STEVE INSKEEP, HOST:
News of a change in media. AT&T, which controls Warner media, plans to merge that with Discovery. And so HBO and Warner Studios, the DC superhero franchise and CNN, among many other properties, will all be in the same big company with Discovery properties like reality TV shows "Naked And Afraid," "Top Gear," as well as channels like HGTV. And that's just the beginning of this. David Folkenflik, NPR's media correspondent, has yet to merge with anyone and is on the line. David, good morning.
DAVID FOLKENFLIK, BYLINE: (Laughter) Good morning, Steve.
INSKEEP: So what will this new company be like?
FOLKENFLIK: Well, it's going to spin off from AT&T. They're basically hiving off their properties. It's going to be a newly formed company led by Discovery CEO David Zaslav, a very respected broadcast and cable executive. The major investor, John Malone, is a big force behind Discovery. He's signed off on this, so have other major investors. This is a go, assuming they can get regulatory approval for this huge merger to happen.
INSKEEP: Well, it was just a few years ago that AT&T bought its way into the media business in a big way. Now they're doing this spinoff with another company, but they'll still own it. So I'm trying to figure out, are they getting out of the media business or going further into the media business with a move like this?
FOLKENFLIK: I'd say they're getting out of it. And I think this underscores two truths, one enduring and one new. The enduring truth is that when you merge a telecommunications company, the pipes, with a company that has the content, everybody thinks it's going to provide this huge synergy. Think of Comcast and NBC. And actually, it doesn't. The reason Comcast works so well is that its telecoms companies is pretty well-run and its TV properties are pretty well-run. But the synergy really didn't produce much of a yield. AT&T, in a few short years, is finding the same thing.
The newer truth is the fact that you have Apple and Amazon and Netflix to compete with and now sort of a hyped-up Disney after it acquired much of Fox. And by getting what's now called scale, by merging its intellectual property with that of Discovery's, AT&T hopes that its content properties can kind of weather the storm and be big enough to ride this out.
INSKEEP: Well, it sounds like it's going to be pretty big. I mean, this is a pretty monstrous conglomerate. But can they really play off, the different parts of this company, really play off one another?
FOLKENFLIK: I think they stand a decent shot as anyone. I think it's similar to Disney in some ways. You know, they have major properties - HBO, huge entertainment property. They have what they believe is an important brand in CNN. If you think about CNN, it's a little weird how many different corporate iterations it's undergone in the last generation - acquired by Time Warner and then AOL and then hived off and then AT&T. But, you know, it's bouncing along. It's increasing profits despite all of the journalistic and political controversies. And the hope is that with a deep bench of movies, a deep bench of TV properties and, you know, vast archives, that people will want to pay to subscribe to stream them against all the others.
I think that what you're seeing is an sort of almost inevitable narrowing of the big players in Hollywood. You know, they'll be a big five or six kind of as there was in days of yore but now many of them located in Northern California rather than Southern California. This deal, of course, still dependent, as I said, on government regulators.
INSKEEP: David, thanks for the insights, always appreciate it.
FOLKENFLIK: You bet.
INSKEEP: That's NPR's David Folkenflik.
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