WarnerMedia CEO Jason Kilar is in negotiations for his exit from the company, two individuals with knowledge of the situation told TheWrap. Kilar has hired a legal team, the individuals added.
The news comes hours after it was announced that AT&T would spin off WarnerMedia in a deal that will see it merge with Discovery. If he exits, Kilar will leave WarnerMedia after little more than a year as its CEO. One individual added that Kilar was not aware of the impending deal until Saturday night.
The New York Times first reported the news of Kilar’s exit talks. Reps for WarnerMedia did not immediately respond to TheWrap’s request for comment.
Kilar earned $52.1 million during his first (and now only) year leading WarnerMedia, which dwarfed his boss, AT&T CEO John Stankey. Kilar took home more than $49 million in stock swards, on top of his base pay of $1.67 million. However, that $49 million will vest over the next four years. Kilar’s yearly compensation package was to be around $17 million going forward. Industry experts believe his exit package will be well beyond that sum.
Discovery CEO David Zaslav is set to lead the spun-off company, which is expected to reveal its name as early as this week.
Under the terms of the all-stock agreement, AT&T will receive $43 billion (a figure subject to adjustment) in a combination of cash, debt securities and WarnerMedia’s retention of certain debt, and AT&T’s shareholders will receive stock representing 71% of the new company. Discovery shareholders will own 29% of the new company, which Zaslav said would announce its new name in coming days. The boards of directors at both companies have approved the merger.
The deal, which is expected to close in mid-2022 subject to regulatory approval and a vote by Discovery shareholders, will create an entertainment juggernaut that seeks to rival Netflix and Disney. It also puts the likes of Warner Bros., CNN, Turner and Discovery’s stable of nonfiction networks and two competing streaming services, Discovery+ and HBO Max, under one roof. WarnerMedia’s U.S. sports rights, including for the NBA, MLB and March Madness, will also be combined with Discovery international sports giant Eurosport.
The combined company’s anticipated 2023 revenue is approximately $52 billion, with more than $15 billion of that in direct-to-consumer revenue. The merger should bring about “at least” $3 billion annually in cost savings via synergies, the companies said, hinting at potential layoffs.
The new company will initially have $55 billion in debt, Zaslav said in a press conference with AT&T CEO John Stankey following the announcement. He said that the company would also have $8 billion in free cash flow that would allow the company to quickly pay down that debt while also leaving room for expansion and strategic investment.
Beatrice Verhoeven contributed to this report.