According to the merger of AT&T Inc (T.US) media business and Discovery Channel (DISCA.US), it will form an entertainment giant. "WarnerBrother Discovery Channel.Wells Fargo & CoAnalyst Steven Cahall and his team point out that the Discovery Channel deal with Warner Media shows that scale is necessary to compete directly with consumer (DTC) content; more content leads to greater user stickiness, thereby reducing user churn, creating pricing power and improving profit margins.Netflix(NFLX.US) andDisney(DIS.US) is "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 & Co predicts that the DTC content of Warner Brothers Discovery Channel will reach 20 billion US dollars by 2024, compared with that of Warner Brothers Discovery Channel.Amazon(AMZN.US) and MGM's combined DTC content tied for third place.

Analysts point out that Walt Disney Company's content is the largest, with a total content value of US $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.

Which meansComcast Corp(CMCSA.US) and ViacomCBS (VIACA.US) face the toughest choices: do they become mercenaries, break up, scale up or merge?

Wells Fargo & Co 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 merger. Wells Fargo & Co says the best option may 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 Corp, NBCU and Sky are a strong and stable platform for content, but because there is no clear strategy, the value prospect is not clear. Comcast Corp's possible options include: 1) selling and merging studios; 2) more actively promoting 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.