Warner Bros. Discovery

Pricing power is moderate. WBD collects revenue from subscriptions, advertising, and cable carriage fees. The recent growth in streaming ARPU suggests some pricing flexibility. However, streaming customers are price-sensitive, and competition may limit price hikes. Traditional affiliate fees have decelerated.

Unlike a utility, WBD can’t easily raise prices without subscriber backlash. We do note that once Max is established globally, long-term pricing may strengthen, aided by sports and exclusive content. But today, margins are only mid-range (~23% adjusted EBITDA) and the company can’t enact large price jumps.

Its historical strategy has been to expand subscriber base even at the expense of higher near-term costs (e.g. absorbing CNN content for free). Overall, pricing power is limited compared to, say, a landline or payment network monopoly.