AT&T CEO: There’s an ‘Apathetic Tone’ on Revisiting Net Neutrality Legislation

John Stankey, CES of major internet service provider AT&T, thinks revisiting net neutrality is a waste of time.

Speaking Dec. 5 at the UBS Global Media & Communications Conference in New York, he referred to the Federal Communications Commission’s decision to revisit restoring open internet protections (i.e., net neutrality) for consumers and businesses — first enacted during the Bush/Obama Administrations, subsequently scuttled during the Trump Administration, and now revived during the Biden Administration.

John Stankey

“I think there’s kind of an apathetic tone on the issue right now because there isn’t an issue,” the executive said.

Net neutrality became a hot button issue during the Obama Administration when Netflix, which was transitioning away from DVD rentals to streaming video, voiced concerns about third-party ISPs, such as Verizon, Comcast and AT&T, among others, throttling data speeds due to limited bandwidths at the time.

Specifically, Netflix and other streamers worried ISP network operators could use traffic-management tools to give preferred treatment to certain data streams as well as their own streaming platforms.

Stankey said that with myriad ISPs operating in the market, consumer access to streaming sites has never been better.

“Nobody is walking around saying there was a website I couldn’t get to recently,” he said, arguing there is greater public concern about social media platforms doing something to restrict free speech. “They’re not wondering whether or not the pipe did it; it’s whether or not the person who owns the platform did it.”

The FCC, in its move to restore net neutrality, or re-classifying the internet as a telecommunications entity under Title II of the Communications Act of 1934, now argues the issue is not about internet streaming access, but, instead, national security.

The FCC says reclassification of the internet would enhance the government’s ability to respond to national security threats by subjecting ISPs to authorization requirements under Section 214 of the act. The section ensures that the U.S. market is protected against potential anti-competitive behavior by a carrier with market power in a foreign country. The FCC has used this authority to ban several China-affiliated online services from operating in the United States for national security reasons.

Stankey argues the real issues facing ISPs revolve around spectrum capacity for wireless communications.

“Pricing is going to go up because [spectrum] becomes a scarce resource,” he said, arguing that the best way to get a market to operate efficiently is for the government to expand access to wireless spectrum.

“That’s where time and energy should be spent,” Stankey said. “I think we should work on closing the digital divide.”

AT&T CEO: Pulling HBO Max Off Amazon Was ‘Smart Decision’

When AT&T disclosed last year that it was pulling access to HBO Max off the Amazon Channels platform, the move ended up costing the telecom giant about 1.8 million domestic subscribers through the third quarter, ended Sept. 30, 2021.

Fast forward to the present and Max and HBO ended 2021 with almost 74 million combined subscribers — exceeding company projections. At the same time, AT&T was able to end paying Amazon for any Max subscriber additions. Amazon reportedly also retained control of Max subscriber data.

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In a question posed on the Jan. 26 fiscal call, CEO John Stankey said the decision to bypass Amazon turned out to be a good one.

“We felt it was the right decision,” Stankey said. “I feel it was the right decision. I think it will even be more the right decision in a post-Discovery environment, as the [combined Warner Bros. Discovery] offer only gets stronger that’s in the market and the content that’s available. At the end of the day, you want full control of your customers.”

Stankey said he remains “confident” that the 1.8 million Max subs lost would return following the launch of Warner Bros. Discovery.

“It may take a couple of quarters for that to happen,” he said. “But there will eventually be a product out there that they’re going to look at and say they want to be part of. And better to have them there where you have direct access control of them, can market to them, know what they’re doing than to have it be in some black box where you absolutely have no idea what somebody else is doing with aggregating your content and your exposure to the customer.”

Stankey reiterated that third-party SVOD subs originated through Amazon Channels really belong to Amazon.

“There are a lot of entities out there growing ‘direct-to-consumer customers’ that are behind the screen of the Amazon marketplace that really are Amazon’s direct-to-consumer customers,” he said. “They are not the media company’s direct-to-consumer customers.”

AT&T CEO: HBO Max ‘Unstoppable’ Following Discovery Merger

AT&T may be selling operational control of WarnerMedia and HBO Max to Discovery for $43 billion, but that didn’t stop the telecom’s CEO John Stankey from gushing about Max’s purported year-end achievements. AT&T said Max and HBO ended 2021 with 73.8 million combined subs, which exceeded previous year-end estimates of 73 million.

Speaking Jan. 5 at Citi’s AppsEconomy Conference, Stankey attributed the Max subscriber gains to “really good” international launches.

“We are now a product that has moved from just not only mid-40 million domestic subscribers, to one that is got momentum in Latin America,” Stankey said. “Our early launches in Europe have been really strong and have demonstrated that there is a market for the library [content] that Max brings … as well as our new content performing incredibly well in all markets, not just in the U.S.”

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Stankey said that following the launch of Max in May 2020, he hoped user engagement would reach one hour daily. He now says that projection was too conservative.

“We have been so far beyond that and have done so much better,” he said. “I just couldn’t be more pleased.”

The executive contends that with movie and TV program production emerging from the COVID hiatus, further rollout of HBO content will see “great longevity into the cultural zeitgeist” from Max users.

“The platform, the technology is getting better,” Stankey said. “More features are coming in. Like any software development that you have to globally scale, you’re always making tradeoffs between time to market and the functionality of the platform. Once you get through another year of those cycles, the product gets better. It adds more features. It does things where people can engage with it more, they can find more content because search starts to improve.”

Stankey lauded WarnerMedia CEO Jason Kilar for doing a “remarkable job” driving Max growth through the company’s controversial same-day theatrical/streaming movie release strategy in 2021. While Kilar is not expected to remain at the helm following the merger with Discovery, Stankey has faith Discovery CEO David Zaslav can take Max to greater heights.

“I think 2022 is going to be even a better year for [Max],” he said. “And once David closes Discovery and can start to bring in the strength of what Discovery does so well into that portfolio, it’s going to be unstoppable.”

AT&T CEO: Congressional Concerns Over WarnerMedia Sale ‘Unfounded’

On the heels of concerns from some Democrat lawmakers regarding AT&T’s $43 billion minority stake asset sale of WarnerMedia to Discovery, the telecom’s CEO said the issues presented by lawmakers are “unfounded,” but expected for a mega merger that includes Warner Bros., HBO and Turner and the parent of HGTV and other media brands.

Rep. Joaquin Castro (TX), Sen. Elizabeth Warren (MA), Rep. David Cicilline (RI), Rep. Pramila Jayapal (WA) and 29 other Congressional members sent a letter to the U.S. Attorney General Merrick Garland asking the DOJ to examine whether the merger would reduce diverse content in a more consolidated and less competitive market.

“I believe the context of our discussion with regulators up to this point has centered around those [diversity] issues, and we feel very good about the data we put on the table that have, it’s clearly indicated that there’s nothing unusual about this transaction,” Stankey told the UBS Global TMT Virtual Conference on Dec. 6.

Castro contends there remains a lack of diversity of people of color in media. The lawmaker cited a 2021 analysis by the Latino Donor Collaborative found that Latinos account for less than 3% of TV show leads, showrunners and directors.

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“Latinos are nearly 20% of the U.S. population, one-in-five Americans, but we’re almost invisible on-screen and behind the camera,” Castro wrote in the letter.

Stankey said issues involving minority representation may have been relative to past media mergers, but not so today.

“I would also tell you that those [Congressional] letters … are not very strong in the foundation of their concerns, nor do I have concerns about what they’re articulating in terms of our ability to navigate through that,” Stankey said.

Jason Kilar: Warner Bros. Producing 10 More Theatrical Releases Streaming Concurrently on HBO Max in 2022

WarnerMedia made headlines releasing the entire 2021 Warner Bros. theatrical slate concurrently on HBO Max for a movie’s first 31 days of release.

WarnerMedia CEO Jason Kilar, speaking on the company’s July 22 fiscal call, said the controversial strategy through six months reveals the enduring importance of the box office ($463 million in revenue domestically through June 30) coupled with the impact technology has made on distribution.

“Clearly motion pictures matter and will continue to matter when it comes to theatrical exhibition,” Kilar said. “They also matter at home, and absolutely in terms of the response that we’ve gotten … from all of our day-and-date titles. We feel very good about the response that consumers have given it in the home.”

Jason Kilar

As the exhibition business turns the page on the pandemic and more moviegoers are vaccinated, Kilar, who is on tap to remain CEO of WarnerMedia into next year heading into the completion of the Discovery merger, doesn’t anticipate movie distribution returning to the lengthy theatrical window.

He said that while some Warner titles in 2022 will have a 45-day window, the studio is also going to be producing more than 10 movies that will be available on HBO Max and in theaters on day one.

“I think that what you’re going to see is this industry continues to evolve, and to continue to innovate in ways that not only works for consumers and fans, but also works for our business partners,” Kilar said.

Separately, AT&T CEO John Stankey said the telecom has heard nothing from federal regulators regarding the merger that will transform WarnerMedia into Warner Bros. Discovery and see Discovery CEO Davis Zaslav running the unit.

Stankey said the regulatory process involves document production and providing information that’s responsive to the government’s requests to begin the reviews.

“No news is good news,” he said. “I’ll tell you internally, all the normal steps are going on to be prepared operationally for when we would expect an approval. It’s not a complicated transaction.”

CEO Stankey Says AT&T Key to HBO Max Success

AT&T just announced it is spinning off a 30% minority stake in WarnerMedia for $43 billion, the latter including Warner Bros., Turner, HBO and HBO Max. AT&T CEO John Stankey contends the Max subscription streaming platform launched last summer would not be “where it is today” without the assistance and support of the telecom giant.

Speaking May 24 on the virtual JPMorgan 49th Annual Global Technology, Media and Communications Conference, Stankey said vertical integration of the former Time Warner media giant (a.k.a. WarnerMedia) helped the telecom expand its brand while validating Max on a global scale.

HBO and HBO Max ended the most-recent fiscal period with 44.2 million combined subscribers. That tally could expand to 63.9 subs worldwide when Max launches in Latin America and the Caribbean in June. A less-expensive ad-supported tier is slated to a launch next month as well.

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“I think realistically, HBO Max would not be where it is today, if not for the strength of the two combined companies, what AT&T was able to bring both in distribution as well as some of the economic clout — market clout, to be able to normalize agreements, and get the product and service off the mark,” Stankey said.

He said AT&T’s continued push of wireless distribution and high-speed Internet, helped more than pave the way toward consumer adoption of HBO Max.

“We had a strong belief that we could help our domestic connectivity business significantly,” Stankey said. “And that started us down the path of the direct-to-consumer evolution.”

The executive contends Max will help AT&T expand high-speed Internet and fiber connections in markets around the world.

“Our connectivity business is kind of captive to the United States for the most part,” Stankey said. “And as a result, when you start looking at the opportunity to grow a fantastic subscriber base … we kind of look at this and say, ‘it’s time to unleash the media assets to go and seize, you know, multi $100 billion opportunity and become one of the premier assets for distributing content,'” he said.

Discovery CEO David Zaslav will be tasked with operating WarnerMedia and Discovery+, the latter the five-month-old SVOD service featuring largely reality-based DIY programming. Stankey contends the combined companies’ synergies can help fund growth in the new OTT video business.

“It’s a deeper content library that can carry forward. And it brings exactly some of that heft in the international side of things, [which is] going to be necessary to scale up [Max and Discovery+] worldwide.”

Is There Hope for Warner Bros. After Three Miserable Years Under AT&T?

The stunning announcement that AT&T wants to unload WarnerMedia and merge it with Discovery strikes me as a long overdue admission by the giant telecom that when it acquired what was then Time Warner less than three years ago, it had absolutely no idea what the hell it was doing.

Similar to Verizon Communications ditching Yahoo and AOL, the AT&T move amounts to a belated cancellation of a deal that never should have happened in the first place.

AT&T buying Time Warner was like a rich, smart and successful businessman donning a chef’s hat and, with absolutely no training, entering the kitchen of a world-class restaurant determined to concoct an enticing new dish that would set the culinary world on fire. With no idea what to do, the “chef” resorts to asking a bunch of different people for help — and when the result is a near disaster he keeps messing with it, adding a pinch of salt here and a sprinkle of cumin there, only to make it even worse.

In desperation, he throws up his hands and asks someone else to take over — while the hungry, frustrated diners become even more apprehensive about what the ultimate concoction will be. How, they wonder, do you create a tantalizing dish out of Wonder Woman and the Property Brothers?

That’s going to be up to David Zaslav, the CEO of Discovery who’s been tapped to lead the new, as-yet-unnamed mashup. Working in his favor is his recognition that it all comes down to talent. Speaking with reporters on a Zoom call shortly after the landmark deal was announced, he stressed the importance of building relationships with the talent community and said he would “strive to create the best creative culture” he could.

That’s something AT&T never quite got, as evidenced by the backlash from Hollywood WarnerMedia heaped upon CEO Jason Kilar after his shocking announcement late last year that the studio would simultaneously release its entire 2021 theatrical slate on HBO Max, the media giant’s struggling streaming service.

The sad truth here is that HBO Max has been a disaster from day one, beginning with a mucked-up launch that for a while saw three different streamers operate at the same time, HBO Go, HBO Now and Max. “Go now” seemed to have been the operative phrase for consumers, who largely stuck with Netflix and, as a second choice, signed up for Disney+. Max’s actual subscriber count is something of a mystery; WarnerMedia claims the service as of the first quarter had 44.2 million subs, but that’s combined with regular HBO — and still a far cry from Netflix’s 207 million and Disney+’s 103 million.

Kilar reportedly seeking an exit should surprise no one. His rash move to effectively sucker-punch exhibitors won’t be forgotten, and his near-dismantling of the venerable Warner Bros. Pictures movie studio — which has had a tradition of putting talent first — can, in retrospect, only be seen as misguided. Warner Bros. is — was — a diamond. Kilar is treating it as though it was costume jewelry.

The problem with chucking tradition and legacy and focusing solely on the hot new toy, subscription streaming, is that to compete in a market where there are already two or three strong, established leaders is a quixotic ploy. What do you do when you throw everything you have into a new venture, only to discover it may never be enough?

I find it ironic that AT&T CEO John Stankey remains the telecom’s point person on the WarnerMedia-Discovery deal. As much as he’d like to pin AT&T’s acquisition of Time Warner on his predecessor, Randall Stephenson, Stankey was the true architect behind the deal — just as he was behind an earlier botched venture, AT&T’s $67.1 billion purchase of DirecTV in 2015.

He’s got two strikes against him. I can hardly wait to see if there will be a third.

On the bright side, Zaslav is now in the unique position of being able to undo some of Kilar’s — and Stankey’s — missteps. He can start by following through on his promise to restore relationships with talent and hopefully give Warner Bros. back some of the luster it lost during those three miserable years under AT&T.

CEO Zaslav: WarnerMedia, Discovery Together ‘Best Media Company’ in the World

On the heels of AT&T and Discovery’s massive merger deal, Discovery CEO David Zaslav, who will head the new combined company, said the agreement, which combines the assets of Warner Bros., Turner and HBO with HGTV, Food Network and Animal Planet, among others, translates into the “best” media company in the world.

Zaslav said he and AT&T CEO John Stankey had been discussing a “singular vision” for some time over rounds of golf regarding media distribution in a burgeoning direct-to-consumer ecosystem.

“Simply put, these assets are better together,” Zaslav said on a conference call with reporters. “Together, we are the best global media company in the world … and believe the deal alters the growth profile of [AT&T and Discovery] in a material way. In an explosive way.”

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Zaslav said the merger would not only enhance the companies’ programming for its legacy pay-TV and broadcast channels, it would also ensure its place as a fully scaled differentiated global streaming platform.

“The combination [of HBO Max and Discovery+] will fully establish us as one of the leading direct-to-consumer streaming players worldwide,” Zaslav said.

Indeed, Discovery+ and HBO Max and HBO had a combined subscriber base of more than 57 million at the end of the most-recent fiscal period. That tally trails significantly when compared with Netflix, Amazon Prime Video and Disney+ with 207 million, 175 million and 103 million subscribers, respectively.

“The capabilities and overall optionality of each facet required to compete at the highest level of the direct-to-consumer playing field, is significantly higher when we’re together,” Zaslav said. “It’s a complicated and strategic roadmap that every single one of our peers is on.”

Complicated is an understatement. How HBO Max and Discovery+ will position themselves together remains uncertain. Zaslav contends the two platforms would be offered to consumers in a bundle similar to what Disney does with Disney+, Hulu and ESPN+.

“In terms of bundling … we’re going to do it differently,” he said.

Stankey said the deal puts WarnerMedia in a position to self-fund its growth going forward, while giving AT&T the ability to invest and address the growing demand for connectivity through 5G and fiber.

“At the highest level, this transaction is an opportunity to unlock value for shareholders on both sides of this deal,” Stankey said.

AT&T CEO Defends Warner Bros./HBO Max Movie Release Strategy, Says User Engagement Up 36% in Past 30 Days

AT&T CEO John Stankey Dec. 8 defended WarnerMedia’s landmark decision to release all 2021 Warner Bros. movies in theaters concurrently with subscription streaming video service HBO Max in the home. Speaking at the UBS Global TMT Virtual Investor confab, Stankey said the move was done in response to the “psyche of the population” during the ongoing pandemic that has decimated the theatrical business through mandated closures, limited seating at operating screens and wary moviegoers.

“We’re all participants in a market that serves customers,” Stankey said. “The longer-term impacts are going to be dictated by what consumers wish to do.”

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Contending the streaming video horse has “left the barn,” Stankey said response among existing HBO subscribers to Max continues to resonate. He said adoption is now 12.6 million subs, up from 8.6 million at the end of the most-recent fiscal period. Since launching HBO Max on May 27, AT&T has made the $15 monthly SVOD service free to its 42 million combined HBO pay-TV (and HBO Now) subs in the United States. Adoption of HBO Max has been slow, with fewer than 3 million HBO pay-TV subs signing up through June — a reality driven by confusing access rules and unavailability on the Roku platform.

By comparison, rival streaming service Disney+ generated almost 74 million subs globally in its first year.

Stankey said offering Warner’s theatrical slate in the home adds an incentive to subscribe to HBO Max while affording diehard moviegoers equal access.

“Customers have a tremendous amount of choice as to how they choose to engage with content,” Stankey said. “If we just simply sit here and say, ‘This is about whether or not people go to movie theaters,’ I think we’re missing the broader point. Today, even before WarnerMedia made this decision, customers could go watch great, two-hour content on a variety of competitive services. Customers are going to drive what happens in a market, ultimately.”

The executive said the distribution strategy could change should the new coronavirus vaccine pan out and consumers return to theaters.

“We’re not putting one [distribution channel] over the other,” Stankey said. “This to me seems like a very friendly and innovative approach.”

John Stankey: Live Sports Could Play Limited Role in HBO Max AVOD Rollout

With HBO Max looking to expand its presence in Latina America and Western Europe in 2021, WarnerMedia’s subscription streaming VOD platform will also tackle an ad-supported option going forward — that could include live sports.

Speaking on AT&T’s recent fiscal call, CEO John Stankey addressed a host of questions on Max and its relation to the existing pay-TV ecosystem, and its main draw: live sports. WarnerMedia’s TNT networks has major distribution agreements with the NBA, Major League Baseball and the NCAA Men’s Basketball National Championship Tournament.

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Stankey said that live sports will remain a unique pillar of pay-TV, which he contends will be the distribution channel’s key advantage when  cord-cutting reduces the pay-TV household footprint to around 50 million to 60 million in the coming years.

“Sports content is important to our linear business, our cable networks business to make sure we have enough of it that sustains that business and keeps it at attractive must-have offering, an offering that our customers want to have in that cable bundle,” Stankey said.

At the same time, AT&T’s online TV  platform, AT&T TV, and Max aim to push WarnerMedia content beyond premium television. And live sports could be part of the mix — as professional soccer, cycling is doing in Europe. Stankey said the concept of adding live sports to streaming video distribution is appealing.

“You’ll probably see as we move through AVOD, maybe we do some additional live work that we have coming forward,” he said.

But Stankey cautioned that any move would be complementary to pay-TV and not involve growing the company’s sports footprint to include additional leagues beyond e-sports and gaming. WarnerMedia recently launched “TNT Bets,” an online companion show available through the TNT app that features live-streamed feed of the games, commentary on betting analysis and odds.

“ELEAGUE,” the interactive gaming show that airs on TBS, just partnered with Amazon’s Twitch for “Super Punch,” an interactive show where fans can discuss the most relevant gaming topics of the day and week.

“Our goal is not to become known as the sports company,” Stankey said. “I don’t see going deeper in sports is the direction for WarnerMedia.”