Departed Turner CEO John Martin Was a Friend of Home Entertainment

NEWS ANALYSIS – Lost in the rapid-fire of events at the closure of AT&T’s $85 billion purchase of Time Warner was the departure of John Martin, CEO of Turner.

AT&T Entertainment CEO John Stankey, who became CEO of renamed WarnerMedia, replacing retiring CEO Jeff Bewkes (at former Time Warner), made the announcement June 15 in a memo to employees.

WarnerMedia includes Warner Bros., HBO and Turner (TBS, TNT, CNN, Turner Sports, Cartoon Network, among others).

Martin, who was also former CFO of Time Warner, was appointed CEO of Turner in 2014 by Bewkes. A proponent of the merger, Martin also once called AT&T’s online TV platform DirecTV Now, “a money-losing business,” – a comment not likely ignored by his new corporate bosses.

“This initial Turner organization structure will allow me to work more closely with more Turner leaders and accelerate my personal learning of the business as we define our shared priorities across the company,” said Stankey regarding Martin and other Time Warner executives’ exits.

Regardless, Martin was a long-time advocate of home entertainment – including UltraViolet and electronic sellthrough of content.

In 2010, Martin backed the short-lived rollout of premium VOD, which would allow consumers to rent a new-release theatrical movies in the home within days of its box office debut.

In 2012, on a fiscal call, Martin showed a sense of humor when he said he was encouraged by “recent signs” of stabilization in home entertainment, with total consumer spending “actually flat” for the year.

He chastised the industry (i.e. Disney) for not rallying around UltraViolet as the primary cloud-based content ownership platform.

“Look, challenges still exist [in home video],” Martin told a separate investor event, adding that secular challenges had mandated the industry to embrace alternative distribution strategies such as street-date transactional video-on-demand and premium VOD, among others.

“Warner Bros. has been the leading studio at trying to move toward embracing new technology, advantaging channels that are higher margin and disadvantaging those channels that are lower margin,” he said.

Martin believed it was that mindset that pushed Warner to spearhead rollout of UltraViolet. He said adoption of the platform was “not where we want it to be,” but that the studio took the leadership position at the time when ongoing technological challenges mandated action.

“Somebody’s got to try and move forward because the industry has to move more quickly to embrace these higher-margin opportunities,” he said.

Warner earlier this year joined Disney and other studios (except Lionsgate and Paramount Pictures) in support of the latter’s rebranded Movies Anywhere platform.


Turner CEO Says Government ‘Clueless’ Trying to Block AT&T/Time Warner Merger

The Department of Justice says the $85 billion merger of AT&T and Time Warner would be bad for consumers and competition. And it filed a lawsuit to prove its case.

That doesn’t sit well with John Martin, CEO of Turner, a unit of Time Warner, to which Martin was CFO for nearly 10 years.

Speaking Feb. 13 Recode’s Code Media confab in Huntington Beach, Calif., Martin decried the government meddling and insinuation that the vertical merger between AT&T and Time Warner is negative.

“I think the government is clueless,” Martin said.

Vertical mergers typically involve two companies that operate at separate stages of the ladder within an industry’s supply chain. In the case of Time Warner, it largely represents content creation while AT&T represents content distribution.

“As a person who’s actually going through the process and has been in depositions, the theory of the [legal] case just makes absolutely no sense,” Martin said. “In the history of the country, what vertical merger has tilted the landscape of the competitive environment? Let me give you the answer: Zero.”

Specifically, Martin said that while merging with AT&T would “supercharge” Turner brands such as CNN, Cartoon Network, FilmStruck, Turner Sports, TNT and Turner Classic Movies, among others, since the announcement, he said AT&T has lost 1.3 million pay-TV subscribers and makes little money on previous acquisition, DirecTV. At the same time, Martin said Netflix has added 6 million domestic subscribers.

The CEO contends the government’s case fails further when looking at the market capitalization of AT&T and Time Warner since the announcement.

“They’re flat,” Martin said. “I think Amazon and Google have essentially, in terms of market cap, the equivalent of AT&T. And Facebook has added the equivalent of two times Time Warner.”

Martin said the government has nothing to worry about regarding the merger, adding the DOJ case amounts to a “massive miscalculation” of resources.

“They’re going to lose,” he said.

When asked if the government could lose while still extracting conditions, Martin said jokingly that the good thing about his comments was the fact he had no idea what he was talking.

To many observers, the merger revolves around President Trump’s immense dislike of CNN, which he has repeated characterized as a source for fake news.

Asked if he thought CNN might be sold [to assuage the DOJ and Trump] Martin said he didn’t think so – a position publicly backed by AT&T CEO Randall Stephenson.

Regardless, Martin said Time Warner units Turner, HBO and Warner Bros. would be “fine” without the merger.

“Time Warner is a pretty stable, successful company right now,” he said. “Whatever happens, happens.”

The federal trial is set to begin March 19.