Monday’s information that Warner Bros. Discovery is splitting into two corporations – one consisting of studios and streaming, the opposite linear TV networks – has cued up Hollywood’s newest succession drama.
David Zaslav, having steered WBD as CEO because the 2022 shut of the $43 billion merger of Discovery (which he previously ran) and WarnerMedia, is slated to be CEO of the “S&S” (studios and streamers) entity. Gunnar Wiedenfels, Warner Discovery’s CFO, who held the identical publish at Discovery and has a pure finance background has been put in as CEO of the networks firm.
The breakup is predicted to formally shut by the second half of 2026, and already a number of questions are swirling concerning the long-anticipated maneuver. Among them: Who will sit within the nook workplace when all is claimed and accomplished?
For every of recent firm, M&A may present that reply. During a name with Wall Street analysts concerning the transaction, Zaslav stated the cut up “reflects our belief that each company can now go further and faster apart than they can together.” Wiedenfels stated each corporations can be “free and clear” for dealmaking as quickly because the cut up is full – with no ready interval, in contrast to when a two-year pause was mandated after WarnerMedia and Discovery mixed.
While Wiedenfels is revered in finance circles, his new gig overseeing the networks firm “would seem to suggest a focus on financial efficiency and potentially a strategic transaction at some point,” TD Cowen analyst Doug Creutz wrote in a notice to shoppers. Guggenheim’s Michael Morris additionally highlighted the appointment, waggishly anointed Wiedenfels “Top Gunnar.”
Prior to Discovery, the German-born Wiedenfels held finance posts at ProSiebenSat and labored in Hamburg for McKinsey & Co. While he by no means grew to become the pop-culture villain that Zaslav did, particularly amongst style followers, he nonetheless managed to impress the inventive group in 2022 by dismissing considerations concerning the scrapping of a Batgirl film as a way to understand a tax profit. “Media likes to talk about media, I guess,” he shrugged on the time.
Bumping up the CFO to CEO is a unique strategy from the one taken by Comcast in assembling the administration crew for Versant, the NBCUniversal cable community holding firm about to spin off from Comcast. Mark Lazarus, the potential CEO, brings important operational and programming expertise to the position, having headed sports activities and leisure throughout linear networks and streaming. Occasionally, CFOs do ascend to the highest job in media corporations (Chris Winfrey at Charter Communications is one present instance), but it surely’s a harder highway in organizations entrenched in Hollywood.
The S&S firm is much more of a home of intrigue, not surprisingly provided that it has status belongings like HBO, HBO Max and Warner Bros. underneath its roof. While Zaslav has lengthy coveted movie-mogul standing, punctuating that ambition by shifting into late Paramount boss Robert Evans’ former LA house, he has additionally dedicated numerous unforced errors. Along with authorize the killing of flicks like the finished Coyote vs. Acme (which was lately bought after an outcry), he got here near torpedoing Turner Classic Movies. Steven Spielberg, Martin Scorsese and a coalition of different A-list filmmakers satisfied him in any other case. And there was that bash he and Graydon Carter threw in Cannes in the course of the 2023 Hollywood writers strike, full with heavy safety.
One senior exec who labored for Zaslav at Discovery and WarnerMedia advised Deadline the cut up plan had a sure valedictory high quality. “It feels like this is the start of his retirement, at least from this company,” the exec theorized. “Would he want to run something that’s so much smaller than what he had before?” At 65, Zaslav would seem to have one other act in him, however some insiders level to his recalling of longtime lieutenant David Levy final month from CNN to a senior publish on the mom ship was a precursor.
If Zaslav had been to ever step away (an enormous if for anybody tuning in to NBA or French Open telecasts over the previous month, the place Zaslav’s embrace of celebrities was on full show), who can be candidates to be No. 1? Two names on the brief checklist can be Casey Bloys and Channing Dungey.
Both had outstanding roles on the firm’s upfront presentation to advertisers final month in New York. Bloys additionally earned unusually fulsome reward from Zaslav on WBD’s most up-to-date quarterly earnings name. The high exec referred to as the HBO and Max content material chief “a generational talent” and stated HBO’s present state just isn’t solely wholesome however the equal to NBC programming in the course of the fabled “Must-See TV” period.
Dungey, in the meantime, sought to pre-empt any hypothesis that she may depart the fold by sending an inside memo asserting the alternative. “I’m thrilled that I will continue to have the privilege of leading WBTVG,” the chairman and CEO of Warner Bros. Television Group and U.S. Networks wrote.
For Wall Street, there are some greater clouds on the horizon than the haze-covered org chart.
“The broader question is: Why now?” puzzled MoffettNathanson analyst Robert Fishman in a notice to shoppers. “While we are not shocked that the company chose to split up, the timing of the move is more surprising. The announcement raises questions about external pressures. We note the move follows closely on the heels of S&P’s recent downgrade of WBD’s debt to below investment grade. WBD’s depressed stock price likely also played a role, possibly creating urgency around re-rating the equity story through structural change. Regardless of the precise catalyst, we now must wait formal separation documents and more clarity on capital structure.”
Investors grew chilly on the deal as Monday’s buying and selling day reached its finish. After initially roaring up greater than 9%, WBD’s already-battered inventory fell one other 2% to shut at $9.77.