AT&T CEO John Stankey and CFO Pascal Desroches held a 45-minute WebX town hall for WarnerMedia employees this morning, offering additional information about the entertainment unit’s upcoming merger with Discovery.
The $43 billion deal surprised the industry, and while it’s expected to take at least a year to close, it has prompted a flurry of questions about the future for the companies and the media business. Investors reacted poorly to the news on the first full day of trading since the announcement, sending AT&T shares down 6% on the day.
The discussion with the two executives was moderated by Christy Haubegger, WarnerMedia communications chief and top inclusion officer. From those who attended, we hear that for the most part, it was in some ways a recap from yesterday’s hour-long press briefing with Discovery CEO David Zaslav and Stankey about the deal. Stankey reviewed the financials of the combination of the companies into a still-unnamed entity, which is projected to have $52 billion in revenue in 2023.
One item of note that surfaced in the town hall was the promised $3 billion in synergies expected from the deal — a higher tally than that given after AT&T’s $81 billion purchase of Time Warner. Attendees said Stankey didn’t have a crisp response to what the synergies might mean in terms of layoffs, and largely talked around the topic.
Synergies take different forms, but administrative functions like HR and finance are often targeted for cuts. In the case of AOL-Time Warner, given the broader streaming-focused revamp, roles in distribution, marketing and sales were also affected. When AT&T acquired WarnerMedia in 2018, executives projected a $2.5 billion annual synergy number. Over the next two years, about 2,000 jobs were cut and a number of senior execs departed.
As a few observed, the AT&T duo were also asked about the merger appearing to be a situation of “David swallowing Goliath,” with WarnerMedia being Goliath. More to the point, the query was about how Zaslav was named the boss of the merger in a situation where AT&T shareholders own 71% of the combined entity and Discovery’s just 29%. Stankey’s reportedly layered response explained how merger talks drill down to the finest points, from the number of board members, to the stock situation of the companies. Essentially, when it came down to naming the CEO of the new combined company, that fell in favor of the Discovery side.
Zaslav’s designation as the lead exec has cast doubt on the future of WarnerMedia CEO Jason Kilar. The New York Times reported yesterday that Kilar has hired a legal team to negotiate his exit. On yesterday’s press call, when asked about Kilar’s status, Stankey said, “David’s got a lot of decisions to make on personnel” ahead of the closing.
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