This article was added by the user . TheWorldNews is not responsible for the content of the platform.

Will David Zaslav's new Warner Bros. Discovery deal work?

Merging is always the easy part. Companies are usually happy to join forces. Bankers and lawyers are incentivized to get the deal done. Additionally, the media likes high-five CEOs and grand scheme photography deals to make history through the process of creative destruction.

But then the hard work continues. It's about successfully combining two often very different companies with different corporate cultures to create shareholder value. I've been in this business for so long that big M&A.

deal crashes and burnouts are at least as good as they were, maybe even more. And even if their work ultimately fails on a colossal scale, Wall Street can reap the rewards. His Warner Bros. Discovery of David Zaslav may be responsible for the next failure . The reason for this will soon become clear.

Consider the once mighty GE. GE is a conglomerate built on the theory that bigger is better. Until that was clarified, the conglomerate had failed to live up to the hype and had to be broken up as its stock had fallen to near penny stock territory. The bankers who built these ugly acquisitions have yet to spend all the commissions they generate on ill-fated deals. In a 1998 mega-deal, Travelers Group's investment banking and insurance giant merged with commercial banking icon Citicorp. It was based on the premise that financial giants could profitably cross-sell investments and traditional banking products to large institutions and individuals.

Critics are mixed on whether his merger plan will be successful.
SOPA image via Gett/LightRocket

Looking back, it's not. The business culture never fully meshed. (Banking tycoon Jamie Dimon was also ousted in the turmoil.) The “synergy” of cross-selling as bankers called it didn’t really materialize, at least not enough to make up for all the bad stuff. did.

Citigroup is still around today, thanks to the generosity of the federal government and US taxpayers. Citigroup was one of the most bailed out banks during the 2008 financial crisis.

The original debacle

Go back in the history books and look at the AOL Time Warner merger failure. In my opinion, there is probably no better example than this Dumbo combo as an example of the destruction of shareholder value built on piles of bank fees and the failure of synergistic bond promises.

1,650 The $100 million deal was announced in a big way in January 2000. A high-fiving CEO emerges, using old media (Time, his Warner magazine, cable shows, CNN, HBO, etc.) in combination with new media (AOL's then-popular internet portal).

In the irrational frenzy of the online bubble, it seemed good. When the bubble burst, so did the company's value proposition. Since then, there has been a significant unwinding of various assets of the company.

Time Warner, which consisted of HBO, CNN, Warner Bros. Studios, TNT and Turner Sports, was also dissolved in 2016.

The latest villain, AT&T, bought the company for $85.4 billion and leveraged AT&T's mobile and broadband distribution to sell Time Warner programming, giving it a boost in numbers. committed to shareholders to make it work (further synergies).

But AT&T's telecom geek didn't like Time Warner's entertainment his type at all (and didn't understand the business). With stock prices crashing and costs rising, they turned to Wall Street again, taking Warner down to Zaslav's Discovery Corporation to create a new media giant, Warner Bros. Discovery.


This deal will eventually (hopefully) You'll capture these elusive synergies, as Zaslav knows how to create a variety of media properties, in this case scripted and unscripted content (HBO's "Game of Thrones" and Discovery's Food Network) serves as one. Warner Bros. Discovery was also born on a scale and scale to compete with Disney and Netflix in the streaming wars, shareholders said.

That said, at scale there is a lot of debt that needs to be cut. Zaslav's financial statements put him worth $55 billion, the equivalent of a mountain of bad scripts. Competition for streaming strategies is fierce, calling into question the future of shows that aren't earning as much as Insiders hope.

And yes, these synergies have been hard to find since Zass (as he is known in the media) formally took over the new company earlier this year. That's why his stock is cratered. Warner Bros. Discovery announced last week that he posted a loss of $3.41 billion in the second quarter.

Heavy ax-wielding

Zaslav is seeking his $3 billion in post-deal savings. As these pages reported, the first thing he went to was the CNN+ streaming service. 'Batgirl', the awakened reset of the DC superhero series, is likely to hit the big budget,before losing more money than the tens of millions Zas has already spent on. Canceled. As I first reported last week, he's looking to integrate streaming platforms HBO Max and Discovery+. A series of layoffs.

Of course, it's too early to put Warner Bros. his Discovery in the same bucket as AOL Time his Warner and the other missteps above. And you can't help but root for Zas. He's one of the few honest guys who's also good at working in this lousy business.

And who knows. Maybe his streaming business will bounce back soon. Needless to say, the company's bankers couldn't care less because they could make money either way.