Discovery takes over HBO, CNN and Warner Bros., creating a new media giant

The deal combines two treasure troves of content and foreshadows new changes in the streaming era.

The newly formed company, Warner Bros. Discovery, will begin trading on Monday. Zaslav said he would hold a public meeting for employees of the merged company later in the week.

“I’m confident that our collective energy and sincere love for these companies and brands will build the fastest growing media and entertainment company in the world,” Zaslav said in a memo to employees Friday afternoon.

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

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

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

He confirmed that the major streaming services on either side of the business, HBO Max and Discovery+, will be combined “into one product going forward”.

The merger propels Zaslav to the top of the media industry, 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 actually beat Goliath!” Greenfield said “Zaslav and his team find themselves in a position that was unimaginable two years ago – sitting near the top of Hollywood.”

Shareholders of AT&T (J), which spun off WarnerMedia earlier this week, owns 71% of the shares of the new company and Discovery shareholders own 29%. But the deal represents AT&T’s reversal of an earlier plan to become a media heavyweight. With Friday’s deal “closed,” on Wall Street, AT&T officially unwound its 2018 takeover of Time Warner and refocused on its core business.

AT&T CEO John Stankey bid farewell to the media company on Friday in a candid note to staffers. “Coming to this moment was one of the hardest decisions of my life,” he wrote. “I’m sure you’re not surprised that it comes with a good deal of anxiety, disappointment and worry about the changes it would trigger. All things considered, I remain convinced that we have blazed the right path.”

“Over time,” Stankey wrote, “the combination of WarnerMedia and Discovery will birth a stronger company and accelerate the already brisk pace of innovation and change you have established.”

Warner Bros. Discovery is planning $3 billion in what the companies often call “synergies,” meaning the combination will almost certainly lead to layoffs. Already, many senior Warner executives have left the company, including WarnerMedia CEO Jason Kilar, whose last day was Friday.

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

Bruce Campbell, director of Discovery, will oversee all revenue from the new company. JB Perrette will lead global streaming and interactive entertainment. Kathleen Finch will oversee all cable networks except CNN and HBO. CNN will be operated separately, with Chris Licht becoming president and CEO of CNN Global. All will report to Zaslav.

Three key WarnerMedia creative executives will also report directly to Zaslav: Casey Bloys, chief content officer of HBO; Channing Dungey, chairman of Warner Bros. Television Group; and the chairman of Warner Bros. Picture Group, Toby Emmerich.

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