Just as WarnerMedia has some hope for the future, the company is alarmingly stuck in the past.
With the Discovery merger likely to take a year or more to close, the company is to some degree hamstrung: Top executives who are seen as lame ducks will be showing up on Zoom calls (or in-person meetings?) for months to come. And, after chafing at AT&T-imposed spending constraints, the wait for federal regulatory approval looks like “another year of treading water in the middle of the most competitive streaming marketplace,” as one company veteran tells The Hollywood Reporter.
Dealing with the delay is the last thing the team at Warners needs, and Wall Street is nervous about it, too. “The single greatest challenge that investors are worried about is that you’re in the middle of an all-out streaming war, and just as it looked like you had your team in place, you’re looking at a year of uncertainty and a year of integration,” says LightShed Partners analyst Rich Greenfield.
This is hardly news to Discovery CEO David Zaslav, who will run the combined companies if the merger gets done. Says a source close to the leader-in-waiting: “His singular focus is getting [the deal] approved quickly. He’s spending his time on how to get it done in less than a year. He feels the company in flux is not good.” Zaslav’s argument to regulators, says this source, will be that the feds already have deep familiarity with Discovery and WarnerMedia. The government reviewed Discovery’s $14.6 billion acquisition of Scripps Networks Interactive and AT&T’s $85 billion purchase of Time Warner, both of which closed in 2018. He has said he’s particularly concerned about not allowing big tech companies to pull even further ahead in the race.
One WarnerMedia insider is among many who could not be more eager to bid farewell to the AT&T management team. “For all of us, it’s like, hurry up and leave,” this person says.
Though Zaslav can’t make personnel decisions, the consensus among industry observers is that once the deal closes, WarnerMedia CEO Jason Kilar will depart, and WarnerMedia Studios CEO Ann Sarnoff may go, too. An outsider who did not become an insider in two years on the job, Sarnoff by many accounts has not developed strong relationships in the broader entertainment community or even within the company. One insider calls her “an invisible layer” within WarnerMedia. A source with knowledge of the AT&T CEO’s thinking says Stankey wants to protect her; the decision, of course, will be Zaslav’s.
Kilar, based on the terms of his deal, has financial incentive to stick around for as long as the overlords want him in place. And it seems they mean to keep him for now. Kilar may not have won hearts and minds inside the company, but he does understand streaming. Another source close to the situation thinks Kilar “truly believes in this mission and if it goes well, he wants credit for it.”
But is it awkward? Very. Kilar has retained lawyer Allen Grubman, who reportedly was going to negotiate an exit. But then Kilar told the troops he was staying. A few days later, Kilar interviewed Zaslav at a June 1 town hall. “I thought Jason showed a lot of grace,” says one exec who was present. “That can’t be fun.” (The issue of Kilar’s future was not addressed.)
It may have become clear to Kilar fairly early on that the path to fulfilling his vision would not be smooth. WarnerMedia veterans had already tried to warn AT&T about the spend that it would take to make HBO Max competitive. A few months after taking the job, a knowledgeable source says, Kilar also went to bat, telling the AT&T board that as the streaming service rolled out internationally, they would need to boost his budget dramatically. The board deferred discussion of the issue. A WarnerMedia rep, when asked for comment, said: “Under Jason Kilar’s leadership, WarnerMedia’s investment in motion pictures and television is at the highest point in its history.”
Still he forged ahead, implementing what many longtime Warners staff saw as a harsh purge of veteran execs with ties to the company’s long-standing talent-friendly culture. Even some who lost their jobs give Kilar credit for implementing needed changes to orient the company toward streaming, though they did not necessarily approve of how he did it. “His strategy directionally — I didn’t disagree with any of it,” says one such person. “I think he did a lot of the dirty work he had to do. I don’t think he did it with much grace.”
Though Kilar often marveled on Twitter about Warners’ storied history, insiders criticize him for what they see as a fundamental lack of appreciation for the company’s relationships with its creative partners. “He has that nerd enthusiasm, but it’s an inch deep,” says one former Warners exec.
That attitude seemed to reach its peak with WarnerMedia’s surprise December decision to put the film studio’s entire 2021 slate on the streaming service the same day they opened — or would have opened — in theaters. “It’s great to be a disrupter and an innovator. That’s all fine,” says one exec who worked for Kilar. “The problem is you don’t get to break something before you understand the thing you’re breaking. If he had learned the business and cared about the things he said he did, he would have handled relationships with the outside world differently.”
Still, Kilar has made efforts to interact with some creatives. Producer Bill Lawrence tells THR that Kilar, a big Ted Lasso fan with a photo from the show in his office, invited him to take a walk on the Warners lot. “If [former Warner Bros. television group chairman] Peter Roth ever said that, it would have been a walk to his golf cart, so I wore the wrong shoes,” Lawrence says. It turned out to be an hour and 45 minute trek, and though Lawrence ended up with painful blisters, he enjoyed his first face-to-face meeting with an exec at Kilar’s level, chatting about Lawrence’s experiences at the studio and with Apple. “It was cool and interesting because the only thing I had read about Jason is that he’s the guy that a lot of features people are upset with,” Lawrence says.
For many, however, the sting of that as well as the painful restructuring still lingers and fair to say there is schadenfreude among some now that Kilar looks like he’ll be handed a pink slip of his own. “That’s the sweet part for everybody,” says one executive who fell victim to the Kilar era. “He got hit by the same bus he hit everybody else with: the AT&T ineptitude bus.”
This story appeared in the June 9 issue of The Hollywood Reporter magazine. Click here to subscribe.
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