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AT&T CEO John Stankey and Discovery CEO David Zaslav shared their reasons and visions for the mega-combination of their companies’ media businesses in a joint venture, unveiled early Monday during a conference call with Wall Street analysts.
It was a deal that was negotiated in Zaslav’s New York City brownstone, one that began with a weekend text exchange between the two executives.
“I was sitting around on a Saturday or Sunday afternoon, and I just texted John, and we ended up on a two-hour conversation about the future of media,” Zaslav told reporters over Zoom on Monday morning. The Discovery CEO will lead the combined company once the deal closes.
Under the terms of the deal, AT&T will spin off entertainment arm WarnerMedia and combine it with Discovery, creating a TV, film and streaming powerhouse. AT&T’s WarnerMedia owns the likes of the Warner Bros. studio, HBO and streaming service HBO Max, as well as the Turner cable networks, including CNN, TNT and TBS. Discovery’s reality TV-heavy properties include Discovery Channel, HGTV, TLC, Food Network, OWN and Animal Planet.
“We think together, the combination makes us the best media company in the world,” Zaslav said Monday, noting that the combined company will spend $20 billion on content. “We will be one company, one culture, one mission: great stories, great content that entertains people in every country around the world.”
Stankey added, “The new company will have a content spend that exceeds most of its industry peers.”
Stankey and Zaslav also addressed the status of WarnerMedia CEO Jason Kilar, who joined the company only a year ago.
“Jason is still the CEO of WarnerMedia,” Stankey said, adding that Zaslav “has a lot of decisions to make about personnel.”
“Jason is a fantastic talent,” Zaslav said, noting that he got to know the exec when he was developing Hulu. He added that CNN president Jeff Zucker was a close friend as well. “The focus will be on talking to everybody at Discovery and everybody at WarnerMedia, and we will be trying to figure out how to get the best people to stay.”
Zaslav also seemed aware of some of the criticism WarnerMedia has faced in recent months from high-profile Hollywood talent, many of whom felt blindsided by the decision to release Warner Bros. films on HBO Max the same day they were released in theaters.
The Discovery CEO said that his “number one priority” will be building “relationships with the creative community,” and that he plans to spend time in Los Angeles, New York and anywhere else that talent is based.
“I will be anywhere in the world the creatives are, to strive to create the best creative culture,” Zaslav said. “We want our company to be the place where people that want creativity, they want flexibility, they want stories, they will come to us.”
Zaslav thanked the founders of the two companies, Ted Turner and John Hendricks, as well as his mentor (and Discovery’s largest shareholder) John Malone, before noting the impact of Harry, Jack, Albert and Sam Warner.
“The story of the Warner brothers is the story of everyone in our industry. Success is about creative talent in front of the screen and behind the screen, and fighting for the culture that creates that vision,” he said.
He also expressed a commitment to CNN, merging it with the international news properties Discovery already owns: “Our mission is to lean into news, put it together with CNN, and be the world leader in news,” Zaslav said.
On the direct-to-consumer front, Zaslav said they would develop a model for CNN, and that they were still figuring out how they would incorporate HBO Max, with its focus on premium fare, and Discovery+, with its lifestyle-driven options.
“We will have enormous flexibility in how we package our streaming services,” Zaslav said, adding that “we will look at the range of options to unlock value here in the U.S. and around the world,” including a super pack that combines all the assets in one service, or a bundled offering similar to what Disney is doing with Disney+, Hulu and ESPN+.
Some on Wall Street have predicted further media megadeals, with much recent focus on a possible merger of Comcast’s NBCUniversal and WarnerMedia, though the merger announced Monday would seem to preclude such an option.
The deal announced Monday would be the largest in the media and entertainment industry since Viacom and CBS remerged to create ViacomCBS in late 2019.
For AT&T, which acquired the former Time Warner for $85 billion in 2018, the deal marks the latest step in its exit from the media business. AT&T has already started selling off non-core media assets.
Discovery’s management team, led by CEO Zaslav, has often touted the firm’s focus on lifestyle and other nonfiction content, arguing that this allows it to avoid a crowded space in which all Hollywood giants are competing for streaming subscribers. However, media mogul John Malone, who controls a voting stake of more than 20 percent in Discovery, has in the past talked about how “free radicals,” or medium- to smaller-sized media companies, should merge to boost their scale.
For the time being, and until the deal closes, both Discovery and WarnerMedia are pushing ahead, with HBO Max’s ad-supported offering still set to launch in June.
“Until the deal closes, we will fight to build the best Discovery on a parallel track,” Zaslav said. He added, however, that the company has chosen a name for the combined venture. It will be announced in the next week or two.
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