AT&T has announced this week that they will be unloading WarnerMedia to Discovery- perhaps one of the strangest announcements we’ve heard in a while. BLAKE & WANG P.A one of the best entertainment law firms los angeles digs a little deeper into the details of this $43B merger.
One company, one culture, one mission
Discovery CEO David Zaslev seems buoyed by the deal, determined that the uniting of the 2 industry greats will successfully create a renewed corporate culture. Meanwhile, it seems that the surprise move from AT&T is indicative of their overall move towards 5G and another tech, broadband, and wireless options, citing the need for a ‘different capital structure’.
What’s particularly surprising is the truncated timescale we’ve seen. Market rumors of the merger only popped early last week, although talks have been underway since earlier this year.
Joining forces with entertainment brands
Under the unusual deal, AT&T shareholders keep 71% of the recombined new entity, with Discovery holding the remaining 29%. In monetary terms, the 2023 revenue is pegged currently at over $50B. It seems the hope is that, with the combination of powerful brands this will bring to the table, it will be possible to create a business entity with the profile to challenge market-dominator, Netflix.
The new company will also have a name change, intended to usher in a new era, and that will be announced in the coming days. To date, we’ve heard nothing regarding the executive suite for the new entity, either. It seems that current WarnerMedia CEO, Jason Kilar, will retain his position. Kilar is already notable for some sweeping 2020 changes, including a major restructuring focused on the digital age, bringing experience from Amazon and Hulu to the table. The rest remains a mystery currently.
Plans going forward
Underneath the current hype over synergy and finding the best talent possible, we can read that they’re looking for a hardworking and talented team that will allow for more content-focused spending. The initial budget is set at $20 billion, and they’re keen to invest more. As yet there is no talk of layoffs, but it’s hard to see how they won’t come in time.
We know that CNN remains part of the deal, a question that’s been asked since 2016. Little else was said of the film side of the business, and relationships with talent and theater owners were not much discussed. What will the fate be for Discovery + and HBO Max, with 15 million and 44.2 million subscribers respectively? Will they be combined or left as separate products? Will we see the commitment to day-and-date releases, or will a longer theatrical window be honored for 2022? Disney has certainly seen success with bundling Hulu, Disney +, and ESPN +, but will the same work for the new entity? Zaslav was non-committal.
While we don’t have a lot to go on regarding the entertainment side of this shock merger to date, rest assured that BLAKE & WANG P.A one of the top entertainment law firms los angeles will keep you informed throughout the process as details become clearer.
