Deadline: Warner Bros Discovery Town Hall: CEO David Zaslav Tells Oprah Winfrey How Merger Came Together, Addresses CNN’s Future, Looming Staff Cuts

Story from Deadline:

Warner Bros Discovery CEO David Zaslav and other top execs met with employees in a town hall this morning on the Warner lot in Burbank. The gathering was primarily a restatement of many of the key messages from the nearly year-long buildup to the historic merger, though the exec did briefly touch on looming layoffs, highlighted CNN and how the merger came together.

The roughly hour-long event was the first all-hands meeting since last Friday’s close of the $43 billion merger. (In addition to the several hundred in person, thousands more watched via livestream.)

According to a preliminary transcript of the event provided to Deadline, Zaslav declared it “a new day, a bright and shiny day.” After speaking briefly, he introduced Oprah Winfrey, who interviewed Zaslav onstage and took him through an hour-long discussion of mostly high-level observations about the overall portfolio. Asked how the deal came together from the initial talks last February, Zaslav said AT&T CEO John Stankey wanted to move quickly with spinning off the company’s entertainment assets. Plus, both WarnerMedia and Discovery were seeking scale in streaming in order to better compete with Netflix and Disney.

Reflecting on the outcome of the more than year-long effort to bring the companies together, Zaslav said, “This is like our rendezvous with destiny. This is art. We have the goods, we have the chance to be the greatest media company. I can’t explain why it happened. This transaction is not like any other wonders four times the size of us. We get to run the whole company together. We get to build a creative team, the best of both companies, but it happened and so now this is our moment. You know, it starts it starts this week. And it’s all in front of us.”

Winfrey handled the onstage chat with Zaslav because the two have been in business together since 2008. The Oprah Winfrey Network, aka OWN, began as a joint venture but is now almost entirely controlled by Warner Bros Discovery. At the end of 2020, Winfrey, through her company, Harpo, sold almost her entire stake for $36 million in Discovery stock. That move gave Discovery nearly 95% of the entity (up from 73%) but Winfrey also signed on to remain a key contributor and creative overseer at OWN for years to come.

Winfrey ran a few pre-submitted questions from employees by Zaslav. He at one point was asked about how he plans to combine the companies, which will likely result in the layoffs of hundreds or perhaps thousands of employees. He agreed with Winfrey that “culture is everything” and said the longstanding cultural issues at WarnerMedia, previously Time Warner, are still in play.

The way that Time Warner bosses like Jeff Bewkes and Gerald Levin had the company set up was “basically, ‘we’re going to have our businesses compete,'” Zaslav observed. “There’s nothing wrong with that it was actually maybe a very good strategy. And you know, they had all these different businesses and you know, don’t do any favors for the other businesses, you run your business make the most money you possibly can, the same way you compete against others compete against them.”

As employees unite, though, “We need to now come together as one culture one culture that starts with people feeling safe, people feeling valued for who they are.” Absent that, he continued, “you can’t be creative.” After so many structures and leaders and configurations (on the Warner side, anyway), “I think we have to lay out very clearly, you know, what is winning?” Zaslav said.

In addition to Winfrey (who noted that Warner Bros had made her film debut, The Color Purple), figures from Warner Bros’ history were in the audience for the town hall. One was Mark Ross, son of Warner Communications boss Steve Ross. (Zaslav noted that he had been hired by Ross’s attorney at the start of his career.) Another was Cass Warner, grand-daughter of Harry Warner, one of the original Warner brothers who founded the studio nearly a century ago. Zaslav also mentioned meeting with CNN founder Ted Turner during a stop in Washington, D.C., earlier this week.

Zaslav referred to Turner as a “hero” for creating CNN and said he has had lengthy conversations recently with Chris Licht, who was installed after the exit of Jeff Zucker earlier this year. Zaslav said newsgathering, not entertainment, would be the focus for CNN given its sizable global footprint. Mounting feeds in multiple languages is a potential way to leverage the company’s unique presence, the CEO said, which has been on display during Russia’s invasion of Ukraine.

“News channels here and around the world have become advocacy networks,” Zaslav said. “There’s not a lot of difference between some of the news networks and the Food Network.”

In addition to the CNN stop, Zaslav has conducted a series of smaller meet-and-greets with workers in multiple cities. Since the deal was first proposed last May, he and Discovery brass have made an effort to deepen their understanding of Warner’s businesses, though until the formal close they faced some regulatory restraints.

WarnerMedia’s spinoff from AT&T and combination with Discovery has created one of the largest companies in the media business. While Discovery controls just 29% of the new entity, it has operational control.

Many eyes are on Zaslav, not only inside the company but across the industry, as he sets about integrating the two large companies, whose combined annual revenue is more than $50 billion. He has promised Wall Street $3 billion in cost savings from the deal, which translates to a significant amount of layoffs. Apart from a series of high-level departures last week, with former WarnerMedia CEO and several of his direct reports leaving the fold, the extent and nature of the cuts is not yet clear.

Streaming, of course, will be a strategic centerpiece at Warner Bros Discovery. The company intends to make HBO Max the main vessel for acquiring customers. Discovery+, the subscription service launched in January 2021, has grown steadily but not spectacularly and will be folded into HBO Max sometime in the coming months or perhaps years. (Many technological and logistical hurdles will prevent it from being an instant process.)

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