part of the subscriber strength to the Summer Olympic Games and Shark Week. Discovery’s planned acquisition of AT&T’s WarnerMedia in mid-2022 will make the company’s DTC streaming platform a serious contender, on part with services like Netflix, Hulu and Disney+. Announced in May 2021, the deal is valued at $43 billion in cash, debt and securities.

“We are excited about our pending merger with WarnerMedia and the opportunity to bring these two companies together, combining iconic and globally cherished franchises and brans, and positioning us to more efficiently drive global scale across the combined portfolio,” Zaslav said.

“Given the breadth of our content offering, we expect the combined service will appeal broadly to all demographics, young and old, with strong male and female genres, again, very complementary, such that our global total addressable market should be on par with the biggest streaming service,” said Discovery president and CEO David Zaslav on the November 3 earnings call.

Bundling followed by a combined platform

On the earnings call, executives at Discovery – Zaslav and JP Perrette, president and CEO of Discovery Streaming and International, – discussed the future of streaming on the Discovery and HBO Max platforms. As a short-term strategy, the companies may bundle Discovery and HBO Max’s streaming services, similar to what Disney+ does with Hulu and ESPN+. As a long-term strategy, however, they expect to combine the streaming platforms into one, creating “meaningful cost savings” for the company.

Image courtesy of Discovery Inc. and AT&T

Third quarter highlights

Other highlights for the third quarter include the following:

  • Total revenue was $3.2 billion, a 23% increase over $2.6 billion made in Q3 2020.
  • Net income was $156 million, or $0.24 diluted earnings per share, compared to $300 million, or $0.44 diluted earnings per share in Q3 2020.
  • At the end of the quarter, Discovery Inc. had $3.1 billion in cash and cash equivalents.
  • Discovery+ launched in Canada and the Philippines.
  • The company broadcast the Tokyo Summer 2020 Olympic Games to more than 372 million people in Europe on both TV and digital platforms, delivering 1.3 billion minutes of Olympic content on their streaming platforms.

Insider Take

In April 2021, Discovery, Inc. reported that it had 15 million total paying direct-to-consumer subscribers across their global portfolio, but a key driver was their new DTC streaming service Discovery+, which launched in January. Once the merger with WarnerMedia closes, the company will add HBO Max’s subscriber base to the mix. As of September 30, 2021, HBO and HBO Max had 69.4 million global subscribers. With six or more months of additional growth, this will easily bring the combined companies’ subscriber count at more than 100 million. With Discovery+ and HBO and HBO Max continuing to grow at a steady pace, they might be the DTC streaming service to watch in 2022.

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