What Lies In Wait For WarnerMedia & Discovery’s International Operations Following $43BN Merger?

David Zaslav hasn’t wasted time in making significant changes at Warner Bros Discovery, and many on this side of the Atlantic are now wondering what happens in the international ranks, where the combined studios have thousands of staff.

Even before WarnerMedia and Discovery closed their $43BN merger Friday, the ax had fallen on the former’s U.S. C-suite.

Last week’s top-level cull of U.S. staff could save north of $70M, one studio insider estimates to us. That’s just the start of cost-saving efforts designed to squeeze $3BN out of the new operation, according to forecasts Discovery gave to Wall Street. Note that $3BN in savings is a lot higher than Disney promised Wall Street when it inhaled Fox, a merger that led to swathes of staff cuts.

Office space

As with any merger, speculation is rife. The expectation among studio executives we speak to in Europe is that there will be streamlining in local international offices. Reorganization is surely a given.

“They will look to cut costs internationally,” one studio source predicted to us. “Staff will know that cuts are possible and it won’t be a shock if they come, but at the same time it’s very possible that nothing has been conveyed yet.”

Another well-placed UK studio source told us that staff in Warner Bros’ UK motion picture division are bracing for change. “People there have been aware this was coming for months. Headhunters have been speaking to staff there for some time.”

One well-connected source said it was possible Discovery could leave the factual giant’s longtime international base in Chiswick, West London, something that has been rumored for a while anyway. Warner Bros moved its Turner staff to a sparkly new office in Old Street on the other side of town in 2019 and also has offices in central London. “That’s the obvious thing they could do to save money,” the source said.

Spokespeople for WarnerMedia and Discovery both declined comment on potential changes. All top-level public communications to date have come from the U.S., but sources on both sides are expecting international-focused communications in coming days.

Strategy

In all likelihood only a few people know what international consolidation will look like and exactly when that will be coming. Those few people are probably WBD CEO David Zaslav; JB Perrette, who has assumed the title CEO and President, Warner Bros Discovery Global Streaming and Interactive Entertainment; and possibly WarnerMedia President of International Gerhard Zeiler, who will be staying on.

There are certainly questions aplenty about structure and strategy.

Will Zaslav and the combined operations redouble efforts to renegotiate their existing Sky deals in key European markets such as the UK, Germany and Italy? To date it has been a dead issue, but will the new regime be content to wait years for HBO Max to reach those valuable territories? International growth has been vital for Netflix’s and Amazon’s global charges. How long can Warner Bros Discovery feasibly continue to wait for HBO Max rollout in Europe’s biggest markets.

How aggressive will the combined company be in grabbing space in the lucrative international sports arena? Discovery is home to pan-European French TV network Eurosport, which has a bevvy of sports rights including the Olympics. Earlier this year, Discovery entered talks to combine Eurosport’s UK business with popular sports broadcaster BT Sport in the UK and Ireland. BT Sport is the current UK home of the lucrative UEFA Champions League and a dozens of Premier League soccer matches.

One talking point on the terraces at MIPTV last week: Could the combined studio be in the mix to buy Channel 4 in order to give it a known platform in the UK? Discovery has had a strong connection with Channel 4 in the past buying plenty of shows for the second window.

Structure

Discovery currently splits its European operations into several territory groupings, and sources say a plan for a single leader to unite them has been floated.

Meanwhile, the WarnerMedia international team is getting used to change. It’s only 18 months ago that the studio set a new structure for its international leadership, with territory heads taking on a combined networks and Warner Bros remit. It was a structure set up “with an eye to the future and our need to respond to changing consumer habits,” a company memo said at the time.

The structure included Adam Presser overseeing China, Australia and New Zealand; Whit Richardson running Latin America; and Priya Dogra overseeing Europe, the Middle East, Africa and much of Asia.

In late 2020, longtime exec Josh Berger, President and Managing Director, Warner Bros UK, Ireland and Spain, left the studio, while last summer saw the departure of 25-year company veteran Iris Knobloch, WarnerMedia’s President of France, Benelux, Germany, Austria and Switzerland.

Among company managers set last year after Knobloch’s departure were Sylvia Rothblum in Germany; Pierre Branco in France, MENA and Africa; and Jamie Friend for Nordic and Central and Eastern Europe. Polly Cochrane heads up the UK office.

WarnerMedia’s Dogra – a streaming services expert who sources say Zeiler sees as something of a protégé – and Discovery President and MD for EMEA Kasia Kieli are both considered strong operators and are likely to be key players in the future shape of the combined studios. 

Kieli is well liked at Discovery and has been promoted several times, previously running the company’s Polish free-to-air channel TVN, while Dogra’s value at WarnerMedia is evident in the scope of her role — overseeing programming, marketing and distribution for WarnerMedia linear networks, distribution of U.S. content and programme and wholesale distribution of HBO Max internationally.

Currently sitting under Kieli at Discovery is London-based UK and Nordics boss James Gibbons. Internally respected, the company veteran has been touted to take on the rumored European chief role, which would act as conduit between territory managers and Kieli.

Back at WarnerMedia, Dogra reports into Zeiler, who now has a dotted line on streaming to Perrette, the long-term Zaslav ally.

Currently, HBO Max General Manager for EMEA Christina Sulebakk reports into Head of HBO Max International Johannes Larcher, while Antony Root, HBO Max’s originals chief in the region, reports into Dogra. “They basically operate as separate businesses — that could be looked at,” said one source.

Meanwhile, the London-headquartered Warner Bros International Television Production oversees a global production group comprising in-house operations around the world and big-name production companies like the UK’s Wall to Wall and Twenty Twenty. It’s understood WBITVP staff aren’t expecting widescale change.