AT&T Board Meets as Discovery Merger Discussions Accelerate; Shock Reverberates Around WarnerMedia

Negotiations for a potential merger of WarnerMedia and Discovery accelerated on Sunday as the shock of a possible transaction ricocheted around the halls of HBO, Warner Bros. and other legacy Time Warner companies that have been on a roller-coaster ride of disruption since 2016.

Sources said AT&T leadership was meeting Sunday to discuss the transaction. Multiple sources said AT&T board members gathered Sunday to discuss the details of the transaction taking shape, the details of which broken early Sunday by Bloomberg News.

Multiple sources said the deal under discussion was a joint venture that would merge AT&T’s media assets — primarily the collection of networks and the storied Warner Bros. studio — with Discovery’s collection of domestic and international cable channels, anchored by Discovery, TLC, Animal Planet, OWN as well as lifestyle juggernauts Food Network and HGTV. The two companies are looking to combine forces to add heft to the program offerings on newly launched streaming services, AT&T’s HBO Max and Discovery’s Discovery Plus.

The valuation under discussion is understood to be well over $100 billion. Discovery CEO David Zaslav would be atop the combined venture. WarnerMedia CEO Jason Kilar would lead the company’s direct to consumer charge.

Word of the deal was a head-swiveling surprise for WarnerMedia insiders even at the senior management level. Executives expressed shock that a company that has experienced three massive restructuring and a round of mass layoffs since 2018, is in for yet another corporate configuration. The executive ranks at HBO, Warner Bros. and the former Turner cable networks have all seen wholesale departures during the same time frame as AT&T bulldozed the historic silos built for a different era of the business in the Time Warner era.

There was also shock expressed that AT&T would look for an exit strategy so soon after acquiring some of Hollywood’s crown jewels. Discovery’s David Zaslav has a reputation as a strong-willed CEO who is known for turning over management teams when results are not to his liking. Sources also indicated the hand of legendary media investor John Malone, who is a large individual shareholder in Discovery. Zaslav is also a longtime friend, associate and former NBC colleague of CNN Worldwide chief Jeff Zucker, who could play a larger role in the combined entity. Zucker had announced his plan to step down later this year but sources say this transaction could change that timetable.

In the meantime, Warner staffers were on text chains throughout Sunday, commiserating and sharing scraps of information as they braced for more changes to come.

“People are in shock,” said a longtime WarnerMedia insider.

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