When AT&T swooped up WarnerMedia three years ago, there was consternation among television fans and critics. WarnerMedia was the home of HBO, after all; what horrors would the telecom company’s functionaries visit on the crown jewel of prestige television? John Stankey, the AT&T veteran who was to lead WarnerMedia, opened by telling HBO employees, “I want more hours of engagement” in order to monetize data and information—not exactly the kind of reassurance employees or HBO aficionados wanted to hear.

Under AT&T’s auspices, HBO nevertheless continued to turn out critically acclaimed series like Watchmen, I May Destroy You, and Succession. The company also successfully launched the HBOMax platform into an increasingly jam-packed streaming scene a few months into the pandemic. Yet there was no question that behind the scenes, a culture clash brewed.

“AT&T’s ham-handed approach to strategy over the last decade when it comes to media has just been a disaster,” Tim Hanlon, CEO of consulting company The Vertere Group, told Vanity Fair this week. The marriage of AT&T and WarnerMedia was a match made in hell. “It’s a completely different mindset, skillset, and imagination set,” he said, “collision of art and commerce. Telcos are the ultimate domination of spreadsheets and revenue streams where the movies and television [business] is very hit-driven, and much more qualitative in its success.”

Discovery and WarnerMedia have very different auras; the former company and its offshoots, including TLC, Food Network, and HGTV, are known for unpretentious and unscripted content, ranging from 90-Day Fiancé to Dr. Pimple Popper to Deadliest Catch. Still, Hanlon sees Discovery—which, as announced this week, will soon merge with WarnerMedia to create a brand-new venture—as a more harmonious partner for WarnerMedia than AT&T. “In essence,” he said, “these are folks who understand how to create television, how to create video, how to create content and maximize its distribution.”

Media insiders were startled by word of the sudden deal, which would put Discovery chief executive David Zaslav in charge of the integrated company. Even Jason Kilar, current WarnerMedia boss, appeared to have been blindsided. Zaslav had been meeting with AT&T’s Stankey “secretly from my brownstone in Greenwich Village,” he told reporters.

“AT&T management was, frankly, desperate to dump its assets to return to its roots as a telecom company, and Discovery management took advantage of that,” Jeff Wlodarczak, principal analyst at Pivotal Research Group, told me. “In the end, it is about building enough critical mass in streaming to be successful. But the problem is, I doubt the global market can support more than four to five massive players.”

The deal won’t change much for HBOMax and Discovery+ subscribers in the short run. But it has caused a major convulsion in the already-turbulent streaming universe, as conglomerates eye further consolidation in hopes of growing big enough to survive.

“It’s all-out war, for sure,” said Peter Csathy, chairman of advisory firm CreaTV Media. “Hundreds of billions of dollars are at stake here, and this is just heating up.” 

The Vertere Group’s Hanlon sees Netflix, Amazon Prime, and Disney+ (with or without sister streamers like ESPN+ and Hulu) as the current top three streaming services. A HBOMax/Discovery+ combo could be a shoo-in for the fourth spot. Assuming the WarnerMedia-Discovery deal goes through, NBCUniversal/Comcast’s Peacock+ and ViacomCBS’s Paramount+ “are on the outside looking in from that ‘big four’ club.” 

Might NBCUniversal and ViacomCBS band together in order to take on their newly expanded competitors? “The content assets for Comcast/NBCUniversal and of ViacomCBS would make a natural fit,” said Hanlon, though he suggests that Comcast could also try to make a bid for WarnerMedia to upend the current deal with Discovery. “I think many eyes are on Comcast, NBCUniversal right now. It’s their strategic play on the chess board.”

Cord-cutting was supposed to make TV cheaper and more fluid—but with such an avalanche of new streamers available, most viewers in practice can only afford to pay for a handful at a time. That means we chase and churn through streamers, opening and canceling subscriptions as we go. Companies like Netflix, Disney+, and HBOMax need to have a constant flood of shows and movies so alluring that you’ll never want to quit them.

That means streaming giants will likely continue to devour other, smaller streamers in the quest to stay on top, in part to acquire franchises (like Harry Potter, Star Wars, and Marvel) that keep them competitive with Disney+ and a newly pumped-up WarnerMedia. 

There are whispers that Amazon is sniffing around a potential purchase of MGM. Csathy speculated that even Netflix could benefit from swallowing up a legacy company to gain access to some franchise action. “How do you break through to the consumer when you have all these massive behemoths battling each other? Ultimately, it’s about brand and content,” Csathy said. “If [Netflix] buys an MGM or a Lionsgate with franchises, then it has a significant weapon to compete against the others when it comes to stuff like tentpole properties.” Smaller niche streamers like AMC+, Starz, and BBC Select may similarly stand a good chance of getting swallowed up in the great consolidation to come, unless they can figure out a way of rolling out programs that forge an unbreakable bond with their subscribers.

“It’s a war for time,” said LightShed Partners media analyst Rich Greenfield. “You are not just competing against Netflix, Amazon, and Disney,” he pointed out, but also against TikTok and YouTube and gaming platforms like Roblox, Fortnite, and Minecraft. “The end result is: scale is more important than ever.”

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