The Warner Bros. Discovery board might have benefited its investors on Thursday by opting for Paramount Skydance‘s purchase proposal as opposed to Netflix‘s, but it also unsettled many of its staff.
While some employees hold WBD shares and might favor the financial aspects of Paramount’s $31-per-share proposition compared to Netflix’s $27.75-per-share bid, CNBC conversed with 10 WBD team members in various positions within the organization. All 10, who wished to stay anonymous due to concerns of possible repercussions, voiced worries about prospective job cuts and uncertainties about who would lead their departments if Paramount and WBD were to merge.
“It’s reasonable to say that people feel dejected by the announcement,” remarked a veteran WBD official.
Regardless, a WBD-Paramount merger “is not a certainty,” California Attorney General Rob Bonta stated yesterday.
The deal must receive regulatory clearance in both the U.S. and Europe. WBD CEO David Zaslav recognized during a company-wide meeting on Friday that the agreement may still face hurdles and showed empathy for those experiencing a sense of disorientation moving from Netflix to Paramount, as mentioned by individuals familiar with the situation.
“The agreement may not finalize. If it falls through, we secure $7 billion, and we return to our tasks,” Zaslav indicated, according to leaked audio shared with Business Insider.
Nonetheless, numerous WBD employees informed CNBC that they wished Netflix had taken over WBD, pointing to several reasons.
While both Paramount and WBD excel in news, sports, theatrical films, and streaming TV, Netflix has significantly less overlapping interests. Netflix co-CEO Ted Sarandos has consistently stated he intended to keep the WBD operations intact, maintaining a separate theatrical segment from Netflix while also preserving HBO Max as an independent streaming service for the foreseeable future.
Netflix was also not looking to take over WBD’s linear cable division with its offer. Employees at CNN, TNT Sports, and the former Discovery networks would have kept their roles to pave the way for a standalone publicly traded entity.
Currently, WBD staff are facing the threat of extensive job reductions. Paramount leaders have previously declared intentions to save $6 billion by cutting “redundant functions” in “back office, finance, corporate, legal, technology, infrastructure, etc.,” as per Chief Strategy Officer Andy Gordon. Both WBD and Paramount have already undergone thousands of layoffs in recent years.
Concerns regard culture and leadership too. Mark Thompson presently oversees CNN, while Bari Weiss serves as the editor-in-chief at CBS News and could likely include CNN in her scope.
The Wall Street Journal reported in December that Paramount CEO David Ellison assured President Donald Trump he would implement extensive changes at CNN if he gained control over the network. Three CNN employees who conversed with CNBC reported a pervasive sense of fear among their peers concerning Weiss possibly enacting significant changes to the cable network’s anchors and style.
“In spite of all the speculations you’ve seen throughout this process, I would advise against jumping to conclusions about the future until more information is available,” Thompson noted in a memo to staff on Thursday.
CNN media correspondent Brian Stelter observed that CNN “is a very profitable entity, and it would be unwise for any owner to jeopardize that.”
In the entertainment realm, WBD employees worry that there could be an excess of decision-makers, which may stifle creativity and innovation for both film and television projects.
One WBD executive pointed out that Paramount’s President Jeff Shell, Chair of Direct to Consumer Cindy Holland, and Chair of Television George Cheeks are all accustomed to holding senior positions in their respective organizations. Shell was the CEO of NBCUniversal. Cheeks previously served as co-CEO of Paramount before its merger with Skydance. Holland was a high-ranking executive at Netflix for 18 years.
The interaction of this mix with WBD’s entertainment leadership team remains uncertain and could potentially result in culture clashes.
TNT Sports is managed by Luis Silberwasser and has predominantly guided WBD towards younger demographics with its programming choices and investments, such as Bleacher Report and House of Highlights. Conversely, CBS Sports caters to the audience demographics of CBS, which has historically focused on an older viewership. This could either cause cultural friction or allow the divisions to complement each other effectively.
Although Silberwasser will collaborate with CBS Sports President David Berson on employee redundancies, like every other unit, there is some reason to feel hopeful regarding the sports division, as WBD and CBS have enjoyed a longstanding partnership in producing March Madness, the NCAA men’s basketball tournament. This has provided both units with a certain level of familiarity.
WBD also lost NBA rights in the last season. Merging with CBS’s extensive sports rights portfolio, including the NFL and the Masters, positions WBD as a formidable contender in sports, even as a subsidiary of CBS.
Another recurring concern among staff is the $64 billion in debt that accompanies the $111 billion total enterprise value of the arrangement. Several employees mentioned that managing such large debt loads has impeded WBD in recent years, leading to fears of continued similar challenges. Two employees indicated they found reassurance in being part of a large corporation like Netflix, which has a market value exceeding $400 billion, while Paramount Skydance’s market valuation stands at merely $15 billion.
