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The combination of Discovery and AT&T’s WarnerMedia, which on May 17 unveiled a mega-deal to merge, will be “magic,” but “we are going to have to earn the trust and respect of the full Warner team,” Discovery CEO David Zaslav told an investor conference on Tuesday.
The merged firm will be “the best media company in the world with the best IP in the world,” he said, touting its “exceptional top-of-the-pyramid” intellectual property. Warner has “the greatest brands,” and together, the company will look to have more content that people will pay for “before they pay for dinner.”
His conclusion: “There are some great media companies and some great streaming media companies. But this will be the only media company whose only focus is storytelling, attracting creative talent and putting content around the world on every platform.” He later added: “Disney is a fantastic company, but this is much broader in terms of its appeal; and Netflix is a fantastic company.”
He touted Warner’s TV production success for various networks and streamers, saying: “We all have had this envy” of the TV studio, which he recalled former General Electric chairman and CEO Jack Welch mentioned when the conglomerate owned NBC and Zaslav worked there. “At NBC we used to say ‘Must See TV,’ but Jack Welch said, ‘Warner Bros. TV,’ because all those shows were from Warner Bros.,” he quipped.
Zaslav also touted the Warner film studio, arguing on Tuesday that “nobody can open a picture everywhere in the world like Warner Bros.,” Zaslav offered.
The Discovery boss, sitting in front of black-and-white photos of James Dean and Humphrey Bogart, on Tuesday lauded the WarnerMedia executive team, including CEO Jason Kilar, HBO and HBO Max chief creative officer Casey Bloys, Warner Bros. boss Ann Sarnoff, Toby Emmerich, chairman of the Warner Bros. Pictures Group, and CNN head Jeff Zucker. He highlighted a couple of times that Bloys has done great at HBO, saying that he was “on an unbelievable run” and “Casey has been really getting it right.”
And he mentioned that he was at a dinner party, which was nice, “because it’s been 15 months since I could said that,” and he shared that everyone there was looking at their watches because they wanted to be home by 9 p.m. “because Mare of Easttown is going to drop.”
Asked about his take on what would be key to making the merger work out, Zaslav said he would make sure everyone had “a very clear vision of what the culture of the company is.” And he emphasized his leadership will be important to attracting creatives, saying: “My job is to make this company the place that everybody wants to come.”
The Discovery boss also told the conference that he sees the fact that WarnerMedia creates so much content will fit well with Discovery’s focus on owning its own intellectual propert. “We are not buyers at this company,” he said about Warner Bros. Discovery. “This company is going to be creative makers, not creative buyers, and there is always an advantage to creative makers.”
Zaslav noted Disney CEO Bob Chapek’s comment on Monday that Disney+ would not launch a lower-priced version with commercials, touting Discovery+ with ads as a competitive advantage. Reiterating past comments that it has a high average revenue per user, he also noted that consumers seem to feel that 3 minutes of commercials was fine with them as that was “almost negligible” compared to traditional TV. As a result, the ad-supported streaming offering is “a window to a lot more money,” a “cherry on top,” Zaslav said. “That is a lane.” If in a few years the streaming space was dominated by Netflix, Disney and Warner Bros. Discovery, “but we had a global platform that was ad-light, what would the economics of that look like,” he wondered out loud.
Asked about the upfront advertising market, the CEO said: “We’re not done” with the upfront, Zaslav said. “That’s a good thing. We need pricing, and we are getting pricing.”
Zaslav, who will lead the combined company, told a recent town hall from the Warner Bros. lot in Burbank that the combined company would be called Warner Bros. Discovery and that its slogan would include the phrase “the stuff that dreams are made of,” a reference to the iconic line from the Warners film The Maltese Falcon.
At a recent investor conference, the Discovery CEO was asked about the broader trend of entertainment industry consolidation right as Amazon.com was about to announce its $8.45 billion takeover of MGM, saying: “I don’t think Amazon got the idea for MGM from us, but we are happy about that deal. Look at the value. It’s all about the IP,” intellectual property. Zaslav also called WarnerMedia “the greatest treasure of global IP” and said the combined firm would be “uniquely competitive with Netflix and Disney.”
When he and AT&T CEO John Stankey first shared their visions for the mega-combination,Zaslav said that his “number one priority” would be building “relationships with the creative community,” adding 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,” he vowed. “We want our company to be the place where people that want creativity” can find it.
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