WarnerMedia and Discovery Combine in Landmark Deal
By Movieguide® Staff
WarnerMedia and Discovery joined forces in a groundbreaking new deal as significant media companies merge to compete with the rise of video streaming in a changing market.
David Zaslav will head the conglomerate, which seeks to compete with the industry’s top entertainment companies.
Zaslav’s ascension is part of a surprising move by AT&T and Discovery to pool their media resources and make a bid to compete more directly with large rivals like Netflix, Walt Disney, and NBCUniversal. Under terms of the deal, AT&T shareholders will control 71% of the new company, while Discovery shareholders would own 29%. The boards of both companies have approved the pact and the transaction is expected to close in mid-2022, subject to approval by regulators and Discovery shareholders. Two key Discovery backers, the media executive John Malone and the media company Advance, will vote in favor of the transaction.
Zaslav has led Discovery since 2007 and his relentless business focus has kept the company competitive even though it is smaller in scale than several of its rivals. When Discovery-owned cable networks start to flag, Zaslav doesn’t shut them down; he rebrands them with new themes and programming. When a new goal comes into focus, Zaslav doesn’t let operating executives charged with the task wander away to get it done; he checks in with them constantly, demanding updates and new information. And though Discovery isn’t the sector’s biggest company, he has worked to grow it, buying up the cable networks of the former Scripps Networks and striking content deals with Oprah Winfrey and home-renovation gurus Chip and Joanna Gaines. Now he will have a broader portfolio of resources as his company and AT&T form a joint venture that will marry his company’s TLC with Warner’s TNT and TBS; the flagship Discovery Channel with Warner’s DC Comics characters; and lifestyle-focused Food Network.
AT&T trusts Zaslav to reconfigure the two companies and, according to the company’s CEO John Stankey, will focus on U.S. telecommunications business, while WarnerMedia makes an effort to compete in the streaming arena. Stankey believes that the new relationship will provide AT&T “with the right capital structure [and] better products are going to come from the media company and the communications company as the result of making this change.”
“It became clear to me over the last several months….that we were hitting escape velocity,” Stankey said. “It became clear to me we were going to need a different capital structure.”
“We want our company to be the place” for creative storytellers, Zaslav said. ‘If we are successful with that, the free cash flow is going to grow.”
The announcement comes after Disney and Sony reached an agreement for Disney+ to carry Sony content, including SPIDER-MAN.