### WBD Executive Optimistic That Trump Administration May Facilitate Increased Streaming M&As
As the streaming landscape progresses, Warner Bros. Discovery (WBD) is gearing up for a future where mergers and acquisitions (M&As) could be integral to sustaining profitability. In a recent earnings call for Q3 2024, WBD CEO David Zaslav conveyed hope that the forthcoming Trump administration might foster an environment favorable for additional consolidation in the streaming arena. This optimism arises as WBD faces challenges in its diverse business segments, despite signs of growth from its direct-to-consumer (DTC) streaming platforms, Max and Discovery+.
#### Streaming Sector Consolidation: An Essential Strategy?
Zaslav has consistently advocated for increased consolidation within the streaming sector. He highlighted the increasing complexity for users, who often find themselves managing numerous subscriptions and navigating various platforms to access desired content. “It’s not sustainable,” Zaslav remarked, criticizing the current state of the streaming industry. He suggested that larger entities might soon pursue mergers or acquisitions of smaller platforms to simplify service offerings and alleviate consumer confusion.
He also proposed that the Trump administration could expedite this trend. Although it’s premature to forecast specific policies, he indicated that the incoming government might provide “a pace of change and an opportunity for consolidation that could differ significantly,” potentially assisting the streaming sector by nurturing a more favorable regulatory landscape for M&As.
#### The Importance of Streaming in WBD’s Future Plans
While Zaslav is optimistic regarding impending M&As, WBD is already heavily relying on its streaming services to stimulate growth. The company’s DTC division, which encompasses Max, Discovery+, and HBO, reported a profit of $289 million for Q3 2024. This is a noteworthy achievement for WBD, as its streaming offerings continue to gain subscribers and elevate average revenue per user (ARPU). Notably, WBD attracted 7.2 million new subscribers in the quarter, increasing its total to 110.5 million.
However, this achievement coincides with difficulties in other sectors of WBD’s operations. The company’s theatrical revenue plummeted by 40 percent, with films like *Beetlejuice Beetlejuice* not matching the success of last year’s *Barbie*. Furthermore, WBD’s overall revenue fell by 3 percent year-over-year, underscoring the escalating significance of its streaming division.
#### Anticipated Price Increases and Password Sharing Enforcement: The Future of Streaming Earnings
As WBD aims to expand its streaming operations, subscribers should prepare for possible price increases and stricter password-sharing enforcement. During the earnings call, WBD CFO Gunnar Wiedenfels confirmed that the company is set to implement actions to limit password sharing, initiating with “soft messaging” before intensifying enforcement in 2025 and 2026. Wiedenfels acknowledged that these measures are essentially “a form of price increases,” akin to strategies already executed by Netflix and other streaming platforms.
Alongside password-sharing limitations, WBD executives hinted at additional subscription price hikes. JB Perrette, WBD’s CEO of global streaming and games, observed that Max has raised prices twice in the last two years but perceives there is still potential for further increases. “We believe the premium nature of our product allows us considerable space to continue raising prices,” Perrette stated.
#### The Rising Importance of Advertising in Streaming
In addition to potential price increases, WBD is also investigating avenues to enhance ad revenue from its streaming services. Currently, Max features an ad-supported tier, but Perrette characterized the ad load as “light” compared to its rivals. He proposed that WBD could add more advertisements without alienating its subscriber base, especially as users grow accustomed to ads across streaming platforms.
Nevertheless, WBD’s approach carries risks. As streaming services like Max implement more ads and increase prices, they risk driving subscribers to cancel or switch to rival platforms. WBD is banking on the notion that most users will accept the changes or choose ad-free subscriptions rather than leaving the platform entirely.
#### Future Challenges for WBD
While WBD’s streaming division is experiencing growth, the company encounters notable obstacles in its other business segments. The cable and film industries are facing difficulties, and the company’s networks division reported a decrease in revenue. Moreover, some elements that previously bolstered WBD’s financial performance, such as revenue from distributing the Olympics in Europe and the conclusion of the Hollywood writers’ and actors’ strikes, will not be available in upcoming quarters.
Zaslav recognized these hurdles but remains hopeful about the prospects for WBD’s streaming services. He stressed the importance of leveraging the company’s existing momentum in streaming to counterbalance declines in other divisions.
#### What Lies Ahead: Will M&As Benefit or Harm Consumers?
As WBD and other streaming leaders strive for increased consolidation, the major
