Discovery CEO plots changes as WarnerMedia merger nears

Discovery Inc.’s acquisition of WarnerMedia is expected to close today, setting off a series of strategic moves that will reverberate through Hollywood in the form of job losses, marketing budgets and competitive threats.

The merger with AT&T Inc.’s media division gives Discovery CEO David Zaslav control of a huge portfolio of assets, including the cable channels HBO, CNN and TBS, as well as the Warner Bros. film and TV studio. Combined, the new Warner Bros. Discovery Inc. will have projected revenue of $54 billion next year. Here are some of the decisions investors will likely hear about in coming weeks.

The company will hold its upfront 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+, jointly as a bundle. Eventually the two will be combined, but that could be months away.

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While the main leadership team was announced Thursday, one key role has not yet been filled. The company plans to announce a new head of its sports division, a role formerly held by Jeff Zucker, who resigned in February. The company will be a powerhouse in live sports, with broadcast rights to professional basketball, baseball and hockey in the U.S., the men’s college basketball tournament, and the Olympics in Europe, as well as cycling, tennis, motorsports and golf.

Discovery has promised $3 billion in cost synergies that will help reduce the company’s debt load. Much of those savings are expected to come through layoffs in areas like ad sales, engineering, corporate finance and legal. Employees at HBO and Warner Bros. are expected to mostly be spared.

Zaslav, 62, will embark on a listening tour next week that will have him meeting with employees in New York, Washington, D.C., 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 a whole lot bigger if it was going to compete with entertainment giants like Walt Disney Co., Comcast Corp., and Netflix Inc.

As part of the agreement, AT&T is distributing shares amounting to 71% of the new company to its shareholders. Zaslav, with input from Discovery investor and board member John Malone, will have a largely free rein to run the business the way he wants.

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—Bloomberg News