David Zaslav’s SpinCo: Warner Bros. Discovery CEO Outlines “Bold Choice” to Split Company

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David Zaslav, CEO of Warner Bros. Discovery, informed financial analysts on Monday about their strategic decision to separately develop the companies they had combined three years prior. This move, he explained, is grounded in their conviction that each entity has a greater potential for growth and speed independently than it does collectively.

In the heart of a significant change across generations, things have been evolving rapidly, and over the past couple of months, the transformation has been substantial,” Zaslav expressed on Monday. (or simply, “Zaslav noted on Monday that we are in the midst of a substantial change across generations, which has been rapid over the last few months.”)

On Monday morning, I participated in a call with our CEO, Gunnar Weidenfels, and the CFO, who will assume the CEO role of the soon-to-be spun-off TV networks business after the deal goes through. During this call, he shared the reasons behind the upcoming separation and gave us a glimpse into what each business will shape up to be post-deal.

As a gamer, I’d rephrase it like this: “I believe these gaming companies will be more tailored to satisfy shareholders, thanks to their unique game dynamics and growth potential. They’ll be quicker on their feet, bolder in chasing expansion, and smarter in delivering the captivating stories and entertainment that gamers crave. Each business we’re involved with is expected to draw distinct types of investors.

Zaslav is responsible for supervising the studio’s business operations, encompassing Warner Bros. film and television studios, HBO Max, while Weidenfels manages the international networks such as TNT, TBS, CNN, the former Discovery channels, plus Discovery+. It is worth noting that this jurisdiction also extends to WBD’s sports rights, with the CFO hinting at potential future opportunities: “The US sports rights will be under the purview of the global networks, and their leadership team will decide the most effective way to capitalize on the streaming and digital rights in the long run,” Weidenfels stated.

While the sports rights represent a significant strength for Weidenfels, it’s important to note that they will also inherit one of WBD’s less favorable aspects: A massive debt amounting to tens of billions of dollars.

Sports rights are a powerful asset for Weidenfels, but they will also take on one of WBD’s more burdensome ones: A colossal debt totaling tens of billions of dollars.

Or:

The sports rights are a valuable advantage for Weidenfels, yet they will also obtain one of WBD’s less appealing ones – a huge debt pile worth tens of billions of dollars.

He mentioned to analysts that it’s likely most of the debt will be carried by global networks, while a substantial, yet not overwhelming, amount will also be shouldered by streaming platforms and studios.

The top brass were vague about the partnership details following the separation; however, they hinted at potential collaboration in areas such as distribution and advertising revenue. Yet, it’s clear that each entity will independently concentrate on their respective ventures and handle individual transactions.

Zaslav expresses that for the upcoming company, they have discovered a highly attractive approach centered around quality, with a focus on mirroring the essence of HBO.

We intentionally brought HBO back into HBO Max because we want to maintain our reputation as the top-notch streaming service. We offer an unmatched collection of motion pictures and TV shows, including all HBO content, and with Warner Bros. Television at our disposal, we can create even more exceptional content like ‘The Pitt’ and ‘Harry Potter’, making us the leading producer of television.

He mentioned that the industry which experiences fluctuations, like rising and falling, is the film industry. He pointed out that this sector tends to be heavily reliant on successes (hits) and is generally smaller than the television business.

We strongly believe in the business we’re in, however, it’s one of the tougher ventures when it comes to profit margins and fluctuations,” Zaslav explained, detailing their future strategy. “What gives me the most assurance is our commitment to applying rigorous discipline, but instead of exploiting our content excessively, we plan to leverage it more effectively. Therefore, we’ll be focusing more on our renowned, globally adored content such as ‘Lord of the Rings’ or DC. Our film executives, Mike DeLuca and Pam Abdy, are actively working on extracting the full potential from these big brands. We will continue to produce a lot of original content, but the advantage we have lies in these established brands.

Regarding the television networks, Weidenfels expressed confidence to investors, stating, “I am certain that these networks will continue to thrive and be highly successful for numerous years ahead.

He pointed out that the appetite for consuming content, particularly from well-known and distinguished brands such as TNT, sports channels, Food Network, CNN, and so on, remains unaltered,” he said in another way.

According to Zaslav, approximately a quarter of HBO Max viewing comes from content provided by linear networks. He also mentioned that this percentage could be a point of discussion during future contract negotiations, but since agreements have been reached in the past year, there aren’t any urgent negotiations planned at the moment.

Occasionally, we encounter distributors who are primarily interested in HBO Max, leading to lengthy negotiations aimed at finding common ground for a broader range of our offerings. On other occasions, individuals prefer our free-to-air and traditional broadcast services only.

But the split is also part and parcel with potential dealmaking.

Weidenfels informed investors that following the completion of the deal, both companies will have the liberty to engage in transactions without restrictions, as contrasted to the WBD deal, which involved a convoluted framework necessitating a two-year wait before any substantial actions could be taken.

He stated that the deal offers more chances for every company to seize potential possibilities and options, yet he emphasized that there’s no premeditated scheme associated with it.

And in the meantime, there will be even more cost efficiencies to find and deals to strike.

As a gamer, my main focus is indeed maintaining efficiency in our current operations, given the ongoing challenges they face. However, I’m excited to say that we also have some fantastic investment opportunities ahead! These chances not only allow us to enhance efficiency but also shape our brands for a digital tomorrow.

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2025-06-09 17:24