Warner Bros. Discovery (WBD) -) is engaged in a precarious balancing act.
The media company is trying to figure out how to best integrate the Warner Bros. and Discovery intellectual properties into one streaming service -- Max -- without cannibalizing its subscriber base.
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It hasn't gone completely to plan, with the company announcing that it lost 1.8 million subscribers -- to 95.8 million global subs from 97.6 million -- across all of its media services on a quarter to quarter basis.
But as Max evolves over the years, one thing is certain after the company's earnings call on Thursday: sports will be a big part of the equation.
"We've had some good success in Europe and Latin America with layering sports into streaming with various business models and this experience is informing our view on how to best deploy these sports rights here in the US," David Zaslav, Warner Discovery CEO said during the company's earnings call.
Currently, the NBA on TNT is the company's most lucrative sports property in the U.S. and the company is gearing up for negotiations with the sports league as its current broadcast rights contract expires after the 2024-25 NBA season.
And while the company has been coy about its future intentions with league in the past, Zaslav made it clear that sports is a big differentiator for any streaming service.
"One of the elements of those [U.S. sports rights] deals is that we own the digital rights to our sports. So we have the ability for no incremental cost to put that content on our platforms," he said while repeating that the company is already doing so in Europe.
When asked if the company will raise the price of Max if and when sports are integrated, the company was again evasive about its plans.
"I think generally our view is sports is a such a premium offering with a very focused and passionate fan base. But generally the model will require some way to find increment -- need to find incremental value to get out of it," a company exec said during the earnings call. "And so exactly how that comes to market, we will have more to say later in the year. But generally our view is that it needs to be monetized incrementally, let's put it that way."
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