Discovery CFO Talks WarnerMedia Merger Deal, Cost-Cutting
BY ETAN VLESSING | HollywoodReporter.Com
Troy Warren #business-all
“There’s so much structural efficiency potential in the combination,” Discovery chief financial officer Gunnar Wiedenfels told an investor conference.
Discovery CFO Gunnar Wiedenfels sees the merger of his company and AT&T’s WarnerMediaallowing for a big increase in content investment owing to cost-cutting synergies available to both sides of the deal.
“There’s so much structure efficiency potential in the combination that we can afford to make those content investments and get to a much more beneficial financial profile,” Wiedenfels told the virtual Evercore ISI Inaugural TMT Conference during a session that was webcast.
With the Discovery financial chief set to play a key role in the critical integration of the Discovery and WarnerMedia units, Wiedenfels was asked how both companies can best capture value creation from their mega-merger. The companies expect $3 billion in cost-saving synergies after two years.
“What we’re going to be able to create is a super deep and super broad library with content that has amazing consumer appeal and it’s going to be one of the most complete offerings in the direct to consumer space,” Weidenfel told the virtual Evercore conference.
The Discovery CFO added both partners were set to invest heavily in content for the joint venture, while the cost-cutting potential was high from eliminating duplication in technological and marketing expenses as examples in their respective business plans. “I have no doubt we’ll be able to come up with a very compelling product with super top line economics and with a margin profile that will benefit from the elimination of this duplication,” Weidenfels told the investors conference.
Under the terms of the deal, AT&T will spin off entertainment arm WarnerMedia and combine it with Discovery, creating a TV, film and streaming powerhouse to be led by Discovery CEO David Zaslav. AT&T’s WarnerMedia owns the likes of the Warner Bros. studio, HBO and streaming service HBO Max, as well as the Turner cable networks, including CNN, TNT and TBS. Discovery’s reality TV-heavy properties include Discovery Channel, HGTV, TLC, Food Network, OWN and Animal Planet.
Wiedenfels told the investors conference Discovery will invest at a record pace in content in the wake of the WarnerMedia merger deal. “We will be spending more on content this year than ever before in the history of Discovery … We are really investing heavily,” he said.