English Entertainment
Content a ‘Game of Thrones’; AT&T’s control over HBO, Cartoon Network, Warner Bros faces regulatory lens
MUMBAI: The global media landscape is resulting in a new juggernaut as an internet and cable behemoth yesterday purchased an entertainment conglomerate making the former unmatched in its size and reach to consumers through home broadband, smartphones, satellite television and a battery of movies and cable channels. This deal could lead to more cautionary flags than Comcast’s merger with NBCUniversal in 2009.
The US$ 108.7-billion AT&T, Time Warner merger has been met with suspicion as analysts raised antitrust concerns that it would create unfair pricing and lead to further media consolidation. The
cash-and-stock deal values Time Warner – with CNN, HBO, and Warner Bros Studios – at over $85 billion, and involves AT&T taking on its debt.
AT&T, over a year ago, became the nation’s largest pay-TV operator when it acquired DirecTV. Now, Time Warner would give AT&T HBO, CNN, TBS, TNT, Cartoon Network and Warner Bros., Hollywood’s biggest television and film studio. The massive deal has become a subject of discussion in the US presidential campaign. Donald J. Trump, condemning the deal, said he would block it if he were the president, “because it’s too much concentration of power in the hands of too few.” Hillary Clinton has assured to be tough on consolidation and corporate megapowers.
Although the latest merger is considered “vertical integration” as the two broadly do not compete against each other as compared to other “horizontal integration” of similar businesses, regulators could look at other ways AT&T might affect the media ecosystem if the deal were to consummate.
AT&T may possibly make it more expensive for its competitors to gain access to HBO or Time Warner’s content or give preferential treatment to its own programming.
A brief history of media/telecom deals
1995
Turner Broadcasting System and Time Warner announced a $7.5-billion merger, bringing together brands including Warner Brothers, CNN, Time magazine, and the Cartoon Network.
2000
AOL announced its plan to buy Time Warner for over $160 billion.
2005
SBC Corporation acquired AT&T for over $16 billion.
2008
Time Warner spins off its cable unit, which becomes Time Warner Cable (not a part of the current deal).
2009
Time Warner spins off AOL.
2011
Comcast receives regulatory nod for its $30-billion bid to buy a majority stake in NBCUniversal. Comcast took over NBCUniversalm completely in 2013, as GE divested its stake.
2013
Time Warner spins off its Time Inc magazine division.
2014
Verizon buys out Vodafone’s stake in Verizon Wireless for $130 billion, gaining complete ownership. Time Warner turns down $ 80-billion bid from Twenty-First Century Fox.
2015
Comcast drops its $45-billion bid to buy Time Warner Cable after the regulator opposes the merger over concerns of creating an Internet provider and a cable operator with too much control. Verizon purchases for $4.4 billion. AT&T gets government nod to purchase the satellite TV company DirecTV creating one of the largest pay-TV servicen providers to compete with Comcast.
2016
Regulators approved US$ 88-billion merger of Charter Communications with Time Warner Cable and Bright House Networks, creating the third-largest video provider and the second-largest broadband
provider. (Comcast purchased DreamWorks Animation for $3.8 billion to compete against Disney.) Time Warner bought a 10 per cent stake in Hulu for $583 million.
Yahoo and Verizon announced a $4.8-billion merger that would give the latter ownership of the former’s Internet assets. AT&T acquires Time Warner.
Regulators could seek promises from AT&T and Time Warner to make content from HBO like “Game of Thrones” or cable networks like CNN available through apps or through streaming, not withholding them from competitors, which could be addressed in conditions attached to an approval.
English Entertainment
Warner Bros. Discovery shareholders approve Paramount deal
Investors wave through a $111 billion megamerger but deliver a stinging, if toothless, rebuke over half-a-billion-dollar goodbye packages
NEW YORK: The shareholders said yes to the deal. They said no to the cheque. At a virtual special meeting on Thursday that lasted barely ten minutes, Warner Bros. Discovery investors voted overwhelmingly to approve Paramount Skydance’s $111 billion acquisition of the company — and then turned around and voted against the lavish exit pay packages lined up for chief executive David Zaslav and his fellow outgoing executives.
Not that it will make much difference. The compensation vote is purely advisory and non-binding. The Warner Bros. Discovery board can, and almost certainly will, pay out as planned.
But the symbolism stings. It is the second consecutive year that WBD shareholders have voted against the executive compensation packages, and this time they had good reason. Zaslav’s exit deal is, by any measure, extraordinary. Under the terms filed with the Securities and Exchange Commission, he is set to receive $34.2 million in cash severance, $517.2 million in equity in the combined company, and $44,195 in continued health coverage — a total of at least $550 million. On top of that, Warner Bros. Discovery has agreed to reimburse Zaslav up to $335 million for taxes assessed by the Internal Revenue Service on his accelerated stock vesting, though the company says that figure will decline depending on when the deal closes. As of March 11, Zaslav also held $115.85 million in vested WBD stock awards — and last month sold a further $114 million worth of WBD shares.
Shareholder advisory firm ISS recommended voting against the compensation measure, citing “problematic” tax reimbursements to Zaslav and the full vesting of his stock awards.
Zaslav will be bound by a two-year non-competition covenant and a two-year non-solicitation of customers and employees after the deal closes.
His lieutenants are not walking away empty-handed either. J.B. Perrette, chief executive and president of global streaming and games, is in line for $142 million, comprising $18.2 million in cash severance and $123.9 million in equity. Bruce Campbell, chief revenue and strategy officer, will receive an estimated $121.5 million, including $18.8 million in severance and $102.7 million in equity. Chief financial officer Gunnar Wiedenfels is set for $120 million, made up of $6.6 million in cash severance and $113.1 million in equity. Gerhard Zeiler, president of international, will get $82.6 million, including $11.9 million in severance and $70.7 million in equity.
The deal itself, clinched in February after Netflix declined to raise its bid for Warner Bros., still needs regulatory clearance from the Justice Department and European authorities. Several state attorneys general are also weighing legal action to block it.
Senator Elizabeth Warren, Democrat of Massachusetts, was unsparing. “The Paramount-Warner Bros. merger isn’t a done deal,” she said after the shareholder vote. “State attorneys general across the country are stepping up to stop this antitrust disaster. We need to keep up this fight.”
If it does go through, the combined entity would be a formidable beast, bringing together Paramount Skydance’s stable — CBS, CBS News, Paramount Pictures, Paramount+, BET, MTV and Nickelodeon — with WBD’s portfolio of HBO, Max, Warner Bros. film and TV studios, DC, CNN, TBS, TNT, HGTV and Discovery+. Paramount has said it expects $6 billion in cost savings from the merger, which is Wall Street shorthand for mass layoffs on a significant scale.
The ten-minute meeting was presided over by chairman Samuel Di Piazza Jr., with Zaslav, Campbell, Wiedenfels and chief communications officer Robert Gibbs in virtual attendance. Di Piazza was bullish. “We appreciate the support and confidence our stockholders have placed in us to unlock the full value of our world-class entertainment portfolio,” he said. “With Paramount, we look forward to creating an exceptional combined company that will expand consumer choice and benefit the global creative talent community.”
Zaslav echoed the sentiment. “Over the past four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” he said. “Today’s stockholder approval is another key milestone toward completing this historic transaction that will deliver exceptional value to our stockholders.”
Paramount Skydance struck a similar note. “Shareholder approval marks another important milestone towards completing our acquisition of Warner Bros. Discovery,” it said in a statement, adding that it looked forward to “closing the transaction in the coming months.”
The shareholders have spoken on the merger. On the pay, they were ignored before the vote was even counted.
