Marketing assets

AT&T completes WarnerMedia merger with Discovery, setting off a string of Hollywood events

Discovery Inc.’s merger with WarnerMedia was completed on Friday, setting off a series of strategic moves that will ripple through Hollywood in the form of lost jobs, marketing dollars and competitive threats.

Merger with AT&T Inc.’s media division gives Discovery CEO David Zaslav control of a vast portfolio of assets, including cable channels HBO, CNN and TBS, as well as the film and television studio Warner Bros. Together, the new Warner Bros. Discovery Inc. will have forecast revenues of $54 billion next year.

Here are some of the decisions investors will likely hear about in the coming weeks.

  • The company will hold its initial presentation in May, revealing a combined brand strategy for advertisers. It will announce a new price for selling its two main streaming services, HBO Max and Discovery+, together as a bundle. Eventually the two will be combined, but it could take months.
  • While the main management team was announced on Thursday, a key role has yet to be filled. The company plans to announce a new head of its sports division, a position previously held by Jeff Zucker, who stepped down in February. The company will be a powerhouse in live sports, with the rights to broadcast professional basketball, baseball and hockey in the United States, the men’s college basketball tournament and the Olympics in Europe, as well as the cycling, tennis, motor sports and golf.
  • Discovery has pledged $3 billion in cost synergies that will help reduce the company’s leverage. Much of those savings are expected to come from layoffs in areas such as ad sales, engineering, corporate finance and law. Employees of HBO and Warner Bros. should be mostly spared.

Zaslav, 62, will embark on a listening tour next week that will see him meet employees in New York, Washington, DC, Atlanta and Los Angeles.

For years, the executive plotted and planned a major media deal. He kept a list of takeover targets and strategized with top lieutenants. Discovery, best known for its nature shows and cable TV networks like Animal Planet, was going to have to get much bigger if it was to compete with entertainment giants like Walt Disney Co., Comcast Corp. and Netflix Inc.

As part of the deal, AT&T is distributing shares representing 71% of the new company to its shareholders. Zaslav, with input from investor and Discovery board member John Malone, will have plenty of free rein to run the business as he sees fit.

Gerry Smith and Christopher Palmeri, Bloomberg