WBD employees fear job losses with Paramount merger

He Warner Bros. Discovery The board of directors may have enriched its shareholders on Thursday when it elected supreme skydanceThe acquisition offer of netflix's, but he also terrified many of his employees.

While some of those people own WBD stock and may prefer the financials of Paramount's $31 per share offer to Netflix's $27.75 per share offer, CNBC spoke with 10 WBD employees in a variety of different roles at the company. The 10, who asked not to be named for fear of possible backlash, expressed concerns about potential job losses and questions about who would ultimately run their divisions if Paramount and WBD ultimately merge.

“It's fair to say people are deflated by the news,” said a longtime WBD executive.

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

The transaction must obtain regulatory approval in both the United States and Europe. WBD CEO David Zaslav acknowledged at an all-hands meeting Friday that the deal could still be blocked and expressed sympathy for those experiencing a feeling of whiplash when moving from Netflix to Paramount, according to people familiar with the matter.

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

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

While Paramount and WBD have core competencies in news, sports, theatrical movies and streaming television, Netflix has much less overlap. Netflix co-CEO Ted Sarandos repeatedly said he planned to leave the WBD business alone, keeping its theatrical business separate from Netflix while maintaining HBO Max as a separate, independent streaming service for the foreseeable future.

Netflix also wasn't going to acquire WBD's linear cable business with its bid. Employees at CNN, TNT Sports and the former Discovery networks would have remained in place to forge a path as an independent, publicly traded company.

Now, WBD employees face potentially massive job cuts. Paramount executives have previously stated that they plan to cut $6 billion by eliminating “duplicated operations” in “back office, finance, corporate, legal, technology, infrastructure, etc.,” according to chief strategy officer Andy Gordon. Both WBD and Paramount have already suffered thousands of job cuts in recent years.

There are also questions about culture and leadership. While Mark Thompson currently runs CNN, Bari Weiss is the editor-in-chief of CBS News and it is plausible that CNN could be added to her competition.

The Wall Street Journal reported in December that Paramount CEO David Ellison promised President Donald Trump that he would make sweeping changes at CNN if he won control of the network. Three CNN employees who spoke to CNBC said there is rampant fear among their colleagues that Weiss will make dramatic changes to the cable network's anchors and tone.

“Despite all the speculation you have read during this process, I suggest you do 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 highly profitable business and any owner would be foolish to put it at risk.”

In the entertainment space, WBD employees fear there are too many cooks in the kitchen, which could bog down creativity and innovation in both film and television.

A WBD executive noted that Paramount President Jeff Shell, Direct to Consumer President Cindy Holland and TV President George Cheeks are accustomed to being senior leaders in their organizations. Shell was CEO of NBCUniversal. Cheeks was co-CEO of Paramount before it merged with Skydance. Holland was a senior executive at Netflix, where she worked for 18 years.

How that mix fits with WBD's entertainment leadership group is an open question and could lead to culture clashes.

TNT Sports is led by Luis Silberwasser and has largely steered WBD toward younger audiences with its programming decisions and investments, including Bleacher Report and House of Highlights. CBS Sports, meanwhile, is governed by the demographics of those who watch CBS and has historically catered to an older audience. This could lead to a culture clash, or the divisions could combine very well as complementary assets.

While Silberwasser will have to work with CBS Sports President David Berson on doubling employees, like any other department, there is some reason for optimism in the sports division, because WBD and CBS have worked together for many years producing March Madness, the NCAA men's basketball tournament. That has given the units a degree of familiarity with each other.

WBD also lost the NBA rights last season. Combined with CBS' strong portfolio of sports rights, including the NFL and the Masters, it makes WBD a major player in sports again, even if it is as a subsidiary of CBS.

Another repeated concern among employees is the $64 billion in debt that is part of the deal's $111 billion enterprise value. Several employees said servicing large debt loads has hampered WBD in recent years and they feared it could lead to more of the same. Two employees noted that it is comforting to be part of a giant company like Netflix, with a market capitalization of more than $400 billion. Paramount Skydance's market valuation is only $15 billion.