David Zaslav is making a lot of money from Paramount Skydance’s merger with Warner Bros Discovery – and so are plenty of other people who have been working for him, On The Money has learned.
Zaslav’s massive payout as CEO of Warner Bros. Discovery was roundly attacked in the Hollywood ecosystem. WBD got off to a slow start under his watch, yet he was paid millions. What was left out, however, is that most came via stock options when shares were trading at $7 and could be exercised at $10.
Now that the deal is complete at $31 a share ($81 billion in equity valuation), Zas will walk away with around $1 billion all-in, I am told. But – and this is an important but – he made sure that the wealth effect of the deal more than trickled down through WBD, and not just among senior executives as is usually the case in such transactions.
To start, about a dozen people who work for him are leaving with at least $40 million each (and some multiples of that). Credit the fact that through his four years of running the company he pushed for an ownership culture. Nearly two-thirds of the company’s 30,000 employees took some of their comp in shares when it was trading close to a penny stock.
From what I understand, 500 employees now are sitting on over $1 million each from the deal. About 1,000 employees got appreciated stock worth $500,000 apiece.
Yes, you will read from the leftist Hollywood community and its media cohorts about Zas achieving billionaire status as if it’s a scarlet letter. You will read less about the assistants who are sitting on sizable nest eggs because that would prove one vital component of the capitalist system — the so-called mergers and acquisitions business — actually can work for the little guys, too.
What is also overlooked in capitalism is that there are no guarantees for success, and you can say WBD was among the least guaranteed success stories in recent merger history. Zas took over officially in 2022 after running Discovery Inc., — known mostly for the Food Network and some specialty cable channels, and merging it with Warner Media — the home of HBO, CNN and the famed Warner Bros. studio – after it was spun off from AT&T.
Media is a tough business. Warner itself has been changing hands for years despite its marquee brands because managers couldn’t make the numbers work.
The telecom guys didn’t do any better than the media vets at running the show, and based on the initial headlines, neither did Zas. The former veteran NBCU exec became a punching bag in Hollywood over what he wouldn’t or couldn’t do, like refusing to over pay for the rights to NBA games. Throw in killing “Bat Girl” in post production and the branding crisis of HBO’s streaming service before finally settling on HBO Max, and you know why his stock hovered in the single digits.
But behind the scenes, however, Zas was righting the ship with cost cutting and a sharp focus on better content. He figured out how to make HMO Max increasingly profitable.
We at On The Money were first to sense that Zas’s game plan was paying off. Last August, well before the bidding war for WBD began, we noted how shares of Warner Bros. Discovery were up more than 53% over the previous 12 months.
The studio was starting to churn out hits and commercial success. He had unveiled plans to break up the company, cleaving its coveted studio and streaming business from the slower growth yet profitable cable properties. “The move lets Zas transfer some of his debt to a company that has better cash flow while he rebuilds the studio, or probably sells it,” as I reported at the time.
About six weeks later, suitors began lining up. Paramount Skydance run by indie producer David Ellison, his dad, Oracle co-founder Larry Ellison, and the savvy media types at RedBird Capital led by Gerry Cardinale were first out of the gate, offering Zas $16 a share.
We were first to report he wanted around $30 a share. The media world scoffed – that is, until Zas created a high-stakes bidding war among multiple media behemoths that ultimately narrowed down to Netflix vs Paramount Skydance. Suddenly his $30 a share boast didn’t seem so crazy. Ellison & Co. upped their bid to $31, knocking Netflix out and securing victory in February.
The road to this week’s closing wasn’t simple. A state AG regulatory challenge over nonsensical antitrust concerns delayed the deal from closing until cooler heads prevailed.
One person in the deal who stayed stable through it all, I am told, is Zas and his belief that the deal would eventually be approved. Yes, it made him a billionaire, and made lots of people who worked for him rich as well.
So please – don’t believe everything you’ve heard about this deal, whether it’s from a lefty California politician or a Hollywood actor. America’s not all bad.
