An Old-School Media Titan Pushes Aside an Upstart

LOS ANGELES — It’s the law of the Hollywood jungle. The biggest cats win.

It was only last year that Jason Kilar, a digital media executive, was named the chief executive of WarnerMedia, a division of AT&T that includes HBO, Warner Bros. and CNN. In particular, AT&T wanted Mr. Kilar to turn an upstart streaming service, HBO Max, into a Netflix-style powerhouse.

With a swagger that astounded Hollywood — who does this outsider think he is? — Mr. Kilar implemented a wide-ranging overhaul, ousting two of WarnerMedia’s top television programmers, smashing the company’s infamous silos, and enraging A-list filmmakers, stars and agents by abruptly deciding to release movies simultaneously in theaters and on HBO Max. His 2020 pay package was worth more than $52 million.

And then Mr. Kilar got chomped.

In recent days, he was blindsided by his AT&T boss, John Stankey, and two media lions, David Zaslav, the longtime chief executive of Discovery, and John Malone, Discovery’s chairman. For months, it turned out, the three alphas had been privately discussing a new direction for WarnerMedia — spinning it off and merging it with Discovery. Mr. Kilar only found out as the final details of the deal were being ironed out, according to two people briefed on the matter, who spoke on the condition of anonymity to discuss private conversations.

By Monday, the old-school media titan, Mr. Zaslav, 61, had been handed a combined Discovery-WarnerMedia to run, and the ascendant technocrat, Mr. Kilar, 50, had hired a legal team to negotiate his departure.

It was lost on no one in Hollywood that WarnerMedia’s library includes “Game of Thrones” and “Succession.” Adding drama, The Wall Street Journal had published a lengthy profile of Mr. Kilar on Friday, with various business leaders singing his praises. AT&T had helped with the article, a move that a prominent talent agent deemed “the ultimate smile-to-the-face, knife-in-the-back.” (It was a comment made with a degree of satisfaction, given the manner in which Mr. Kilar kept agencies in the dark in December regarding his plans to speed movies to HBO Max.)

Mr. Kilar declined to comment.

Mr. Zaslav, a media industry tour-de-force who goes by Zaz and is often outfitted in an outdoorsy vest, told reporters on Monday that the deal had come together “secretly from my brownstone in Greenwich Village.” The gravelly voiced Mr. Stankey, who joined AT&T in 1985, joked that “discreet” was a better word. “Secret sounds like we were in the Bat Cave or something,” he said.

They declined to discuss the blindsiding of Mr. Kilar, although Mr. Zaslav praised him as a “fantastic talent.” Mr. Stankey said that Mr. Zaslav had “decisions he’s got to make” in terms of “who will be in what roles moving forward.”

With that, Hollywood began parsing comments for clues about other executives.

On a conference call with reporters, Mr. Zaslav name-checked Jeff Zucker, the CNN boss and a longtime personal friend. Did that signal that Mr. Zucker, who had announced plans to leave CNN after tension with Mr. Kilar, would remain?

Inside WarnerMedia, a rumor began to ricochet: Was there a chance that Richard Plepler, who ran HBO during its “Game of Thrones” glory years, might return to the company in a prominent role? He left in 2019 after clashing with a heavy-handed AT&T. (He signed a five-year producing deal with Apple last year.)

On Monday morning, Mr. Kilar and Ann Sarnoff, the chief executive of WarnerMedia Studios and Networks Group, held a 45-minute Zoom session with senior WarnerMedia executives. Neither made any reference to leaving, according to two people briefed on the conversation. Mr. Kilar said securing regulatory approval for the AT&T-Discovery maneuver would likely take 12 to 15 months and talked up the benefits of such an arrangement. The new company would be well-capitalized; there would be no overlap of movie operations since Discovery does not own a film studio; Discovery would supercharge the effort to expand HBO Max overseas. Both Mr. Kilar and Ms. Sarnoff emphasized how much everyone on the leadership team mattered.

A town hall with all WarnerMedia employees was scheduled for Tuesday. Mr. Kilar sent a rallying-the-troops memo to WarnerMedia staff on Monday morning that called the merger “momentous news” and rhapsodized about his “passion and affection” for the company.

“I recognize it will take all we’ve got to keep our collective focus on the mission,” the memo concluded. “We can do it.”

He added a smiley face emoticon.

Fatigue seemed to be the prevalent emotion for Warner Bros. employees on Monday. Once the most stable studio in Hollywood, Warner Bros. has been whipsawed between leaders and corporate structures in recent years. But there was also a sense of cautious optimism. Mr. Zaslav, unlike Mr. Kilar and Mr. Stankey, at least hails from the traditional entertainment business. Mr. Zaslav told reporters he planned to accentuate the “creative culture in media.”

Under AT&T, WarnerMedia’s ability to spend was significantly curtailed by the wireless giant’s debt burden and dividend requirements. Studio executives complained bitterly about what they saw as AT&T’s frugality. (AT&T would counter that the studio was living too high on the hog.)

“Let’s hope the new management has less disdain for creative talent,” said Jason E. Squire, the editor of “The Movie Business Book” and a professor at the University of Southern California’s School of Cinematic Arts.

Mr. Kilar, 50, fashioned himself as a disrupter inclined to break with the status quo in the pursuit of innovation. He became the chief executive of WarnerMedia in April 2020. He previously had started a video streaming company called Vessel and had managed Hulu, where he gained a reputation for thwarting the desires of the entrenched media executives overseeing the company.

HBO Max made a lackluster debut just two months after his arrival at WarnerMedia. By August, Mr. Kilar dismissed Bob Greenblatt and Kevin Reilly, two longtime television executives who were in charge of the streaming service’s programming. Mr. Kilar also laid off some 1,000 employees.

Those inside the company credit Mr. Kilar with two important decisions that have better positioned the company in the current media climate. He oriented all the divisions around HBO Max. He also hammered on the importance of making HBO Max a global streaming service, accelerating its rollout. HBO Max is set to expand into Latin America and the Caribbean next month. The European launch is scheduled for later this year.

But now the television veterans are in control.

Mr. Zaslav has run Discovery since 2007. He started his media career in 1989 at NBC, ultimately helping to create cable networks like CNBC and MSNBC and expanding USA and Bravo around the world. Known for celebrity-strewn parties at his East Hampton, N.Y., estate, Mr. Zaslav has long been one of the highest-paid chief executives in media. Last year, his compensation totaled $37.7 million. In 2018, when he signed a new contract, he received more than $100 million in Discovery stock.

Richard Gelfond, the chief executive of Imax, predicted in a CNBC interview that Mr. Zaslav would bring a “diplomatic soft touch” to WarnerMedia’s shifting movie releasing strategy. “He’s been an innovator, but he knows how to do it within the confines of the existing system,” Mr. Gelfond said.

Pulling strings in the background, per his style, will be Mr. Malone.

Nicknamed the “cable cowboy,” in part because his base of operation is in Colorado, Mr. Malone, 80, is the consummate deal maker. Mr. Zaslav in Monday’s call described him as “a teacher, and a best friend and really a father to me.” He has a reputation for putting together complex transactions that limit his tax exposure. He began amassing his fortune in 1973 when he took over Tele-Communications Inc., an almost-bankrupt cable company that he grew and then sold to AT&T in 1998 for $32 billion. A subsidiary, Liberty Media, was spun off into its own entity with Mr. Malone at the helm.

Liberty holds significant stakes in a variety of entertainment companies, including Discovery, the Atlanta Braves and SiriusXM. The company purchased Formula One racing in 2016 for $4.4 billion. And in 2017, Discovery purchased Scripps Network Interactive for $11.9 billion, which added HGTV, Travel Channel and Food Network to its media arsenal.

In 2019, after selling his shares of Lionsgate, Mr. Malone increased his ownership of Discovery, purchasing $75 million of additional shares for a total 23 percent stake.