The Merger
The WarnerMedia-Discovery merger is reverberating across the media and entertainment world. --Jason Kilar appears headed for the exit. Kilar is now negotiating an exit from the company he was tapped to lead just a year ago, with
The New York Times noting that he was the subject of a
Wall Street Journal profile just a few days ago. "AT&T had helped with the article, a move that a prominent talent agent deemed 'the ultimate smile-to-the-face, knife-in-the-back.'”
--What now for CNN? 33 years ago CNN founder Ted Turner called Discovery Channel founder John Hendricks and pushed for a merger. "They just belong together," Turner said. Now, Turner's vision is one step closer to reality. Inside CNN, the news was greeted with a sense of optimism.
The story.
--Will there be layoffs? The companies said they expect to see $3 billion in cost-savings from the merger. That usually means layoffs, though real estate, technology and vendor savings will be a factor as well. "While overlap in our creative and content capabilities is virtually non-existent, there will be opportunity to redirect investment away from duplicative back-office, support and administrative functions into our growth strategies," AT&T CEO John Stankey wrote in an email to WarnerMedia employees Monday, obtained by
THR. "This reality is a necessary part of our journey to reposition the company."
--The John Malone angle: Malone, along with the Newhouse family, gave up his super-voting shares in Discovery to get the deal done, effectively ceding control (the Newhouse family still owns Conde Nast). The tax structure of the deal also looks like a Malone special, allowing shareholders like him to avoid taxes.
“I think that the technology of connectivity and digital technologies are one focus, and creating content that people get addicted to is another focus,” he
told the Wall Street Journal. “And you seldom would find both of those in the same management team... “I give [John] Stankey enormous credit for having studied the situation and come up with a solution for his company, which I think is going to work wonderfully well,”
--Remember the federal antitrust suit? Well Makan Delrahim, who ran the suit, told the
Journal that the original deal "was motivated by an effort to salvage a bad deal made for DirecTV, which was why they couldn’t execute it well,” Mr. Delrahim said, adding that the pending spinoffs of both DirecTV and Time Warner will allow AT&T and Discovery to focus on wireless service and content, respectively. “Credit to Stankey to be willing to rip the cord and say, ‘Let’s get back to what we know best.’ ”
►The deal is already kickstarting fresh consolidation talks, with Amazon in talks to buy MGM. The Information, which
first reported the news, says that MGM is seeking between $7-$10 billion. The studio is home to the James Bond franchise, as well as
Survivor,
Shark Tank and other TV programs.
--
The New York Times added that "Michael De Luca, MGM’s chairman, presented the studio’s coming slate to Amazon’s team on Friday..."
Even more consolidation... +In France: In a bid to compete with Netflix and other global streaming giants on their home ground, Groupe Bouygues and RTL Group have announced plans to merge leading French commercial broadcasters TF1 and M6 to form a new European TV giant.
More.
+In the music biz: French media conglomerate Vivendi is considering the sale of an additional 10 percent stake in Universal Music Group, the label home of the likes of Taylor Swift and Lady Gaga, to a U.S. investor.
More.
►After “fool’s gold” rush, telecom giants exiting Hollywood. AT&T and Verizon hoped that spending billions on media assets like HBO, Warner Bros., Yahoo and AOL would yield hoped for synergies with their core wireless operations — but that never panned out, Georg Szalai writes.
--“The simple rule from the past 20 years is that telco and media assets generally do not mix,” argues Ian Whittaker, a London-based finance consultant. “The mindset between the two sides is too different, and it always ends up with the telco companies regretting their purchase.”
The story.
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