WBD employees fear job losses from Paramount merger

The Warner Bros. Discovery The board may have enriched its shareholders on Thursday Paramount Skydance‘s takeover offer has ended NetflixNo, but it scared many of its employees.

Some of those people own WBD stock and may prefer Netflix’s $27.75-per-share bid to $31-per-share, CNBC spoke with 10 WBD employees in various roles at the company. All 10, who asked not to be named for fear of potential backlash, expressed concerns about potential job losses and questions about who would ultimately run their divisions if Paramount and WBD were to merge.

“It’s fair to say people are relieved by the news,” said one longtime WBD executive.

Nevertheless, the WBD-Paramount merger is “not a done deal,” as California Attorney General Rob Bonta said yesterday.

The business needs to get regulatory approval in the US and Europe. WBD CEO David Zaslav acknowledged at an all-hands meeting on Friday that the deal could still be blocked and expressed sympathy for those feeling the whiplash going from Netflix to Paramount, according to people familiar with the matter.

“The deal may not close. If it doesn’t close, we’ll get $7 billion and we’ll go back to work,” Zaslau said, according to leaked audio provided to Business Insider.

Still, several WBD employees told CNBC they wish Netflix had acquired WBD, citing several factors.

While both Paramount and WBD have major strengths in news, sports, dramatic film and streaming TV, Netflix has much less overlap. Netflix co-CEO Ted Sarandos has repeatedly said he plans to leave the WBD business alone, keeping its drama business separate from Netflix and keeping HBO Max as a separate, independent streaming service for the foreseeable future.

Netflix did not acquire WBD’s linear cable business with its bid. Employees at CNN, TNT Sports and the old Discovery Networks were staying on in their jobs to pave the way as an independent publicly traded company.

Now, WBD employees are seeing massive job cuts. Paramount executives previously said they planned to cut $6 billion by eliminating “duplicated operations” across “back office, finance, corporate, legal, technology, infrastructure, etc.,” according to chief strategy officer Andy Gordon. Both WBD and Paramount have already gone through thousands of job cuts in recent years.

There are also questions about culture and leadership. While Mark Thompson currently runs CNN, Barry Weiss is editor-in-chief at CBS News and may add CNN to his portfolio.

The Wall Street Journal reported in December that Paramount CEO David Ellison had promised President Donald Trump that he would make sweeping changes at CNN if he took control of the network. Three CNN employees who spoke to CNBC said there is an overwhelming fear among their colleagues about making dramatic changes to the anchors and voice of the Vice cable network.

“Despite all the speculation you’ve read during this process, I suggest you not jump to conclusions about the future until we know more,” Thompson wrote in a memo to employees Thursday.

CNN media reporter Brian Stelter noted that CNN is “a very profitable business and any owner would be foolish to put it at risk”.

On the entertainment side, WBD employees fear there may be too many proverbial kitchen sinks, reducing creativity and innovation for both film and TV.

One WBD executive noted that Paramount’s president Jeff Schell, direct-to-consumer president Cindy Holland and TV president George Cheeks are all used as senior leaders in their organizations. Shell was the CEO of NBCUniversal. Cheeks was co-CEO of Paramount before the merger with Skydance. Holland was a top executive at Netflix, where he worked for 18 years.

How blending meshes with WBD’s entertainment leadership group is an open question and can lead to culture clashes.

TNT Sports is run by Louis Silberwasser and has steered WBD toward a largely younger audience with its programming decisions and investments, including Bleacher Report and House of Highlights. CBS Sports, meanwhile, is driven by the demographics of CBS viewers and has historically served an older audience. This can lead to culture clashes or departments meshing well as complementary assets.

While Silberwasser will have to work with CBS Sports President David Burson on employee copy, like every other department, there is some reason for optimism in the sports department, as WBD and CBS have worked together for years to build March Madness into the NCAA men’s basketball tournament. It gave the units some degree of familiarity with each other.

WBD also lost NBA rights last season. Combining with CBS’ robust portfolio of sports rights, including the NFL and the Masters, makes WBD a major player in sports again, even though it is a CBS affiliate.

Another recurring concern among employees is the $64 billion in debt that comes as part of the $111 billion enterprise value of the deal. Several employees said servicing large debt loads has hampered WBD in recent years, and they worry it could lead to more. The two employees noted that being part of a giant company like Netflix, with a market capitalization of more than $400 billion, is comforting. Paramount Skydance’s market value is just shy of $15 billion.