The Federal Telecommunications Institute (IFT) validated the concentration operation between warnermediaas a selling party, and Discovery Inc. and Drake Subsidiary Inc. as the purchasing party, of a series of content businesses that include tangible and intangible assets, as well as liabilities and the direct distribution of the HBO Max channel in Mexican territory.
The IFT He said that he validated this concentration on August 22, in his capacity as authority in matters of economic competition in telecommunications in Mexico.
The notification of concentration of these entities to the IFT occurred in september 2021when the selling party, still owned by AT&Tnotified the regulator that it had reached an agreement for the sale of certain assets in favor of the economic interest group linked to Discovery Inc. in the United States and with impact on the Mexican market of audiovisual content.
AT&T had bought WarnerMedia and other assets in 2018 for about $85 billion. On those dates, AT&T submitted this business unit, then called TimeWarnerto a series of financial restructuring and after business strategies that bore little fruit, AT&T decided to dispose of this company, which was acquired by the Discovery group to now create the brand “Warner Bros Discovery”.
Concentration WarnerMedia-Discovery meant a business valued at 43,000 million dollars.
The operation, now validated by the Mexican regulator, creates a new audiovisual communications giant, strong in applications streaming.
This is due to the fact that Warner Bros Discovery was born with the contribution of the channels HBO, HBO Max, CNN, Warner Bros, DC Films, New Line Cinema, TBS, TNT, TruTV, Cartoon Network/Adult Swim, Turner Sports and Rooster Teeths and the half of CW Network that warnermedia kept in conjunction with paramount.
As long as Discovery Inc. brought content from Discovery Plus, Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, Turbo/Velocity, Animal Planet, Science Channel and OWN to the new entity.
Once all the assets of these two companies were combined to create Warner Bros Discoverythe billing projection for the new entity would be 52,000 million dollars in the year 2023with gross profits of 14,000 million dollars and cost efficiencies of 3,000 million dollars a year.
The combination of all these contents and the millionaire billing made the IFT investigate the viability of the WarnerMedia-Discovery operation and its possible positive and negative effects on the Mexican market.
For the IFT, the concentration involved the provision and licensing of audiovisual content for transmission through OTT distribution platforms; and it also had to do with the sale of time and advertising space in distribution systems of audiovisual content via streaming.
After its analysis, the IFT generally foresaw that the operation would not generate risks to free market access and economic competition in the Mexican telecommunications market and the provision of audiovisual content services.
But the IFT did identify in particular that Warner Bros Discovery participates in the related market for the provision and licensing of audiovisual content to pay television service providers in the children’s programming category, through the Cartoon Network and Cartoonito channels, in the which has a “substantial” stake measured in terms of audience.
Therefore, it requested Warner Bros Discovery not to tie or bundle the restricted children’s channels that were owned by WarnerMedia, with the restricted channel of Discovery Kids, nor to transfer audiovisual content from the Restricted children’s channels that were owned by WarnerMedia to the Discovery Kids channel or vice versa.
