THE Discovery of Warner Bros. The board of directors may have enriched its shareholders Thursday by choosing Paramount Skydancethe offer to acquire Netflix‘s, but it also terrified many of its employees.
While some of these people own WBD stock and might prefer the financial aspects of Paramount’s $31 per share offer over Netflix’s $27.75 per share offer, CNBC spoke with 10 WBD employees in various positions within the company. All ten, who asked not to be named for fear of potential backlash, expressed concerns about potential job losses and questioned who would ultimately run their divisions if Paramount and WBD ultimately merged.
“It’s fair to say people are deflated by the news,” said one longtime WBD executive.
Still, a WBD-Paramount merger “is not a done deal,” as California Attorney General Rob Bonta said yesterday.
The transaction must obtain approval from regulatory authorities in the United States and Europe. WBD CEO David Zaslav acknowledged during an all-hands meeting Friday that the deal could still be stalled and expressed sympathy for those feeling a sense of whiplash from moving from Netflix to Paramount, according to people familiar with the matter.
“The deal might not get done. If it doesn’t get done, we’ll get $7 billion and get back to work,” Zaslav said, according to leaked audio provided to Business Insider.
Still, several WBD employees told CNBC that they wish Netflix had acquired WBD, citing several factors.
While Paramount and WBD both have core competencies in news, sports, movies and streaming television, Netflix has much less overlap. Netflix co-CEO Ted Sarandos has repeatedly said he plans to leave the WBD business alone, keeping its theatrical operations separate from Netflix while keeping HBO Max as a separate, independent streaming service for the foreseeable future.
Netflix also wouldn’t acquire WBD’s linear cable business with its bid. Employees at CNN, TNT Sports and the former Discovery networks would have remained in their jobs to navigate their way as a standalone publicly traded company.
Now, WBD employees face potentially massive job cuts. Paramount executives previously said they planned to cut $6 billion by eliminating “duplicate operations” in “back office, finance, business, legal, technology, infrastructure, et cetera,” according to chief strategy officer Andy Gordon. WBD and Paramount have already suffered thousands of job cuts in recent years.
There are also questions about culture and leadership. While Mark Thompson currently runs CNN, Bari Weiss is the editor-in-chief of CBS News and could conceivably add CNN to her purview.
The Wall Street Journal reported in December that Paramount CEO David Ellison had promised President Donald Trump that he would make sweeping changes to CNN if he took control of the channel. Three CNN employees who spoke with CNBC said their colleagues were concerned about Weiss making sweeping changes to the cable network’s anchors and tone.
“Despite all the speculation you have read during this process, I suggest you do not jump to conclusions about the future until you know more,” Thompson wrote in a memo to employees Thursday.
CNN media reporter Brian Stelter noted that CNN “is a very profitable company, and it would be foolish for any owner to put it at risk.”
On the entertainment side, WBD staffers worry there are too many proverbial cooks in the kitchen, which could bog down creativity and innovation for both film and television.
A WBD executive noted that Paramount Chairman Jeff Shell, Direct to Consumer Chairman Cindy Holland and TV Chairman George Cheeks are all accustomed to being top executives in their organizations. Shell was CEO of NBCUniversal. Cheeks was co-CEO of Paramount before its merger with Skydance. Holland was a top executive at Netflix, where she worked for 18 years.
How this mix fits into WBD’s entertainment leadership group is an open question and could lead to cultural clashes.
TNT Sports is led by Luis Silberwasser and has largely geared WBD toward younger audiences through its programming decisions and investments, including Bleacher Report and House of Highlights. CBS Sports, meanwhile, is driven by the demographics of those who watch CBS and historically caters to an older audience. This could lead to culture clash, or the divisions could integrate seamlessly to form complementary assets.
Although Silberwasser will have to work with CBS Sports President David Berson on employee duplications, as in every other department, there is reason for optimism in the sports division, as WBD and CBS have worked together for many years to produce March Madness, the NCAA men’s basketball tournament. This gave the units a certain degree of familiarity with each other.
WBD also lost NBA rights last season. Combined with CBS’ strong sports rights portfolio, including the NFL and Masters, makes WBD a major player in sports, even though it is a CBS subsidiary.
Another recurring concern among employees is the $64 billion in debt that is part of the $111 billion enterprise value for the deal. Several employees said servicing a large debt had hampered WBD in recent years, and they feared it could lead to a similar situation. Two employees noted that it was comforting to be part of a giant company like Netflix, with a market capitalization of more than $400 billion. Paramount Skydance’s market valuation is only $15 billion.