Discovery takes control of HBO, CNN, and Warner Bros., creating new media giant

The deal combines two hidden treasures of content and heralds new changes in the streaming age.

The newly formed company, Warner Bros. Discovery, will go public on Monday. Zaslav said he will hold an event at the town hall for employees of the combined company later in the week.

“I am confident that our collective energy and genuine love for these businesses and brands will build the most dynamic media and entertainment company in the world,” Zaslav said in a memo to employees Friday afternoon.

Zaslav said that Warner Bros. Discovery “can drive the creation of high-quality content; create more opportunities for underrepresented storytellers and independent creators; and serve customers with more innovative video experiences and points of engagement.”

The deal, first announced last May, is a capstone moment for Zaslav and his former associates at Discovery, best known for brands like Animal Planet, TLC and HGTV. The merger adds HBO, CNN, TNT, Turner Sports, the Warner Bros. movie studio and a host of other media assets to the company.

Setting the stage to compete with Disney and Netflix, Zaslav said in Friday’s memo that “we are well positioned to become a top-tier streaming competitor.”

He confirmed that the main streaming services from each side of the company, HBO Max and Discovery+, will be merged “into a single product in the future.”

The merger brings Zaslav to the top echelon of the media business, controlling everything from a legendary movie studio to a global news network.

As Rich Greenfield, the influential media analyst at LightShed Partners, told CNN Business, “David can beat Goliath!” Greenfield said that “Zaslav and the team find themselves in a position that was unimaginable two years ago: near the top of Hollywood.”

Shareholders of AT&T (T), which spun off WarnerMedia earlier this week, owns 71% of the new company’s shares, with Discovery shareholders owning 29%. But the transaction represents the reversal of AT&T’s earlier plan to become a media heavyweight. With Friday’s deal “done,” in Wall Street parlance, AT&T has officially canceled its 2018 acquisition of Time Warner and refocused on its core business.

AT&T CEO John Stankey bid farewell to the media company in a candid memo to staff on Friday. “Getting to this point was one of the hardest decisions of my life,” he wrote. “I’m sure you’re not surprised that you came in with a great deal of anxiety, disappointment and concern about the changes it would bring about. All in all, I’m confident we’ve charted the right course.”

“Over time,” Stankey wrote, “the combination of WarnerMedia and Discovery will create a stronger company and accelerate the already strong pace of innovation and change it has established.”

Warner Bros. Discovery anticipates $3 billion in what the companies often call “synergies,” meaning the combination will almost certainly involve layoffs. Many of Warner’s top executives have already left the company, including WarnerMedia CEO Jason Kilar, whose last day was Friday.

Zaslav wrote in an internal memo Thursday that “we are establishing a simpler organizational structure with fewer layers, more responsibility and more screen-focused resources.”

Discovery executive Bruce Campbell will oversee all revenue from the new company. JB Perrette will run the global broadcast and interactive entertainment. Kathleen Finch will oversee all cable networks except CNN and HBO. CNN will operate separately, with Chris Licht becoming president and CEO of CNN Global. Everyone will report to Zaslav.

Three key WarnerMedia creative executives will also report directly to Zaslav: HBO Chief Content Officer Casey Bloys; Warner Bros. Television Group Chairman Channing Dungey; and Warner Bros. Picture Group Chairman Toby Emmerich.

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