AT&T Breaks Up Turner, Bulks Up Warner Bros. in Major WarnerMedia Overhaul

AT&T Inc. officially started reorganizing its WarnerMedia unit Monday by combining its disparate networks and entertainment businesses, an overhaul that is expected to lead to significant layoffs.

The company said it hired former NBC Entertainment Chairman Robert Greenblatt to be chairman of a newly created unit called WarnerEntertainment and Direct-to-Consumer. In that role, Mr. Greenblatt will lead a new “networks” unit composed of HBO and Turner’s entertainment unit, as well as oversee content on the direct-to-consumer streaming service WarnerMedia plans on launching later this year.

Other parts of Turner are being lopped off and merged with different units as part of the overhaul. Turner’s sports division will be overseen by CNN chief Jeff Zucker, who now becomes chairman of WarnerMedia News and Sports, and president of CNN.

Warner Bros. Chairman and Chief Executive Kevin Tsujihara will add oversight of Turner’s animation operations, which include the Cartoon Network and Adult Swim as well as their merchandise and licensing units. The combination of Turner’s animation with Warner Bros.’ DC Comics is aimed at the creation of a new global children programming and videogame behemoth.

Turner Classic Movies will also be housed at Warner Bros. under Mr. Tsujihara.

The consolidation of several units within WarnerMedia is expected to lead to significant staff reductions, people familiar with the matter said. Cutting costs and streamlining operations is crucial for AT&T, which is currently saddled with about $170 billion in net debt, the most of any nonfinancial U.S. company. After AT&T announced its plans to acquire Time Warner in 2016, it projected $1.5 billion in annual cost savings and another $1 billion in “revenue synergies.”

The moves are AT&T’s first significant steps since it closed on its $80 billion-plus acquisition of Time Warner last June. Last week, in anticipation of the changes, HBO Chairman and Chief Executive Richard Plepler and Turner President David Levy announced their resignations.