This is perch and you may be hearing some news this morning, speculating on a t, selling warner media and why? Why does this matter for comics well dc comics is a piece of warner, media, it’s, it’s, ultimately kind of a piece within a piece and there’s been a lot of speculation around dc in general, with at t and kind of what it all means, and if i Mean i’m sure everybody remembers that over the last, oh, i would say year and a half there’s been a constant stream of this is the end for dc it’s likely death and then it wasn’t death. But then you know they did a bunch of layoffs and now the death is coming and surely t doesn’t know how to run comic books and and so on, and so there’s a lot of these stories. This new story is uh it’s, it’s hard to tell where it’s going to go and uh and what aspect it’s going to take, but i’ll lay out kind of the facts. What i’m curious about, because i haven’t really seen i haven’t fairness, i haven’t gone looking. I don’t know if we’re once again getting uh the world is falling and dc is, is on a new deathbed or if it’s uh, you know, or if it’s it’s happier than that. This is good news um for what it’s worth and i’ll get into why this is one of those good news, bad news kind of situations as it comes for dc and i’ll, explain why.
I think that it definitely clarifies the world for dc and i think there’s short term reasons that you know that that should be a very optimistic positive thing for dc comics. However, that clarification might also lead to down the road problems. So so let me kind of back up a bit and explain a little bit what’s uh going on here so first off at t in 2018, for 108 billion dollars acquired uh time warner and time warner includes a lot of things uh most notably uh, cnn uh, Hbo and uh and and of course, bc warner media um at the time why atnt is doing this was not a great mystery, although most of the analysis that suggested that this is going to be the death of dc comics ignored. The reason at t made the acquisition in the first place and there’s a very simple reason for it. They were viewing netflix and then disney, following along close behind as severe threats to owning entertainment. Now you may say: well wait a minute at t isn’t an entertainment company. Well, no, but they do provide infrastructure. They provide bandwidth. They they’re they’re a connectivity company for lack of a better word, although they hate to be called that and why they want to have a piece of this entertainment puzzle is because the they don’t want to become a commodity. Now, how could they become a commodity? It means that they own the wires they own the connection, but all of the real value the money is made on what’s.
Using that connection. This is the same reason why at t and verizon others have struggled not to just become the telephone service company. That is a race to the bottom, because ultimately, these things start to reduce costs over time and as they reduce costs over time, it means their value is capped, and so what the last thing they wanted to do was to have all the upside all the business Growth be controlled by companies like say, netflix that were using their bandwidth and and being very aggressive with uh. You know basically taking their their speed uh, but getting none of the value in return and, as we saw from some early court cases, you know throttling these companies wasn’t going to particularly work, so at t was in a position that, if they wanted to play in This new space they’re going to have to start owning some of it and that’s why they basically had this this massive acquisition of a hundred and uh, you know more than uh 108 billion dollars. So you know that was done for a reason. So, as people were saying, wait a minute, but they don’t want a comic company. Well, what they want is to own entertainment and entertainment comes in many different forms and – and yes, comic books – are a tiny speck in the world of of entertainment, games and and movies and shows and streaming and other things. But it is a valuable piece of all that there is ipgeneration sure but there’s also this perception that you’re creating entertainment value and, as i said, to some other people and it always rubbed them the wrong way, but it’s it’s, one of those where i think everybody Was offended by this comment, you know at t likely looked at dc comics as marketing and really didn’t intend or care about making any profit off of it.
If it’s marketing for entertainment value, if it’s getting uh brands out there, that they can, you know, have in the public space and ultimately monetize it’s, uh, it’s marketing and to to put it in a more crass way, dc, comics or sorry at t spends as much Just creating brochures and other things uh in marketing that that then dc’s cost for the year, it’s it’s crazy to think about, but it’s like it’s, just not a factor so etnt. Probably as this was my big argument – and it proved out to be more or less correct at t wasn’t going to micromanage the you know how much money they’re making off of bc comics because they really didn’t care where they’re making money money at all. Now, i would argue, from a company ownership perspective, that’s a lousy place to be. I i don’t think it’s not healthy. When you know a parent company doesn’t really care about profits from other subsidiaries, it may sound, relaxing and comfortable to some of the people working there. Look, we don’t have to make any money, nobody cares, but it also means you’re not going to be getting any money. You’Re not going to be getting any attention and ultimately you’re not going to grow. It means you’re kind of stuck in this lower tier marketing, state and bluntly, i think we’re, seeing a little bit of that now. Um, you know, dc comics is adrift to some extent they’re they’re, not shutting down, by any stretch the imagination they’re putting out comics.
This fortnight crossover has been a success, but at the same time, you’re not seeing the parent company at t do anything to push the brand they’re not pushing out marketing or messaging. That that says, hey we’ve got comics, who wants comics they’re, not they’re, not trying to improve that situation at all, and why would they they’re not trying to grow that business they’re just comfortable with doing whatever it’s doing so? What is this uh? This reported it’s it’s rumors right now, but you know enough. People have now reported on them from reuters to the la times to the verge variety. Hollywood reporter everybody is uh is reporting that there’s there’s truth to this story and in fairness during the last shareholder meeting at t did tip their hand a little bit that they would be looking to potentially find close partners for their media. I think a lot of people took that to me and they may make more acquisitions but bluntly: where are they going to get? The cash at t’s spent a lot and they’re looking to recoup some of those costs, so we find kind of the first uh. You know indication of where this is all going and that’s that at t is nearing a deal with discovery, which is a public company. Both both are and to basically combine assets and come up with a a brand new entity that would become a new public company and they’d, be able to fundraise off of it they’d be able to shed some of their debt off of it and they’d.
Really. You know make a full conceit. You know this entire company’s purpose would be to push entertainment. You know that would be the the intent of it. It’S not just to you know, be a a shield to prevent a t from becoming a data commodity. It would become an entertainment business, so first off you might say, discovery isn’t, that the educational crap well they’re, the owner of a ton of lifestyle, tv networks, um they’ve got hgtv tlc tons of content. Their library is, is quite large, and if you combined the warner media hbo max library with the discovery library, they would have as much content as netflix. It would be significant. They would dwarf disney in terms of the amount of total content. That would be compelling. Hbo max, of course, is a is an asset owned by a warner, media and hbo max there i saw some people commenting. Hbo max has been a disaster. It really hasn’t, um hbo max has 63.9 million global subscribers. Yes, some of that is because they’re subscribers on tv but brent bluntly, money is money. That’S, that’s, okay, um and discovery. Uh is currently it has 15 million subscribers. So so not much, but you combine those two together and you’re. Getting close to 80 million uh disney had boasts 100 million, netflix boasts 207, so they’re still behind. However, the content library they include would be would be significant and what netflix is finding is a lot of the reality.
Tv show stuff is uh, it helps have dropped. My feeling on reality, tv there reality tv is, is basically uh pushing a lot of the views. So there’s a belief that combining these two uh would be, you know, potentially a significantly positive consolidation and people would go for it. So you know so it’s a couple things one. What does this mean? Does this mean? Att is retreating from it. No, i mean at t would continue to own a significant stake in this. This public entity, uh at t shed direct tv or or at least basically sold a third of it, so att would still be able to profit off of this, but but basically uh. It would allow the debt to get off their books and to be able to raise money. Other places they’d be able to control it to some extent, but not have to be fully in charge. Not not have it be a liability so that’s good for at t, but i said a few minutes ago that this was a kind of a good news, bad news for dc. So what do i mean by that? Well, the good news here is that being part of a company where entertainment is the point, first and foremost, is probably a good thing for dc. It means they’re going to get better marketing. It means they’re going to get better clarity over what it is they’re supposed to be doing. It means that suddenly, you know pushing the comics, and some of these other pieces would be in the company’s best interest, even if they’re pursuing streaming it still would be uh.
You know it would be valuable for them to push it so that’s. The good news, uh dc, may see a little bit more love and we may see a little bit more of a logical effort as opposed to a t which was always kind of an odd, odd bed fellows for a comic book company. An entertainment based entity is going to be looking at movies and streaming and shows and books and and comics yes, so that’s that’s, a good that’s, good news, but there’s also bad news and the bad news is remember before when i said at t likely didn’t care. If the company made a profit or not well in this new entertainment arm, that would suddenly become a big deal, especially if it’s a public company where they’re reporting on numbers and then the purpose of the company is to provide traction within entertainment spaces. So suddenly running at a profit gets to be pretty important. This could spells bad news for a lot of people at dc. Now you might argue, this could be good news for fans who who want to see a big push, but this is where uh, you know not making a profit means changes would be made and those changes could be very dramatic at times so it’s it’s an interesting Case no, this isn’t the death of dc by any stretching imagination. It is likely to have some short term benefits if it goes through, but it also means this company is going to be on more of a track to operate like a business which you know could be good if they make the right decisions could be bad if Uh, you know people get frustrated and they start making some deep cuts.
You might say uh. Some of these people should be cut well, okay, but you know you’re gon na lose some comics in the process, so it’s gon na be an interesting way to see. You know if this plays out, it looks like it will uh right now. All indications are this. This deal will happen and if it does um, you know it’s, it’s, it’s, definitely making the race with uh disney, plus and netflix and hbo max a little bit more interesting of how these are all going to come together. And you know how they’re going to fight and – and who knows this could mean it will mean differences for comics anyway, you’re going to probably see a lot of analysis, a lot of people giving their various takes on all this. Yes, it’s more change, but in this case it’s uh it’s unlikely to be as sweeping and dramatic in terms of change are layoffs. Coming no unlikely. In this case, the company is already cut very, very thin. Any kind of consolidation with discovery you don’t have. This bleeding overlap with publishing in the same way, and if you did, it would probably be positive, because discovery still has a foothold in places that you know could be considered more of the newsstand than comics. So that could be a positive. But you know layoffs, know a push to be accountable and profitable yeah – probably yes, and that could have some interesting side effects anyway.
That’S my take on it curious to hear yours and certainly what you’re hearing other places um, i i hope we’re not. I hope i again i haven’t looked but i’m hoping we’re not going to get another round of the sky is falling stuff. I i just uh i’m tired, bluntly i’m, tired anyway.