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Warner Bros. Discovery

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Warner Bros. Discovery, Inc.
Company typePublic
ISINUS9344231041
Industry
Predecessors
FoundedApril 8, 2022; 2 years ago (2022-04-08)
Headquarters230 Park Avenue South,
New York City, New York[2]
,
U.S.
Area served
Worldwide
Key people
Products
Services
Divisions
Subsidiaries
Websitewbd.com

Warner Bros. Discovery, Inc. (WBD) is an American multinational mass media and entertainment conglomerate corporation that is based in Midtown Manhattan, New York City. It was formed after the spin-off of WarnerMedia by AT&T, and its merger with Discovery, Inc. on April 8, 2022.

The company's properties are divided into nine business units, including the flagship Warner Bros. film and television studios (which includes comic book publisher DC Entertainment), Home Box Office, Inc. (which includes HBO and Cinemax), U.S. Networks (which includes the majority of the ad-supported cable networks of its predecessors, including Discovery, Scripps Networks, Turner Broadcasting, and Warner), CNN, Sports (which includes Turner Sports, TNT Sports, and Eurosport, among others), Global Streaming & Interactive Entertainment (which includes the Discovery+ and HBO Max streaming services, and video game publisher Warner Bros. Interactive Entertainment) and International Networks. It also holds stake in the broadcast network The CW alongside Paramount Global.

History

Formation (2021–2022)

The company's initial draft wordmark.

On May 16, 2021, Bloomberg News reported that AT&T was considering an offer to divest equity interest in their media subsidiary WarnerMedia (the former Time Warner, which AT&T acquired in 2018 for just over $85 billion in an attempt to become a vertically integrated media conglomerate), and have it merge with Discovery, Inc. to form a new publicly traded company.[3][4] AT&T and Discovery officially confirmed the agreement the next day; the merger would be structured as a Reverse Morris Trust, with AT&T shareholders holding a 71% interest in the new company's stock and appointing seven board members, and Discovery shareholders holding a 29% interest and appointing six board members. AT&T would receive US$43 billion in cash and debt from the divestment. The merger was expected to be completed in mid-2022.[5][6][7]

The new company would be led by Discovery's current CEO, David Zaslav; WarnerMedia's CEO Jason Kilar's position in the new company was uncertain.[5] Zaslav stated that the two companies would spend a combined US$20 billion annually on content (outpacing Disney, Netflix, and Amazon). The company will aim to expand their streaming services, which includes WarnerMedia's HBO Max, to reach 400 million global subscribers.[6] It was stated that the company would aim to achieve $3 billion in cost savings via synergies within two years.[8]

On June 1, 2021, it was announced that the merged company would be known as Warner Bros. Discovery, and an interim wordmark was unveiled with the tagline "The stuff that dreams are made of"—a quote from the 1941 Warner Bros. film The Maltese Falcon. Zaslav explained that the company aimed to be the "most innovative, exciting and fun place to tell stories in the world", and would combine Warner Bros.' "fabled hundred-year legacy of creative, authentic storytelling and taking bold risks to bring the most amazing stories to life" with Discovery's "integrity, innovation and inspiration."[9][10]

In an SEC filing on November 18, 2021, Discovery Inc. revealed that talks with AT&T had fallen through, in April 2021, due to disagreements over the ownership of the new company between AT&T and Discovery shareholders, and the amount of debt transferred to Discovery when they merged with WarnerMedia, before talks resumed on May 17, 2021.[11]

In November 2021, during an earnings call, Discovery Streaming CEO JB Perrette discussed possible options for its Discovery+ streaming service post-merger, including bundling the service with HBO Max and eventually merging them under a single platform with a mixture of both companies' technologies. He also noted that WBD may prioritize launching Discovery+ and HBO Max as a unified platform in markets where Discovery+ has yet to launch, such as another parts of the Asia-Pacific.[12] On March 14, 2022, Discovery CFO Gunnar Wiedenfels—who would assume the same position post-merger—confirmed that such a transition was a long-term goal.[13]

On December 22, 2021, the transaction was approved by the European Commission.[14][15] On January 5, 2022, The Wall Street Journal reported that WarnerMedia and Paramount Global (at the time named ViacomCBS) were exploring a possible sale of either a majority stake or all of The CW, and that Nexstar Media Group (which became The CW's largest affiliate group when it acquired former WB co-owner Tribune Broadcasting in 2019) was considered a leading bidder.[16] The news led to speculation that, should a sale take place, new ownership could steer the network in a new direction, transforming The CW from a young adult-oriented network into one that featured more unscripted and even national news programming.[17] However, reports also indicated that WarnerMedia and ViacomCBS could include a contractual commitment that would require any new owner to buy new programming from those companies, allowing them to reap some continual revenue through the network.[18] Network president/CEO Mark Pedowitz confirmed talks of a potential sale in a memo to CW staffers, but added that "It's too early to speculate what might happen" and that the network "must continue to do what we do best."[19][20]

On January 26, 2022, AT&T CEO John Stankey stated that the merger was expected to close sometime during the second quarter of 2022.[21][22] On February 1, 2022, it was reported that AT&T had finalized the structure of the merger: WarnerMedia would be spun off pro rata to AT&T's shareholders, and then merge into Discovery Inc. to form the new company.[23][24] The transaction was approved by the Brazilian antitrust regulator Cade on February 7,[25] followed by the United States Department of Justice on February 9.[26] On March 11, 2022, the merger was approved by Discovery's shareholders. Due to the structure of the merger, it did not require separate approval from AT&T shareholders.[27][28]

Beginning of operations (2022–present)

In an SEC filing on March 25, 2022, AT&T stated that two-way trading of WBD stock with that of AT&T would begin on April 4, 2022, and that a special dividend would be issued the next day to give AT&T shareholders a 0.24 share in WBD for each share of AT&T common stock they hold.[29][30] Discovery shareholder Advance Publications holds a 23% stake in the combined company.[31] The merger was officially completed on April 8, 2022, with trading beginning on the Nasdaq on April 11.[32] At this time the company unveiled its final logo, designed by Chermayeff & Geismar & Haviv, which features a rendition of Warner Bros.' long-time shield logo.[33]

The combined company retained several top executives from WarnerMedia, including film and television heads Toby Emmerich and Channing Dungey, and HBO and HBO Max chief content officer Casey Bloys. Most of the company's top executive roles are filled by their Discovery counterparts, including Gunnar Wiedenfels as CFO, JB Perrette as president and CEO of global streaming and interactive, and Discovery's chief lifestyle brands officer Kathleen Finch—whose role has been expanded to cover most of the combined company's U.S. linear networks, besides CNN (which was taken over by Chris Licht, replacing the outgoing Jeff Zucker), Magnolia Network (which reports to Bloys, after having previously reported directly to Zaslav under Discovery), and the Turner Sports unit (which currently has a vacancy with the departure of Zucker, as Licht will only oversee CNN).[34][35][36]

In an introductory town hall featuring Oprah Winfrey as host, Zaslav stated that the combined company would need to have "one culture" that "starts with people feeling safe, people feeling valued for who they are", as opposed what he described as a culture of internal competition between WarnerMedia's businesses.[37] He also expected that "investment avoidance" via the consolidation of redundant business units (such as streaming) and staff would be one of the main ways that the company would achieve its promised $3 billion in cost savings.[38] On April 21, 2022, Licht and Perrette announced the shutdown of CNN's streaming service CNN+, which had only launched two weeks prior to the completion of the merger; the new leadership considered it to be incompatible with their goal of a unified streaming service for all WBD properties.[39][40][41]

In an investors' call on April 26 (concurrent with the first quarter earnings reports for Discovery Inc., its last prior to the merger), Zaslav contrasted the company's streaming businesses with those of Netflix (whose stock saw a decline after a quarterly loss in subscribers), describing Warner Bros. Discovery as being a "far more balanced and competitive company" that would "invest at scale smartly" and not "overspend" on growth and that its streaming businesses would complement its linear television. He stated that HBO Max had "meaningful subscriber churn", and that the planned merger of it with Discovery+ would help to reduce it by offering a broader array of content.[42] It was reported that the company had also suspended scripted development at TBS and TNT, in order to evaluate their strategies moving forward.[43] The following day, Zaslav purchased approximately $1 million worth of WBD stock.[44]

On May 11, 2022, Warner Bros. Discovery eliminated several executive positions carried over from WarnerMedia, including Kids, Young Adults and Classics head Tom Ascheim, and general manager of TBS, TNT, and TruTV head Brett Weitz. These networks will be overseen by Finch as head of U.S. Networks, while the studios under the Kids, Young Adults and Classics division will be moved under Warner Bros. Television.[45][46][47] The same day, it announced an agreement with British telecom company BT Group for it to contribute its BT Sport channels into a 50/50 joint venture with its UK Eurosport channels, and eventually merge them.[48][49] On June 9, WBD named former Discovery and Univision executive Luis Silberwasser as chairman of Sports.[50][51]

In July 2022, Warner Bros. Pictures head Toby Emmerich departed from the company.[52] Warner Bros. Pictures was then divided into three business units with their own leadership: former MGM executives Michael De Luca and Pamela Abdy became the co-chairs of Warner Bros. Pictures and New Line Cinema, and will temporarily oversee the DC Films and Warner Animation Group units until new executives are hired for the positions.[53][54]

WBD delivered its second-quarter earnings report—its first since the merger—on August 4, 2022. Ahead of the report, the company performed multiple cuts to HBO Max throughout July and early-August, including new programming development in much of Europe,[55] live-action children's programming development,[56] and direct-to-streaming films—leading to the notable August 3 cancellations of the nearly-completed films Batgirl and Scoob! Holiday Haunt as tax write-offs, and the quiet removals of multiple HBO Max original films from the platform and its upcoming releases.[57]

In the second quarter of 2022, WBD took $9.8 billion in revenue and a net loss of $2.2 billion pro forma, primarily from integration and restructuring expenses. The company took $825 million in write-offs on "content impairments and development".[58][59] The company confirmed cuts to children's programming development,[60] and abandoned the production of direct-to-streaming films for HBO Max—with Zaslav arguing that they lacked economic value and impact in comparison to theatrical releases. Despite this, Zaslav stated that the company planned to otherwise "embrace and support and then drive the incredible success that HBO Max is having", and had renewed its contracts with Bloys and other key HBO executives.[61] Zaslav stated that a "10-year plan" was in development for DC Films, modeled after those of Marvel Studios,[62][63] while Perrette stated that the planned merger of Discovery+ and HBO Max would occur by summer 2023 in the United States, with other markets to follow.[64]

Assets

For a more comprehensive list, see List of assets owned by Warner Bros. Discovery and List of libraries owned by Warner Bros. Discovery.

Warner Bros. Discovery consists of nine primary business divisions:[36]

Leadership

References

  1. ^ "S&P Dow Jones Indices Announces Treatment of AT&T Transaction with Discovery" (PDF). S&P Dow Jones Indices. S&P Global. April 7, 2022. Retrieved May 24, 2022.
  2. ^ "Discovery Selects 230 Park Avenue South As New Global Headquarters – Discovery, Inc". corporate.discovery.com. Retrieved June 28, 2022.
  3. ^ Hammond, Ed (May 16, 2021). "AT&T Is Preparing to Merge Media Assets With Discovery". Bloomberg News. Retrieved June 2, 2021.
  4. ^ Sherman, Alex (May 16, 2021). "AT&T in advanced talks to merge WarnerMedia with Discovery, deal expected as soon as Monday". CNBC. Retrieved June 2, 2021.
  5. ^ a b Hammond, Ed; Turner, Nick (May 17, 2021). "AT&T's WarnerMedia, Discovery to Merge in Blockbuster Deal". Bloomberg News. Retrieved June 2, 2021.
  6. ^ a b Kovach, Steve; Meredith, Sam (May 17, 2021). "AT&T announces $43 billion deal to merge WarnerMedia with Discovery". CNBC. Retrieved June 2, 2021.
  7. ^ Hayes, Dade (May 17, 2021). "David Zaslav And John Stankey Outline Plans For Merging Discovery And WarnerMedia, Addressing Future Of Jason Kilar, CNN, Streaming". Deadline Hollywood. Retrieved June 2, 2021.
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  59. ^ Weprin, Alex (August 5, 2022). "Warner Bros. Discovery Takes $825M Write-Down on Content Following High-Profile DC Axings and TBS-TNT Cancellations". The Hollywood Reporter. Retrieved August 6, 2022.
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  61. ^ White, Peter (August 4, 2022). "Warner Bros. Discovery To "Spend Dramatically More" On HBO/HBO Max & "Lock Up" Majority Of Casey Bloys' Top Team". Deadline. Retrieved August 5, 2022.
  62. ^ D'Alessandro, Anthony (August 4, 2022). "David Zaslav Talks DC "Ten Year Plan" In Wake of 'Batgirl' Axing; 'Flash' Still On Track For Release". Deadline. Retrieved August 5, 2022.
  63. ^ Hatchett, Matt Webb Mitovich,Keisha; Mitovich, Matt Webb; Hatchett, Keisha (August 4, 2022). "WBD Boss on Batgirl Cancellation: 'We're Not Going to Put a Movie Out Unless We Believe in It'". TVLine. Retrieved August 5, 2022.{{cite web}}: CS1 maint: multiple names: authors list (link)
  64. ^ White, Peter (August 4, 2022). "Warner Bros. Discovery: HBO Max & Discovery+ Combined Streamer To Launch In U.S. In Summer 2023". Deadline. Retrieved August 5, 2022.
  65. ^ "Warner Bros Discovery Exploring Overhaul of DC Entertainment (EXCLUSIVE)". Variety. April 14, 2022. Retrieved April 14, 2022.
  66. ^ Zielińska, Urszula (April 21, 2022). "WarnerBros. Discovery w Polsce samodzielnym bytem. Są zmiany w kierownictwie TVN" (in Polish). Rzeczpospolita. Retrieved May 25, 2022.
  67. ^ a b "Warner Bros. Discovery Leadership". Warner Bros. Discovery.
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