WarnerMedia Can Compete With Disney—Here’s How

Empires rise and fall and no one claims the crown forever.

Disney vs. WarnerMedia
Disney vs. WarnerMedia Kaitlyn Flannagan for Observer

Perception and reality exist in a near constant state of exclusivity, but in the rare instances of intersection a consensus seems to emerge. An obvious contemporary example is the belief that Disney (DIS) is an unbeatable corporate behemoth, a view mostly supported by indisputable numbers. Yet that does not mean what is will always remain—empires rise and fall as frequently as Quentin Tarantino showcases feet.

Since Bob Iger was named Disney CEO in 2005, the company’s stock has surged 458%. This is due in large part to Iger’s aggressive acquisition strategy that has brought Pixar Animation, Marvel Entertainment, Lucasfilm and 21st Century Fox under the Disney umbrella. The result? The studio now easily outpaces its competitors at the box office, and the Mouse House is positioned as a dangerous streaming threat. Cries of monopolistic operations and seek-and-destroy tactics grace the lips of detractors as the rest of the industry struggles to keep up.

SEE ALSO: Who Will Replace Disney CEO Bob Iger—And How Will It Be Pulled Off?

But of all of Disney’s would-be challengers, AT&T-owned WarnerMedia is arguably the most well-equipped to emerge as a legitimate contender (don’t take it personally, Netflix), though it won’t be easy to threaten the Magic Kingdom.

“AT&T’s strength in this battle is their significant customer household penetration and their potential capability to sell wireless services, etc., as a package between ‘great content’ and their existing base of customers,” Al DiGuido, president and chief revenue officer of North 6th Agency, told Observer, hinting at AT&T’s 150 million-plus existing customers. “The proof is in the pudding. We hear a lot of ‘potential’ for Warner/AT&T—the media landscape is littered with organizations that had great potential to be winners and for any number of reasons didn’t deliver on the opportunity. Disney counters with being great marketers and over-delivering on their promises. Because of that, they have a leg up in this battle.”

To match Disney’s war chest of properties, WarnerMedia will need to rely on its impressive variety and flexibility, much of which is already present in-house.

WarnerMedia stock streaming service

Warner Bros. Pictures

Disney, with its four-quadrant family-friendly focus, has a very specific target. Warner Bros. may not boast quite the same roster of high-profile brands, but it does possess more dexterity in the array of audiences it can attract through a mix of major tentpoles and mid-budget fare.

“Because of the range of content they have and the age of their content (it goes back a ways), they could have a very general appeal that could attract a generational fan base and not just a subset based on genre,” Patrick Millsaps, film producer and founder/CEO of entertainment firm Londonderry, told Observer.

After struggling to erect a sustainable shared cinematic universe that could regularly compete with the MCU, WB is smartly refocusing DC Films on more standalone efforts. Wonder Woman (which grossed $822 million worldwide) and Aquaman ($1.1 billion) are the templates with October’s Joker presumably launching a new division of disconnected experimental comic book movies. Fantastic Beasts: The Crimes of Grindelwald may have iced J.K. Rowling’s Wizarding World for the moment, but the property remains highly valuable. A future adaptation of Cursed Child that reunites the original Harry Potter cast is a strong $1 billion bet if it ever gets made.

James Wan’s Conjuring horror series continues expanding with sequels and spinoffs—and no noticeable fatigue. June’s Annabelle Comes Home, the sixth film in the continuity, grossed more than $220 million worldwide. It, meanwhile, remains the highest-grossing horror movie of all time, and September’s sequel stands a good chance of topping the original. Plus, after years of rumors, WB has finally green lit another Matrix movie. The multimedia franchise has grossed more than $3 billion over it lifetime, including $1.5 billion at the global box office.

Although WB didn’t produce a single top-10 domestic grosser last year until Aquaman swam into theaters in December, it remained firmly entrenched among the top-three earning studios. How? By belting out a series of impressive singles and doubles that spanned genres as well as demographic targets. There’s not much of a through line between Crazy Rich Asians, A Star Is Born, The Meg, Ocean’s 8 and Ready Player One other than solid ticket sales.

Beyond the box office, WB remains a safe haven for filmmaker-driven features. From 1990 to 2019, the studio has distributed four Best Picture-winning films, second behind only Universal in that span. The studio has boasted at least one Best Picture nominee every year this decade outside of 2016, and that depth of variety should serve Warner Bros. well moving forward. Audiences want options.

“WB has the rights to 90% of the RKO library—Citizen Kane, Fred Astaire, etc.,” Millsaps said. “There’s you’re baby boomer-plus demographic. Then, they’ve got DC; that’s your superhero group. They have such a breadth of content that can’t be put into a bucket like Marvel or Star Wars. That gives them a more general audience base, and the more people you can reach, the more money you’re going to make.”

HBO shows movies ratings budget


As AT&T prepared its $85 billion acquisition of Time Warner, HBO was singled out as the crown jewel of the deal. The praise was merited.

HBO currently has around 140 million worldwide subscribers, including roughly 40 million in the United States. The premium cable network generates upwards of $6 billion in annual revenue and is the most profitable network in all of television. Its content earned the most Primetime Emmy nominations this year with 137, up from 108 last year.

Unfortunately for HBO, over-the-top distribution has upended the marketplace and maintaining the status quo with a carefully curated lineup of quality is no longer a viable strategy. Under WarnerMedia head John Stankey, HBO is attempting to change with the times. That involves upping the cable network’s content budget by $500 million and increasing original programming by 50%. Traditionally, HBO has invested 50% of its content budget, estimated to hover between $1.5 billion and $2.5 billion, into originals in recent years. A bulked up roster of originals will help avoid churn and aid WarnerMedia’s subscription video-on-demand efforts which require a significant infusion of content to maintain.

We can see that push beginning to manifest itself on the horizon. In the wake of Game of Thrones‘ conclusion, HBO has several ambitious big-budget series launching in the near future to fill the void. It’s wise not to discount television’s most visionary network over the last 30 years.

HBO Max Price Streaming Service Cost Netflix


WarnerMedia is determined to avoid nearsighted decision-making by approaching its forthcoming streaming service from a more holistic standpoint that stretches beyond the Warner library.

“If we don’t adhere to what the consumer wants, we’ll be irrelevant and obsolete,” Peter Roth, head of Warner Bros. Television, said in June. “But if there’s one thing I fear about the future, it’s increased insularity and vertical integration. Studios are going to rely exclusively on in-house fare, and I object to that. Homogenization is never good for the consumer. Our goal is to be a content provider for the new service while still maintaining our freedom. We have series on 26 different networks and we intend to keep it that way.”

We’ve previously questioned the early roll out and rumored price point ($16 to $17 per month) for HBO Max and explored the challenges these elements might incur as a result. And the same questions are running through the the minds of observers throughout the industry.

“For a chance to win at streaming, WarnerMedia must be one of the top four left standing in the gladiator pit,” Eric Schiffer, a tech investor and CEO of the Los Angeles-based private-equity firm the Patriarch Organization, told Observer. “To do that, WarnerMedia’s strategy needs to be priced far more wisely (an ad-driven funded variant is possible) to pick off the 40 million HBO subscribers in line with Netflix (NFLX) and Amazon.”

But if content truly is king, as this era of IP-driven success would suggest, than HBO Max has access to the necessary titles to eventually land in the vicinity of its stated goals. The platform will draw content from (deep breath): HBO, TNT, TBS, truTV, Adult Swim, Boomerang, CNN, Carton Network, The CW, Crunchyroll, DC Entertainment, Looney Tunes, New Line Cinema, Rooster Teeth, Turner Classic Movies and Warner Bros. Additional library content involves a long-term deal with BBC Studios that includes all 11 seasons of the Doctor Who revival, Idris Elba’s Luther and the British version of The Office. AT&T chairman and CEO Randall Stephenson has even kept the door open for live programming—the last vestige of hope employed by linear television—from Turner Sports.

Legacy programming helps retain customers, but original content is what drives subscription growth. HBO Max users won’t want for exclusive options; Reese Witherspoon’s Hello Sunshine production company and uber-producer Greg Berlanti have both signed film deals with HBO Max. Originals also include ambitious potential broad appeal breakouts such as Dune: The Sisterhood and Station Eleven. Again, a variety of genres and demographics that stands in stark contrast to the PG to PG-13 focus area of Disney+ and a wealth of content that could eventually outweigh cost concerns in the minds of consumers.

“But to really get serious traction, they need colossal creativity that not just builds in behemoth ways off their Warner and HBO assets, but also comes out with original, big tent quality,” Schiffer said. “This gets consumers hooked beyond their IP mega-trove library. In the end, I expect their core competitive advantage of new content creation to beat Netflix overall in original quality programming and allow them to be one of the standing four.”

J.J. Abrams movies tv shows

J.J. Abrams

After an industry-wide recruitment of prolific free agent writer-director-producer J.J. Abrams, WarnerMedia won the day with a reported $500 million overall deal. This deal is expected to encompass film, television, digital content, music, games, consumer products and theme-park attractions, making the half-billion dollar investment for Abrams and his Bad Robot production studio a far more multi-faceted pact than your standard agreement.

As a director, Abrams’ five films have a combined domestic gross of nearly $1.7 billion and a global haul of roughly $3.5 billion. December’s The Rise of Skywalker, which closes out the main Star Wars saga for Disney, is sure to add to that total. Abrams and Bad Robot have successfully managed to revive three blockbuster franchises—Mission: Impossible, Star Trek and Star Wars. Bad Robot Television is responsible for hugely popular series such as Alias, LOST, Person of Interest and Westworld. Upcoming TV shows from the banner include Apple’s Little Voice and Lisey’s Story, as well as HBO’s Contraband and Lovecraft Country.

Abrams and his banner are proven hit makers, brands unto themselves with their own coalition of fans. That’s valuable in Hollywood’s arms race for content that represents repetitive cash flow value. There’s a reason Disney, Netflix and Apple were also hot on his heels.

In his own way, Abrams can serve as WarnerMedia’s counterpoint to Marvel’s Kevin Feige or Lucasfilm’s Kathleen Kennedy—a big picture thinker with a guiding cross-platform vision.

WarnerMedia Can Compete With Disney—Here’s How