Discovery shareholders are set to approve a $43 billion merger with WarnerMedia on Friday, the last big move before AT&T completes the spin-off. Ahead of the expected close of the deal next month, the who’s in and who’s out parlor game is gaining momentum as CEO David Zaslav finalizes the leadership team.
Top executives who have worked with the chief executive for years will remain, working with a few battle-tested Warner executives, though probably no others. Kevin Mayer, a former Disney chief executive known for leading the launch of Disney+ and a number of M&A deals, is helping Zaslav shape the new organizational structure as a high-level advisor. The structure will be leaner and less heavy than what Warner veterans are used to as they move into a third group of corporate owners in four years.
“Zas does not make layers,” said a former colleague.
Discovery and AT&T have promised that the merger will save at least $3 billion, and once the closure occurs, they will be forced to pay off the debt. While back office and administrative functions, as well as business areas such as distribution, advertising and marketing, are likely to bring in most of the savings, rethinking and optimizing ranks is a priority.
While Mayer himself has been heavily mooted for a high position, many people familiar with the discussions indicate that he is likely to continue as an advisor, which is said to be a very lucrative pursuit and hardly his only occupation. Mayer is also the chairman of sports streaming agency DAZN and has also just teamed up with fellow Disney alumnus Tom Staggs to launch Candle Media, a $2 billion-funded media venture funded by private equity firm Blackstone.
“Kevin has a big brain,” Zaslav said during a recent conference call. “He’s very excited to get in the car with us.”
According to insiders, in addition to being a more cohesive structure, the new organization is likely to favor Zaslav’s alma mater. This was the case when Discovery acquired Scripps Networks Interactive in 2018, and Zaslav’s approach when he became CEO in 2007 after a lengthy stint at NBCUniversal. “This is a team, the guys from Discovery, they stick together,” said one of the veterans.
Officially, the company declined to comment when the final details are collected. (AT&T’s bad experience with the Time Warner merger, which was delayed by a federal antitrust suit, raises the level of caution.) Management moves will only be announced when the ink dries.
A number of outside executives have been mentioned in connection with potential top entertainment roles at the new company, including Disney’s Peter Rice, CAA’s Brian Lourd and Legendary’s Mary Parent. However, according to numerous sources, each of them is unlikely to come on board for contractual or logistical reasons.
There are also some important officials to consider. Casey Bloys, who joined HBO in 2004, has overseen both HBO and HBO Max since the high-profile departures of Richard Plepler and Kevin Reilly three years ago, earning public praise from Zaslav along the way. Warner Bros Pictures head Toby Emmerich was also a canny survivor, climbing the corporate ladder even as his former home, New Line, was incorporated into the Warner system. In the final year of his current contract, he has more than a handful of hits, the latest being Batman. Ann Sarnoff, chairman and CEO of WarnerMedia Studios and Networks Group, by comparison, joined Warner in 2019. She oversees a lot of valuable film and television work, especially since Warner is still in the licensing business.
A grace period of some length is likely to be extended for Sarnoff, Emmerich and Bloys when the merger goes into effect, according to several people involved in the discussion.
Zaslav is known for being down-to-earth, which means that one scenario considered unlikely is someone coming in as a direct replacement for WarnerMedia CEO Jason Kilar. Since last May, when the deal was first proposed, it has been widely known that Kilar does not expect to continue operations after the deal closes. However, he was at the helm as WarnerMedia began to find its footing, surpassing internal projections with 73.8 million subscribers on HBO and HBO Max by the end of 2021, among other successes. Kilar’s close associate, Hulu veterinarian and HBO Max head Andy Forssell, is expected to be in the new mix, given his tech acumen and involvement in reshaping streaming after a failed 2020 launch.
One reason for being willing to let the current Warner team shine is the strength of film and television programming. The studio, which has returned to the theater window for many releases after its daily efforts on HBO Max last year, has a number of significant releases this year and next. The 2022 list includes Fantastic Beasts: Dumbledore’s Secrets, DC League of Super-Pets, Black Adam and Shazam! Fury of the gods. Next year will see Aquaman and the Lost Kingdom, The Flash, Blue Beetle, Meg 2: Trench, and Wonka.
Meanwhile, HBO and HBO Max kicked off 2022 with record-breaking views for the second season of Euphoria and the new DC series Peacemaker. HBO will also welcome Game of Thrones spin-off House of the Dragon this year, as well as The White House Plumbers and new seasons of Westworld and Barry. The list of upcoming HBO Max originals includes more DC series, as well as Ladder, Love and Death, and new seasons of Burglars and Flight Attendant.
Zaslav’s close involvement in day-to-day operations will be very different from what it was during AT&T’s independent management. In upgrading Discovery stock to a Buy rating in January, Bank of America media analyst Jessica Reif Ehrlich acknowledged that it would be a “difficult integration.” However, in a note to clients, she described the $3 billion synergy goal as “highly achievable, if not conservative” and predicted that the new company would hit that figure in just two years, and possibly sooner.
Another hallmark of Zaslav is loyalty, a value he cultivated as he rose through the ranks at the NBCU after a short stint as a lawyer early in his career. After more than two decades at NBCU, he joined Discovery in 2007, shaking up Silver Spring, MD and changing levels of management. For example, he decided to abolish the position of Discovery Networks president Billy Campbell, appointing general managers of five network groups who report directly to him. Three of Zaslav’s top executives at the NBCU — J.B. Perrett, Adria Alpert Romm and Bruce Campbell — have followed him to Discovery and are expected to continue in key roles.
Perrette is a key figure to keep an eye on. Although he is not well known in Hollywood, he has more business and technical experience and has worked in London as CEO of Discovery Streaming & International. One of the founding executives of Hulu during his time at NBC. He is expected to continue as a key streaming curator, possibly from the US. One strategic challenge will be to figure out how HBO Max and Discovery+, which launched just over a year ago, fit together. Discovery+ has grown, but not spectacularly, with most of the company’s 22 million subscribers on streaming services as of the end of 2021. Erlich and other Wall Street analysts expect Discovery+ to fully merge with HBO Max. However, merging technologies and determining the best strategy for pricing, customer acquisition, and other areas will be challenging.
Along with Perrette, the third member of the triumvirate that runs Warner Bros Discovery at the corporate level will be Discovery CFO Gunnar Wiedenfels.
One of the executives who joined Wiedenfels and other Discovery executives during the 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 by making deals. At NBCUniversal, where he was EVP of Business Development, he led strategic planning and corporate transactions. At Discovery, he managed distribution deals that generated huge cash flow, even as the company faced cord-cutting fees and pay-TV cuts. Distribution, of course, also now has a vital streaming component.
Romm has worked closely with Zaslav since joining Discovery in 2007 after 25 years at the NBCU. She currently serves as Director of Human Resources and Culture and is expected to continue developing the plan for the new organization. If Warner Bros. Discovery is going to be like its media competitors, likely to have a centralized structure built around streaming.
Another key corporate executive for Discovery is COO David Leavey, a 21-year veteran of Discovery. A former Clinton White House official, Livy expanded his role to become Zaslav’s aide, who also manages a significant number of corporate functions. Levy helped chart new territory as the regulation process unfolded.
John Steinlauf, who leads advertising sales at Discovery, is a former Scripps executive who became one of the few senior executives in the acquired company after Discovery’s acquisition of Scripps Networks Interactive in 2018. The other is Kathleen Finch, who became Lifestyle’s brand director in 2018 after the $14.6 billion Scripps deal closed.
Jill Goldsmith contributed to this report.