According to Zhitong Financial APP, the merger of AT&T (T.US) media business and Discovery Channel (DISCA.US) will form the entertainment giant Warner Brothers Discovery Channel. Wells Fargo analyst Steven Cahall and his team pointed out that the deal between Discovery Channel and Warner Media shows that scale is necessary to compete directly with consumers for (DTC) content. More content will lead to greater user stickiness, thereby reducing the loss of users, creating pricing power and improving profit margins. Netflix (NFLX.US) and DIS.US are "putting this tactic into practice", while other companies want to follow suit.

It is understood that Warner Bros. Discovery Channel should be one of the top three companies in DTC. Wells Fargo expects Warner Brothers Discovery Channel's DTC content to reach $20 billion by 2024, tied for third place with AMZN.US and MGM's combined DTC content.

Analysts point out that Disney's content is the largest, with a total content value of $47 billion in 2024. Warner Bros. Discovery Channel ranked second with a total content value of $36 billion, NBCN/SKY ranked third with $34 billion, and Netflix ranked fourth with a total content value of $28 billion.

This means that CMCSA.US and ViacomCBS (VIACA.US) face the toughest choices: to be a mercenary, split, scale up or merge?

Wells Fargo pointed out that even if ViacomCBS ranks fifth in content value and fifth or sixth in streaming value, it may need to find another way out in the future wave of fierce competition and consolidation. Wells Fargo said the best option might be to follow FOX.US 's example and make money through Paramount and CBS television studio networks rather than radio and television networks. On the other hand, for Comcast, NBCU and Sky are a strong and stable platform for content, but due to the lack of a clear strategy, the value prospect is not clear. Comcast's possible options include: 1) selling and merging studios; 2) more aggressively improving streaming; and 3) doing nothing. On the whole, the sale merger is the most beneficial to shareholders, but the probability is the lowest, and the company has no action.

At the same time, these companies face a potentially bigger problem: if Warner Bros. Discovery Channel wants to reintegrate into NBCU or ViacomCBS, it will become the world's largest content company.