On his second full business day at the helm of the combined Warner Bros. Discovery, CEO David Zaslav with new CNN President Chris Licht huddled with Ted Turner in Washington, D.C., then flew to Atlanta to meet employees at the Midtown campus of what used to be known as Turner Broadcasting.
There, Zaslav took selfies, toured the facilities and gave a pep talk to staff in nearly the same spot where the intrepid Turner introduced the 24/7 news operation CNN to the world 42 years earlier.
AT&T formally spun off the WarnerMedia media properties April 8 into a new business with Discovery, creating a film, television and streaming giant. Zaslav’s visits with the billionaire Turner and to the Midtown campus were nods to history, but aside from CNN, Atlanta and many of the Turner brands are second tier within the new company.
The Warner Bros. film studio, the HBO Max streaming platform and CNN have gotten the most national attention in this latest media merger. Barely mentioned have been profitable Atlanta-based properties like TNT, TBS and Cartoon Network that now seem like lesser stars in a constellation of brands that stretch from Harry Potter films to HGTV.
Credit: WARNER BROS. DISC
Credit: WARNER BROS. DISC
Zaslav and his leadership team are attempting to build an empire to survive a shifting media landscape and take on competition in streaming from the likes of Apple, Amazon, Disney and Netflix.
The futures of 5,000 employees in Atlanta and 40,000 total around the globe are tied to Zaslav’s ability to make this creation a success.
In remarks at a town hall in California April 14, Zaslav seemed to understand the challenge.
“We need to now come together as one culture, one culture that starts with people feeling safe, people feeling valued for who they are,” Zaslav said.
Absent that, he noted, “you can’t be creative.”
‘We have the goods’
Warner Bros. Discovery declined to comment on the future of its Atlanta properties and it’s too soon to say what impact the merger will have here.
It was just six years ago that AT&T bought Time Warner, including CNN and the Turner networks, for $85 billion, with hopes that content and distribution would work together. But it wasn’t an ideal match.
During AT&T’s ownership, the former Turner properties in Atlanta shrank from about 6,000 employees to 5,000.
Warner Bros. Discovery is now entirely consumer content, meaning films and movie franchises like “The Matrix” and “Shazam!,” TV series such as “Sex and the City,” “Game of Thrones” and “Friends,” news like CNN and sports such as NCAA March Madness and the NBA playoffs.
It’s also a raft of cable networks like Food Network, HGTV, TLC and Discovery with corresponding shows featuring the likes of Guy Fieri, the Property Brothers, “Dr. Pimple Popper” and sharks.
And all that content will likely end up in one place for what Warner Bros. Discovery sees as the future of entertainment consumption: streaming.
Paid TV subscriptions peaked in 2010 at 105 million households or about 90% of homes. That number is now around 76 million, according to Leichtman Research Group, while 83% of households currently subscribe to at least one streaming service.
HBO Max, piggybacking on its existing HBO subscriber base, is already one of the more popular options with nearly 50 million domestic subscribers. Discovery+, which debuted in early 2021, hit 22 million by the end of 2021.
Warner Bros. Discovery wants to be in the same league as bigger streaming rivals Disney+ and Netflix.
“We have the goods. We have the chance to be the greatest media company,” Zaslav declared to Oprah Winfrey at a town hall at the storied Warner Brothers film studios in Burbank, California two days after visiting Atlanta.
Currently, the combined entity has multiple separate streaming services.
Discovery+ is almost entirely unscripted shows. HBO Max, which WarnerMedia launched two years ago, includes everything from “The Batman” movie to “Sesame Street.” Then there’s the newly launched CNN+.
Wasting no time, Zaslav killed New York-based CNN+, which debuted March 29 under previous management and will be gone by May 1.
New management wants all its streaming services under one umbrella and with $55 billion in debt as part of the merger, is also looking to trim $3 billion in costs relatively quickly.
Sarah Smith worked at Turner Broadcasting in the 1990s and 2000s and continues to collaborate on projects with both Turner alums and active Warner Bros. Discovery employees. She said many employees she knows there were disenchanted under AT&T but wonders if debt pressures will trump new management’s efforts to build a healthy work environment.
“They paid too much for it,” Smith said. “A new culture clash will happen and a bloodbath will ensue.”
CNN, nonetheless, remains a major priority for the new company and is still highly profitable, according to Kagan, a media research group, even though it generates lower ratings and revenues than Fox News.
Credit: Alyssa Pointer/Alyssa.Pointer@ajc.com
Credit: Alyssa Pointer/Alyssa.Pointer@ajc.com
Streaming has quickly degraded the value and relevancy of some of Turner’s former crown jewel cable networks such as TNT, TBS and Cartoon Network, which all have sizable footprints in Atlanta.
Since HBO Max launched, TNT and TBS have not released any new scripted shows. And TBS’s marquee talent Conan O’Brien last year ended his 11-year-old talk show on the network for an unspecified future HBO Max program.
“These brands are on auto pilot,” said Al Meyers, a former vice president of strategic planning at Turner from 1998 to 2008. “They’re mature businesses. They need to stay relevant to maintain rates with cable operators.”
The saving grace for TNT and TBS: live sports, which has kept many households tethered to cable subscriptions. (Turner himself once owned the Atlanta Braves, the Atlanta Hawks and World Championship Wrestling, and used the franchises to provide content for TBS and TNT.)
Credit: TNS
Credit: TNS
During the town hall meeting, Zaslav touted the power of sports. What was once called Turner Sports has spent billions in recent years to keep the rights to such key sports events as the NCAA March Madness, the NBA playoffs and the MLB playoffs. Those games largely air on TBS and TNT, though it’s inevitable that some will migrate to HBO Max.
Much of the sports broadcasting operations are in Atlanta, including TNT’s signature show “Inside the NBA” featuring Ernie Johnson, Shaquille O’Neal and Charles Barkley.
In what Zaslav dubs Warner Bros. Discovery’s “traditional business,” he sees a big and profitable advantage for the company as it funnels some that cash flow into building HBO Max.
Deep ties
It’s been more than a quarter century since Turner sold Turner Broadcasting to Time Warner and a decade since most key management left Atlanta for New York.
But Turner, now 83, remains a powerful symbol within Warner Bros. Discovery. The company released a photo via social media of Licht and Zaslav with Turner, who has been suffering from Lewy body dementia in recent years. Zaslav called Turner “a hero.”
“Discovery has always been a very strong cable programmer,” Meyers said. “And Zaslav is a proven leader. As long as he believes in and commits to CNN, Atlanta will continue to have a very large presence.”
CNN still has major operations at CNN Center, including its digital operation, CNN International and Robin Meade’s morning show on sister station HLN. About 40% of the company’s Atlanta employees work at CNN.
AT&T sold CNN Center last year to a Florida-based investment group and a CNN spokesman said operations will likely move to the Midtown campus, where CNN originally started, in a year or more.
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