English Entertainment
Disney restructures business in the face of digital disruption
MUMBAI: Walt Disney Co, on Wednesday, announced a sweeping restructuring aimed at accelerating its global expansion during a period of upheaval for Hollywood.
The entertainment giant said it would combine its international media business and its content streaming operation into one unit and create another division to house its consumer products business along with Walt Disney Parks and Resorts.
Its biggest restructuring in recent years, Disney’s move is the latest effort by a legacy entertainment and media company to adapt to rapid changes in consumer behaviour driven by digital technology.
Disney had been expected to make structural changes as it prepared to launch two streaming services and buy film and TV assets owned by 21st Century Fox—a $52.4 billion deal that requires federal regulatory approval.
Disney’s new direct-to-consumer and international unit will include the upcoming ESPN+ streaming service, which launches later this year, and a Disney-branded film and TV streaming offering scheduled to debut in 2019.
The unit also will include video-on-demand service Hulu, in which Disney would own a controlling stake if the Fox deal is approved. Kevin Mayer, who has been Disney’s chief strategy officer since 2015, was named chairman of the new global business.
The combining of Disney’s parks and resorts business and its consumer products group will help streamline operations for units that already had their share of overlap.
Bob Chapek, who has headed Disney Parks and Resorts since 2015, was named chairman of the new unit. As its leader, Chapek will assume additional responsibility for all of Disney’s consumer products operations globally, including licensing and Disney stores.
Disney chairman and chief executive Robert Iger said in a statement that the changes would position the company “for the future, creating a more effective, global framework to serve consumers worldwide, increase growth and maximise shareholder value.”
In December, with the announcement of the prospective Fox deal, Iger, 67, extended his contract by three years; he is now expected to retire in 2021 when his new pact ends.
The restructuring plan, which is effective immediately, elevates key lieutenants Mayer and Chapek, who now are poised to work more closely with Iger for the remainder of his tenure.
Their promotions come amid much speculation about who will be chosen as Iger’s successor.
Chapek was head of Disney Consumer Products before being tapped to lead the parks group. The 58-year-old executive also previously was president of distribution for Walt Disney Studios.
The last time Disney restructured its business units was in 2015, when it merged its interactive and consumer products units, a move that was designed to better align once-distant businesses that new technology had brought closer together.
Two Disney units – media networks and studio entertainment – are remaining the same, save for minor changes, such as the studio’s programme sales operation moving to the direct-to-consumer and international unit.
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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.
