AT&T chief John Stankey and Chief Financial Officer Pascal Desroches were asked tough questions about the implications of the pending merger of WarnerMedia and Discovery during an all-hands meeting of studio employees on Tuesday.
Stankey tried to placate worried staffers by assuring them that he was going to advocate on their behalf and also urged them to “stay the course” during the months it will take for the deal to close. Media coverage has largely focused on AT&T’s decision to spin off WarnerMedia as an ignominious retreat by the telecom giant from the content business, one that added unsustainable debt to its balance sheet. Stankey was asked by WarnerMedia communications chief Christy Haubegger about press coverage of the sale, which focused on how Discovery chief David Zaslav had stealthily orchestrated the shocking merger and positioned the story as “a David and Goliath tale,” one in which Discovery was the victor.
“Christy, no one won,” Stankey said.
He also argued that AT&T was not getting out of the entertainment business entirely, noting that it still would control a 71% stake in the new, as yet unnamed entity. Staffers said that Haubegger was friendly with the two men, but asked hard questions, including mentioning that people were worried about their jobs. There’s been a lot of talk about “synergies,” Haubegger said, which is often corporate speak for layoffs. She noted that the studio was busy releasing movies and debuting shows on HBO Max and on its cable properties, and asked why people should work harder than ever when they might get pink-slipped when Discovery takes control.
“This doesn’t change anything right now,” Stankey said.
That answer didn’t land well with some employees who feel burned out by the workload and the reorganization undertaken by AT&T, as well as the layoffs that accompanied the company’s sale to the telecom in 2018. Now, they’re looking ahead to a new boss and the potential for more unrest and shakeups to come, all after a months-long global pandemic.
Stankey was also asked why Zaslav was going to be in charge of the new enterprise instead of someone from WarnerMedia. Staffers were concerned that Discovery would control all of the decision-making without anyone advocating for the WarnerMedia side of the business. Stankey said he was going to stay “deeply involved in the process” and that WarnerMedia would be “fairly represented.”
During the hour-long meeting, Stankey was pressed about AT&T’s failure to realize that it would be hard to remain well capitalized after buying Time Warner for $85 billion. As AT&T has noted, it’s spinning off WarnerMedia in order to get more capital for its 5G expansion. Stankey said that the cost of the technology had been higher than anticipated and also said that the need to invest in 5G had been “accelerated by the pandemic.”