Discovery’s partnership with WarnerMedia sparked a huge discussion about the impact of the deal that surprised nearly everyone at Burbank and Hudson Yards over the weekend.
After a long day of reading the news and reading the tea leaves, industry insiders focused on the time WarnerMedia CEO Jason Kilar left and the size of his compensation package after a year and two weeks of work.
Another surprise to the fine print in the deal was the change that signaled John Malone, Liberty Media and former TCI Baron, a longtime investor as an individual on Discovery.The transaction was all dominant. Of the deal, designed by Malone in which shareholders evade taxes through a complex structure called the Reverse Morris Trust, a process that helped AT&T separate WarnerMedia into a separate entity that would be merged with Discovery.
The surprise came with the news that Malone and another Discovery shareholder Advance / Newhouse (the holding company for the prestigious Newhouses of Conde Nast) gave up the stock with the vote it needed to. Helping smooth transactions When the deal is completed, the combined Discovery WarnerMedia will have only one share of its kind, with no voting rights required for any shareholder. That would make it more pleasing to institutional investors, and yes, it would make it easier on some days to buy a new company.
Malone and Advance / Newhouse currently jointly control 44% of the voting rights on Discovery.Malone will be on the board of directors of the enlarged company. But there will be no privilege other than the economic value of the shares he owns, the $ 43 billion that will be paid to AT&T in cash and the shares will give AT&T shareholders 71percent of the combined company, while Discovery shareholders hold 29%. It is unclear how many 29% Malone and Advance / Newhouse holdings and how those preferred shares will be converted to common shares.
Other telling details can be found in the “repped by” credit for the banker in the deal. LionTree, Aryeh Bourkoff-led boutique media investment firm, has been Malone’s banker since its founding in 2012, but LionTree has been. It was listed as AT&T Financial Advisor alongside Goldman Sachs, not Malone or Discovery.
Bourkoff worked with AT&T on the transaction to better understand AT&T needs and assets to carve out for the new legal entity.Bourkoff declined to elaborate on the deal other than saying it was a valid move for both. Two companies, AT&T, received much-needed debt relief while retaining the majority of companies with strong potential, and AT&T has won the proven media CEO David Zaslav, who has led Discovery since 2007.
“The shift from linear requirements to broader digital needs and increased financial flexibility. That goes along with unlocking shareholder value, ”Bourkoff said. Variety“And want industry participants to work together in a collaborative way for the greater good.”
Meanwhile, the focus in Hollywood lies in the short-term fate of Kilar, the former Hulu leader who rocked the industry after taking over WarnerMedia on May 1, 2020, although Kilar was chosen to play WarnerMedia by John. AT&T CEO Stankey, a move to hand over the keys to Zaslav, and his findings are a clear signal that AT&T is convinced of WarnerMedia’s ability to compete as it is.
On top of that, industry sources said the strategic move shattered last December – when WarnerMedia, where Kilar’s direction, opted to simultaneously broadcast in theaters and on HBO Max for Warner Bros’ slate. The 2021 movie is seen as a huge mistake as it cost studios more than $ 1 billion in lost box office revenue, attendance payments, talent gains and high license fees. That pays for movies from HBO Max, unless the HBO Max membership increases significantly over the next few months.
Given the circumstances and the fact that he was imprisoned in the dark about Discovery talks, it’s not surprising that Kilar was said to be planning to leave WarnerMedia.Kilar was given a stock option. AT&T was valued at $ 48 million at the time he joined WarnerMedia on a contract dated March 20, 2020 for a starting date on May 1.These options are scheduled to be exercised annually, with a quarter increase in For the four years ending February 15, 2024, he will certainly retain those options, although the maximum value will depend on the cost and operating results of the expanding company. Shares while getting the rights.
According to the cut-off terms, Kilar appears to be eligible for at least $ 5 million from AT&T, his $ 2.5 million base salary and $ 2.5 million cash bonus target for at least a year on his contract. He would be eligible for more payments if he held the position for two or more years. Kilar is also subject to a 1-year ban and a 1-year ban in which he solicits WarnerMedia employees for other ventures.
(Image: Jason Kilar)