CEO Stankey: ‘Still Have Work to Do’ Building HBO Max Subscriptions

One month after launching on May 27, WarnerMedia’s subscription streaming video platform, HBO Max, had 4.1 million subscribers who’d activated their Max app. By comparison, Disney+ had 10 million app activations after one day.

Disney’s foray into SVOD was greatly assisted by a strong brand and promotional campaign with Verizon, the latter affording the telecom’s 115 million wireless subs free 12-month access to Disney+. HBO Max has no similar jumpstarter.

While AT&T CEO John Stankey makes the usual upbeat comments (“It’s the early days”) and claims the average number of weekly hours spent viewing Max is 70% more than on HBO Now, which launched in 2015, the underlying message remains: Convincing consumers and existing HBO subs to join Max is a work in progress.

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“We still have work to do to educate and motivate the exclusively linear [HBO] subscriber base [about Max], and we’ll continue to work with our wholesale partners to drive these activation rates,” Stankey said.

AT&T ended the fiscal second quarter with 36.3 million combined HBO and HBO Max subscribers compared with 34.6 million at the end of 2019.

The CEO said there’s been “positive pull-through” combining Max with AT&T wireless and fiber plans, and expects that ongoing 5G handset upgrades will be one of the key drivers growing wireless service revenue in the second half of the year.

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Yet, while AT&T has worked overtime making Max available to consumers through nearly every content distributor in the U.S., it has failed to get assistance from Roku and Amazon Fire TV — which represent about 70% of all standalone streaming media devices in the U.S., according to Parks Associates.

Indeed, rival SVOD services Netflix, Amazon Prime Video and Hulu all have distribution on Roku and Fire TV. Negotiations between WarnerMedia, Roku and Amazon have reportedly stalled over control of user data, among other issues.

“We’ve tried repeatedly to make Max available to all customers using Amazon Fire devices, including those customers that have purchased HBO Now via Amazon [Channels],” Stankey said. “Unfortunately, Amazon has taken an approach of treating Max and its customers differently on how they’ve chosen to treat other [SVOD] services.”

AT&T Posts 886,000 Q2 Video/OTT Sub Loss; Broadband Declines Too

AT&T says the bulk of its pay-TV subscriber woes is behind it. The numbers tell a different story. The media giant July 23 said it lost 886,000 video subs in the second quarter (ended June 30), which is a slight improvement from the 897,000 subs lost in the first quarter.

The decline included 68,000 AT&T TV Now online TV subs, about half of the 138,000 subs lost in Q1. The online TV segment ended the quarter with 720,000 subs — down from 1.3 million during the previous-year period. AT&T ended Q2 with 18.4 million video connections compared to 22.9 million on June 30, 2019.

Incoming CEO John Stankey continues to paint a rosy future, saying the company’s “resilient cash” from operations continues to support investments in growth areas, dividend payments and debt retirement.

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“We are aggressively working opportunities to sharpen our focus, transform our operations and continue investing in growth areas, with the customer at the center of everything we do,” Stankey said in a statement.

Regardless, as pay-TV operators continue to lose video subs to alternative channels, including over-the-top video and SVOD, they have rebounded through the growth in high-speed Internet — a prerequisite to broadband video access.

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Yet, the telecom said it lost 79,000 broadband subscribers to end the period with about 13.9 million connections. That compared with 14.4 million subs on June 30, 2019. Broadband net losses included 159,000 disconnections where nonpaying subscribers are receiving service under the “Keep Americans Connected Pledge” AT&T rolled out during the ongoing coronavirus pandemic.

AT&T said Entertainment Group revenue (which includes pay-TV units DirecTV and AT&T U-verse and OTT) dropped 11.4% to $10.1 billion, reflecting continuing declines in video subs, legacy services and lower advertising revenue, which were impacted by lower spend attributable to COVID-19.

Revenue declines were partially offset by higher pay-TV and OTT video ARPUs. Entertainment operating expenses totaled $9 billion, down 8.3% versus the second quarter of 2019, largely driven by lower content costs resulting from fewer subscribers, lower marketing costs and ongoing cost initiatives, partially offset by annual content rate increases, higher amortization of fulfillment cost deferrals, including the impacts of second quarter 2020 updates to decrease the expected subscriber lives and pandemic-related bonus payments to front-line employees and contractors.

AT&T Drops ‘Watch TV’ Sign-Ups

AT&T has begun informing users that it will no longer offer its low-budget AT&T Watch TV service to new and returning subscribers.

“Standalone WatchTV is no longer available for new sign ups or to re-subscribe,” AT&T said in a statement. “Existing WatchTV customers who subscribe to the app or have a qualifying AT&T Unlimited plan can continue to use the service. Customers on a qualifying AT&T Unlimited plan with the WatchTV benefit can create a separate account.”

Launched in 2018 during AT&T’s contentious regulatory battle with the DOJ over its $85 billion acquisition of Time Warner, and targeting the younger high school and college-age demo using mobile devices, AT&T Watch TV is a $15 a month streaming service featuring select channels and no DVR.

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With the rebranding of DirecTV Now to $39.99 AT&T TV in March, the telecom-turned-media-giant is streamlining its streaming portfolio. AT&T TV also includes access to new subscription streaming video service, and company flagship, HBO Max.

Indeed, the telecom continues to struggle pitching standalone online TV (and linear pay-TV) to consumers. AT&T jettisoned 897,000 combined DirecTV and U-verse subs in the first quarter (ended March 31), in addition to 138,000 AT&T TV members. The one million+ sub loss was up 65.1% from the 627,000 subs lost in the previous-year period.

AT&T CFO: HBO Now Viewership Up 40% During Pandemic

AT&T’s singular streaming video focus is on the recent subscription video-on-demand launch of HBO Max. Yet, the telecom’s existing SVOD service, HBO Now, which launched in 2015, saw a 40% uptick in viewership during early days of the coronavirus pandemic, CFO John Stephens said June 17 during an investor event.

Speaking remotely at the Credit Suisse Virtual Conference, Stephens said consumer response to Max, which launched less than three weeks ago, remains promising, adding he expects AT&T to announce subscriber data on the earnings call in July.

AT&T CFO John Stephens

AT&T’s WarnerMedia segment, which operates HBO, recently announced that HBO Now would be called HBO going forward. This, despite the fact Now subs who access the platform through HBONow.com, Google or Apple TV automatically have access to Max at no extra charge. Now subs who access via Roku, Amazon Prime Channels or third-party ISP, however, must download the Max app and re-register.

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Separately, HBO Go, which offers HBO pay-TV subs on-demand access to programming, is being phased out with subs given the option to migrate to Max.

“Quite frankly, on the HBO Max side, we’ve been pleased with where we’re at,” Stephens said. “But it’s been three weeks or not quite three weeks. And so from that perspective, we’re — it’s early. We’re — well, I’m very about positive it, but it’s early.”

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The CFO’s measured support for Max underscores corporate’s sometimes confusing messaging surrounding HBO’s streaming assets. Stephens hinted that was one of the reasons AT&T hired former Hulu CEO Jason Kilar to run WarnerMedia, which includes Warner Bros., Hulu and Turner.

“[Kilar’s] very experienced in over-the-top products and launching, and … he’s very helpful to what was a very strong team already,” Stephens said. “We feel very good about that. And we’re optimistic. We just remain optimistic. It’s a multiyear process. But so far, so good.”

Stephens says AT&T is sticking to previous guidance projecting 50 million Max subs by 2025.

“We’re going to give it some more time and make sure we do full measure,” he said. “But yes, we saw increased [Max] engagement. The engagement really improved in HBO Now.”

Dan York Named CEO of Cox Media Group

Dan York, former chief content officer at DirecTV and MediaPlay News “Digital Driver,” has been named CEO of Cox Media Group.

York will be responsible for all aspects of managing the company’s media platforms and will oversee CMG’s long-term strategic priorities.

Steve Pruett, who was interim CEO, will continue as executive chairman of CMG. He said York’s success in media, content, distribution, operations, and successfully leading large organizations, makes him essential.

Dan York

“Most importantly, [York] embraces contemporary thinking as the media landscape continues to evolve,” Pruett said in a statement. “We have full confidence he is the right person to lead CMG in the next phase of the company’s growth.”

As CCO at DirecTV, York developed a reputation for being a hard negotiator, including driving programmers to tears during all-night contract proceedings, according to a 2016 Los Angeles Times profile.

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York helped build AT&T’s video business over the past 15 years from a start-up to one of the nation’s largest pay-TV provider and the world’s largest licensor of content. During his tenure he oversaw all content activities, including licensing, operations, strategy, investments, original content, compliance, and ran AT&T’s ad sales and regional sports networks.

Indeed, it was York who allegedly was instrumental in preventing DirecTV from picking up the Los Angeles Dodgers’ regional cable channel, SportsNet LA, which is controlled by the former Time Warner Cable (now part of Charter Communications). The heavy-handed tactics resulted in the Justice Department lawsuit against AT&T-owned DirecTV.

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“We all negotiate hard to get good deals,” a veteran TV executive told the Times. “But Dan mashes your face into the cement.”

DirecTV and other AT&T cable systems finally ended the Dodgers blackout in April 2020.

Despite Highest SVOD Price, HBO Max a ‘Real Bargain,’ AT&T CFO Says

When HBO Max launches later this month (May 27), it will be the one of most expensive high-profile subscription streaming video services at $14.99 monthly — more than twice the price of Disney+ and two dollars more than Netflix’s standard plan. WarnerMedia is offering the service for $12 monthly for a year if pre-ordered before May 27.

That’s still a great deal to AT&T CFO John Stephens. Speaking online May 12 at the virtual MoffettNathanson 7th Annual Media & Communications Summit, Stephens said Max would “quite frankly” attract many more demographics than competing SVOD services.

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Indeed, Max will feature a “Friends” reunion (delayed due to the coronavirus), a “Gossip Girl” reboot and a Grease spin-off, among other original fare.

“So from that perspective, I think it’s something that’s going to be accepted as very high-quality and significant content that goes across the whole family unit or multiple individuals, as opposed to just one demographic. As such, I think it’s at the right price point,” Stephens said.

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The executive said the platform would be tweaked and adjusted based on consumer feedback.

“[We’ll] see how that plays out. We’ll make adjustments,” Stephens said.

WarnerMedia Absorbs Xandr Ad Platform

AT&T continues to rejigger its media operations, combining WarnerMedia and ad platform Xandr for what the telecom claims will be a better advertising value proposition for brands, publishers and consumers. Gerhard Zeiler, chief revenue officer of WarnerMedia and president of WarnerMedia International, will oversee all advertising responsibilities across AT&T.

The merger was foreshadowed last month when Brian Lesser, CEO of Xandr, abruptly resigned, creating some uncertainty about the future the advertising unit.

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​Kirk McDonald, chief business officer of Xandr will continue to lead the unit, reporting directly to Zeiler. The merged goal is to accelerate new advertising formats by 2021 for HBO Max, WarnerMedia’s high-profile subscription streaming video service launching this month. ​

“Now more than ever, we need to simplify advertising and further our marketplace capabilities for our customers,” Zeiler said in a statement.

As the lines between TV and digital video continue to converge, Xandr’s platform aims to make it easier for ad buyers/sellers to find audiences across multiple distribution screens.

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“This is done through one holistic conversation that spans premium content and trusted environments, alongside proven and advanced ad capabilities,” Zeiler said.

Randall Stephenson’s Legacy: Backing Media in Partisan Era

Just hours after AT&T announced that its CEO Randall Stephenson would be stepping down in July after 13 years, President Donald Trump called Stephenson’s departure “great news!” in reference to WarnerMedia’s ownership of CNN, which the president often clashes with.

“Randall Stephenson, the CEO of heavily indebted AT&T, which owns and presides over Fake News @CNN, is leaving, or was forced out. Anyone who lets a garbage ‘network’ do and say the things that CNN does, should leave ASAP. Hopefully replacement will be much better!” Trump tweeted April 24 on social media.

Stephenson’s departure comes as AT&T grapples with shrinking pay-TV subscribers at DirecTV and AT&T U-verse, an online TV misfire with DirecTV Now (rebranded as AT&T TV), and $163 billion in debt — a figure that grew by $5.5 billion earlier this month following a third-party loan during the coronavirus pandemic.

Some have speculated the DOJ’s repeated attempts to nix AT&T’s $85 billion acquisition of Time Warner (and formation of WarnerMedia Entertainment) in 2016 stemmed from the president’s public animosity toward CNN.

“CNN’s job is not to be popular with the president,” Stephenson said at the time of the merger. “CNN’s job is really simple: It’s the job of all media: to hold people in power accountable.”

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Strong words from a CEO who often criticized government regulation, welcomed Trump’s corporate tax cut and was frequently accused of telling Wall Street that he preferred taking care of shareholders over consumers.

Indeed, in the first quarter (ended March 31), AT&T’s dividends paid for common shares totaling $3.7 billion (up 47% since 2017) and the company repurchased 142 million of its common shares for $4.7 billion.

Stephenson made headlines in 2017, when, as National Chair of the Boy Scouts of America, he criticized Trump’s address at the Boy Scouts of America’s annual Jamboree in West Virginia.

Trump had turned his speech into a partisan political rally, criticizing Obamacare, reiterating his 2016 election victory over Hillary Clinton, reportedly asking for greater loyalty from scouts and their parents and criticizing former President Barack Obama for not attending the Jamboree — a tradition among presidents since Franklin D. Roosevelt in 1937.

“Anyone knows his speeches get highly political — we anticipated that this could be the case,” Stephenson told The Associated Press. “Do I wish the president hadn’t gone there and hadn’t been political? Of course.”

Stephenson’s dogged defense of CNN continued despite some concern on Wall Street the global network founded by billionaire Ted Turner could undermine AT&T’s businesses going forward.

“This is one of those issues you just ask, ‘What is the right thing to do?'” Stephenson said at a Wall Street Journal forum as reported by The Dallas Morning News. “And then you do the right thing.”

Craig Moffett, analyst with MoffettNathanson, said Stephenson leaves behind a company that transformed from telecom operator to media conglomerate.

“But the jury is still out if the transformation is for better or worse,” Moffett told CNBC.

AT&T CEO Randall Stephenson Stepping Down; John Stankey Taking Over

In a surprise, AT&T April 24 announced Randall Stephenson is stepping down from his CEO position on June 1, to be replaced by COO John Stankey, former CEO of WarnerMedia Entertainment.

After serving 13 years as chairman and CEO, Stephenson, 60, will serve as executive chairman of the board of directors until January 2021 to ensure a smooth leadership transition.

Stephenson’s career saw the telecom acquire satellite operator DirecTV and then spend even bigger ($85 billion) purchasing Time Warner, including Warner Bros., HBO and Turner. The acquisitions ballooned AT&T’s debt and caused headaches such as the failed DirecTV Now online TV platform (now called AT&T TV), and allegations of inappropriate sexual conduct against former Warner Bros. CEO Kevin Tsujihara.

In addition, consumers are increasingly moving away from traditional linear pay-TV — a reality underscored by AT&T losing almost 900,000 pay-TV subscribers through March 31. With the coronavirus pandemic shuttering Hollywood production, free cash flow may be rising, but WarnerMedia’s markets are shrinking — most notably at the box office.

Stankey’s comments regarding a probable sluggish theatrical market after restrictions are lifted prompted Warner Bros. CEO Ann Sarnoff to respond by telling the media the studio still supported exhibitors and the traditional 90-day box office window.

President Trump didn’t wait to tweet his opinion, calling Stephenson’s departure “great news!” in reference to WarnerMedia’s ownership of CNN, which the president often clashes with.

“Randall Stephenson, the CEO of heavily indebted AT&T, which owns and presides over Fake News @CNN, is leaving, or was forced out. Anyone who lets a garbage ‘network’ do and say the things that CNN does, should leave ASAP. Hopefully replacement will be much better!” Trump wrote.

Stankey’s selection as AT&T’s next CEO completes the final phase of a succession planning process that AT&T’s board began in 2017, which included a thorough evaluation of internal and external candidates.

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The telecom said it engaged in an extensive five-month search process to ensure that the company’s next CEO possessed the “vision, experience, talent and leadership” qualities necessary to deliver on AT&T’s strategic plans.

“Leadership succession is one of the Board’s most important responsibilities,” AT&T director Beth Mooney said in a statement. “After an extensive evaluation, it was clear that John Stankey was the right person to lead AT&T into the future.”

Stankey, 57, has served as president and COO since October 2019. He joined AT&T in 1985 and has more than 30 years of accomplished leadership spanning nearly every area of AT&T’s business, from corporate strategy and technology, to operations and media and entertainment.

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Stankey has served in a variety of roles, including: CEO of WarnerMedia; CEO of AT&T Entertainment Group; Chief Strategy Officer; Chief Technology Officer; CEO of AT&T Operations; and CEO of AT&T Business Solutions.

“I’m honored to be elected the next CEO of AT&T,” Stankey said in a statement. “My thanks go to Randall for his vision and outstanding leadership during a period of tremendous change and investment in the core capabilities needed to position AT&T well for the years ahead.”

Later this year, AT&T’s board will elect an independent director when Stephenson retires as executive chairman in January 2021.

AT&T’s John Stankey Doesn’t Expect Movie Theaters to ‘Snap Back’

With Georgia becoming the first state to publicly announce it would allow movie theaters to re-open on April 27, theater chains such as AMC, Regal and Cinemark remain optimistic business can return to some degree of normalcy by July. AT&T COO John Stankey isn’t so sure.

Speaking April 22 on the telecom’s somber fiscal call, Stankey said WarnerMedia is “rethinking the theatrical model,” adding a return to normal for exhibitors won’t “snap back,” and instead could take extended time as consumers slowly regain confidence that sitting in a cineplex isn’t hazardous to their health.

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“I think that’s going to be something that we’re going to have to watch the formation of consumer confidence, not just about going to movies, just in general about being back out in public and understanding what’s occurring there,” Stankey said.

Will Smith as Venus and Serena Williams’ father, Richard, in biopic ‘King Richard’

Indeed, Warner Bros. has pushed back release of its highest-profile summer tentpole — Wonder Woman 1984 — to August. Other titles have been delayed to 2021 while animated feature Scoob! is headed to premium VOD on May 15.

King Richard, the Venus and Serena Williams’ biopic starring Will Smith as their father, has been delayed to November 2021. The Many Saints of Newark, a “Sopranos” prequel movie, has also been delayed to next year.

Among other superhero movies, The Batman has been moved to Oct. 1; The Flash has been moved up to June 2, 2022, from July 1; and Shazam! 2 has been pushed back to Nov. 4, 2022, from April 1.

“The theater business is an incredibly stressed business [right now] … it’s hard to generate revenue,” Stankey said.

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