In a Thursday town hall with staff in Burbank, the mogul described his vision for the combined Hollywood empire. Days after closing a megadeal that combines the Warner Bros. entertainment empire with the unscripted powerhouse of Discovery.
Zaslav walked through how the merger went from a call with AT&T CEO John Stankey to reality, reiterated his appreciation for the Warner Bros. studio's history and addressed remote work opportunities for employees. Winfrey asked if the potential plan was for "one big streaming channel," Zaslav said of it.
"That's where we go," Zaslav said of the concept of a unified streaming platform that includes HBO Max and Discovery+, and a caution: "It's gonna take us a little longer for us"
According to a source, "We have almost 40 channels on any given night, 40 percent of Americans viewing one of our channels, so we have we create a single platform, but we have so much content that we must understand how do we use it to nourish it."
The next step for leadership will be integrating teams and then undertaking steps to pinpoint where the estimated $3 billion in cost synergies will be discovered. (At the time of the merger announcement, Zaslav told staff to be patient with us since it will take us a lot of time and we'll be as transparent and honest as possible. We have been established as a family that has grown by acquisition."
Winfrey pressed for an estimated cost synergie of $3 billion, to which Zaslav affirmed his view that "cost avoidance" will be considered. "We don't know exactly how it will work," Zaslav said of the $3 billion. "But we don't know exactly how it's going to be paid," said one employee. "There are a lot of companies that Warner is not in, and vice versa."
The CEO said that the majority of the savings would be investment avoidance. So for example, we were going to spend $600-$800 million on Discovery+ and Warner was going to spend $800-$1 billion on HBO Max. With one platform, the type of expenditure isn't doubled.
Zaslav argued that for the streaming platform, engineers were hired. "We had in our plan to hire a lot more engineers. Now when we come together, we have tens of thousands of engineers, but we don't have to hire many more thousands of engineers," he said.
Zaslav was also asked about remote work amid the epidemic, and how workplace culture has evolved in the two years since COVID-19 shutdowns impacted offices and productions. "I don't think we'll ever return to five days a week," he said of in-office work, "but I truly believe in being together."
"You don't build a narrative on Zoom, but you don't get a mentor on Zoom," the CEO said.
AT&T and Discovery Inc. completed a $43 billion merger on April 8, securing (trading as WBD) the company, which combines streaming platforms like HBO Max and Discovery+, televisions like HGTV, Food Channel, TNT, and Cartoon Network, and worldwide news giant CNN, on Thursday, up slightly from the close date.
Nine executives from AT&T's WarnerMedia leadership, including CEO Jason Kilar and chair/CEO of studios and networks Ann Sarnoff, were cleared out in April. A newly minted Warner Bros. Discovery chief Zaslav installed his trusted lieutenants among the thirteen executives that were promoted and installed as top leaders, including CFO Gunnar Wiedenfels and Kathleen Finch, the head and content officer for U.S. networks.
Zaslav has announced plans to hire a chief diversity, equity, and inclusion officer as well as a chair and CEO to oversee Warner Bros. Discovery Sports. The combined corporation now holds major league sports rights across several jurisdictions in the United States and Latin America and Europe, as well as the Olympic Games in Europe, till 2024.
According to Zaslav in his opening remarks, Warner Bros. Discovery would have a "single strategic focus as a global pure-play content corporation," combining the iconic Warner Bros. studio and HBO features from Discovery, according to Zaslav, who was also bullied about Ted Lasso, the producer of Apple TV+, and Abbott Elementary, which he described as among the "leading content arms dealers in the industry."
As speculation shifts to job cuts, Zaslav addressed cost synergies in February..... on an earnings call, pointed to duplication at HBO Max and Discovery+. Were spending roughly $6 billion on technology and marketing between HBO Max and Discovery+., Zaslav said.
The acquisition of AT&T's WarnerMedia assets coincides with the first major acquisition from Zaslav's Discovery, which purchased Scripps Interactive, then the home of HGTV, Travel Channel, and Food Network, in 2018 with a $14.6 billion cash and stock deal. The cost synergies from the transaction were initially estimated at $350 million, but that figure was later raised.
Zaslav's new team joins Warners in preparation for Fantastic Beasts: The Secrets of Dumbledore on April 15 in response to the franchise's box office draw, while The Batman ($737 million globally) begins its run on HBO Max on April 18. Meanwhile, CNN's new streaming program is weeks away from its January 29 launch date, which has raised concerns about its long-term feasibility as a standalone service. Discovery has 22 million streaming subscribers globally, while HBO and HBO Max combine for 73.8 million worldwide subscribers.
On Wall Street, Bank of America analyst Jessica Reif Ehrlich initiated a "buy" rating and $45 price target for the merged Warner Bros. Discovery on April 13, despite declaring that there will be "some near-term volatility in the stock price as shareholders digest this new transaction."
Zaslav described Warner Bros. Discovery as well-equipped for the current streaming and content spending race with its assets in his departure. "Everyone else is trying to figure out how they survive," he said. "We got everything we need now. We just had to work together."