Discovery shareholders are set to OK the $43 billion merger with WarnerMedia on Friday, the last big step before AT&T completes the spinoff. Ahead of the deal’s expected close next month, a who’s-in/who’s-out parlor game is gaining intensity as CEO David Zaslav finalizes the leadership team.
Top managers who have been with the exec for years will be sticking around, working with a few battle-tested Warner execs, though likely without others. Kevin Mayer, the former Disney exec known for leading the launch of Disney+ and a string of M&A deals, is helping to shape the new org chart as a high-level consultant to Zaslav. The structure will be leaner and less top-heavy than what Warner vets are accustomed to as they settle into a third corporate ownership group in four years.
“Zas doesn’t do layers,” pronounced a former colleague.
Discovery and AT&T have promised the merger will deliver at least $3 billion in cost savings, and as soon as the close happens they will be under pressure to pay down debt. While back-office and administrative functions, as well as business areas like distribution, advertising and marketing, are likely to drive most of the savings, re-thinking and streamlining the ranks is a priority.
While Mayer himself has been buzzed about for a top job, multiple people familiar with the discussions indicate he is more likely to continue as an advisor, which is said to be a very lucrative gig and hardly his only one. Mayer is also chairman of sports streaming outlet DAZN and also just teamed with fellow Disney alum Tom Staggs to launch Candle Media, a media venture backed by $2 billion in funding from private equity firm Blackstone.
“Kevin has a big brain,” Zaslav said on a recent earnings call. “He’s super excited about getting in the car with us.”
In addition to being a tighter formation, the new entity is likely to favor Zaslav’s alma mater, insiders say. That has been the pattern when Discovery acquired Scripps Networks Interactive in 2018 and also was Zaslav’s approach when he arrived as CEO in 2007 after a lengthy run at NBCUniversal. “They’re a crew, the Discovery guys, they stick together,” one veteran observed.
Officially, the company has sworn off comment as the final pieces come together. (AT&T’s bruising experience with the Time Warner merger, which was delayed by a federal antitrust lawsuit, is ratcheting up the level of caution.) Exec moves will only be announced when the ink is dry.
A number of outside execs have been mentioned in connection with potential top entertainment roles at the new company, among them Disney’s Peter Rice, CAA’s Bryan Lourd and Legendary’s Mary Parent. Each of them, though, seems unlikely to climb aboard for contractual or logistical reasons, according to multiple sources.
There are also some significant incumbents to consider. Casey Bloys, who started at HBO in 2004, has been overseeing both HBO and HBO Max after the high-profile exits of Richard Plepler and Kevin Reilly three years ago, earning public shout-outs from Zaslav along the way. Warner Bros Pictures chief Toby Emmerich has also been a canny survivor, climbing the ladder even as his former home, New Line, was subsumed into the Warner machine. Having extended his contract last fall, he has more than a few hits to point to, most recently The Batman. Ann Sarnoff, Chair and CEO, WarnerMedia Studios and Networks Group, is newer to the fold by comparison, having joined Warner in 2019. She oversees a lot of valuable turf across film and TV, especially with Warner still in the licensing game.
A grace period of some duration is likely to be extended to Sarnoff, Emmerich and Bloys as the merger takes effect, according to multiple people involved with the deliberations.
Zaslav is known for being hands-on, meaning one scenario seen as unlikely is for anyone to come in as a direct replacement for WarnerMedia CEO Jason Kilar. Since last May, when the transaction was first proposed, it was widely understood that Kilar was not expected to continue on after the deal closes. Nevertheless, he has been at the controls as WarnerMedia started to find its footing, beating internal forecasts with 73.8 million subscribers to HBO and HBO Max by the end of 2021, among other strides. A close associate of Kilar’s, Hulu vet and HBO Max head Andy Forssell, is expected to be in the new mix given his tech acumen and involvement in the turnaround of streaming since a rocky launch in 2020.
Zaslav’s close involvement with day-to-day operations will be a starkly different dynamic from that during the arm’s-length stewardship of AT&T. In upgrading Discovery stock to a “buy” rating in January, Bank of America media analyst Jessica Reif Ehrlich acknowledged it will be a “challenging integration.” Yet in a note to clients, she described the $3 billion cost synergy target as “highly achievable, if not conservative,” and predicted the new company will hit that number in just two years, possibly sooner.
Another Zaslav hallmark is loyalty, a value he cultivated while climbing the ladder at NBCU following a brief stint as a lawyer in his earliest career phase. After more than two decades at NBCU, he joined Discovery in 2007, shaking up the Silver Spring, MD company and shedding management tiers. He decided to eliminate the position of Discovery Networks president Billy Campbell, for example, installing general managers of the five network groups who all reported directly to him. Three of Zaslav’s top execs at NBCU — JB Perrette, Adria Alpert Romm and Bruce Campbell — followed him to Discovery and are expected to continue in pivotal roles.
Perrette is a key figure to watch. Though not exactly unknown in Hollywood, he has a more business- and tech-centric background and has been based in London as CEO of Discovery Streaming & International. One of the founding executives at Hulu during his tenure at NBC, he is widely expected to continue as a key overseer of the streaming operation, possibly from back in the U.S. One strategic task will be to figure out how HBO Max and Discovery+, which launched a little more than a year ago, fit together. Discovery+ has grown, but not spectacularly, accounting for the bulk of the company’s 22 million streaming subscribers as of the end of 2021. Ehrlich and other Wall Street analysts expect Discovery+ to fully merge with HBO Max. Knitting together the technology and determining the best strategy for pricing, customer acquisition and other areas will be a complex undertaking, however.
Along with Perrette, the third member of the triumvirate steering Warner Bros Discovery on a corporate level will be Discovery’s Chief Financial Officer Gunnar Wiedenfels.
One of the execs who joined Wiedenfels and other Discovery execs during top-secret merger talks led by Zaslav and AT&T CEO John Stankey is Campbell, Discovery’s chief development, distribution and legal officer. Campbell, like Mayer and Perrette, established himself in the media business through dealmaking. At NBCUniversal, where he was EVP Business Development, he steered strategic planning and corporate transactions. At Discovery, he has spearheaded the distribution agreements that have generated massive cash flow even as the company has faced the wages of cord-cutting and the shrinking pay-TV bundle. Distribution of course also now has a vital streaming component.
Romm has been a close collaborator with Zaslav since joining Discovery in 2007 following a 25-year run at NBCU. Currently serving as Chief People and Culture Officer, she is expected to continue laying out the blueprint for the new organization. If Warner Bros. Discovery is going to resemble rivals in media, it will likely have a centralized structure built around streaming.
Another key corporate executive at Discovery is Chief Corporate Operating Officer David Leavy, a 21-year Discovery veteran. A former Clinton White House official, Leavy has expanded his role and become a Zaslav aide who also manages a significant number of corporate functions. Leavy has been helping map out the new territory as the regulatory process has unfolded.
Jon Steinlauf, who heads ad sales for Discovery, is a former Scripps exec who ended up as one of the few senior-level execs from the acquired company after Discovery’s 2018 purchase of Scripps Networks Interactive. Another is Kathleen Finch, who became Chief Lifestyle Brands Officer in 2018 after the $14.6 billion Scripps deal closed.
Jill Goldsmith contributed to this report.
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