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.”

AT&T CEO: ‘Tenet’ Theatrical Release No Fiscal Home Run

Warner Bros.’ return to theatrical distribution remains a work in progress due to the ongoing coronavirus pandemic keeping theaters in key markets closed.

Speaking on the company’s Oct. 22 fiscal call, AT&T CEO John Stankey said he’s “breathing a lot easier now” about the restart of movie and TV productions at Warner, which he said totaled about 130 through the previous week from the pre-pandemic tally of 180 in February.

“We’re well back up [into production],” Stankey said, adding that he didn’t think production needed to return to the previous 180 count based on renewed “rationalizations” regarding market realities.

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“The confidence of employees [working on sets] is growing day by day, so feel good about where that’s at,” he said. “Think we’re out of the woods from the dead cold of the pandemic. That’s going to help our products, most importantly HBO Max.”

The theatrical business, however, is a different reality.

“That’s still one of the things we don’t have great visibility on,” Stankey said.

Prodded by director Christopher Nolan’s penchant for theatrical releases, Warner Sept. 4 launched espionage thriller Tenet in theaters worldwide. While ticket sales were respectable overseas, domestic revenue was not, generating just $50.6 million, or about 15% of the movie’s $334 million global take. The movie reportedly had a $200 million production budget.

“I can’t tell you that we walked away from the Tenet experience saying it was a home run,” Stankey said. “[But] I’m happy we did it.”

The CEO said the studio has had “some experimentation” on distribution, which included forays into early transactional VOD and premium VOD access in the home — the latter around animated movie Scoob!.

“We tried a few things,” Stankey said, without elaborating. “We learned things we can do. I believe if theaters were open nationwide, [if] California and New York were open, we would have some latitude to be able to do some of these geographical releases.”

He said the winter holiday period would be the next “checkpoint” as to whether Warner could move content back into theaters, which Stankey said remains the most ideal distribution channel for major tentpole titles.

“At the same time, we’re expecting this be incredible choppy moving into next year,” he said. “We’re not optimistic … expecting a big recovery in theatrical movement in the early part of next year.”

Stankey expects the theatrical waters to remain “choppy” well into 2021, which he said translates into evaluating all “of our [distribution] options,” including studio teams working the Plan A, Plan B and Plan C plans.

“As we get through the next month or two, we’ll pull the cards on the [plans],” he said.

AT&T CFO John Stephens estimates COVID-19 has had a $1.6 billion negative impact on WarnerMedia, the organizational umbrella that includes Warner Bros., HBO and Turner.

CEO: AT&T Turning the Page on Pay-TV; Embracing Streaming Video, Broadband

AT&T, like Comcast Cable, has been hemorrhaging pay-TV subscribers in recent years. The corporate owner of DirecTV and AT&T U-verse lost about 4 million combined subscribers in 2019, which included former online TV service DirecTV Now as consumers increasingly cut the cord in search of cheaper over-the-top video alternatives.

In response, subsidiary WarnerMedia rolled out subscription streaming platform HBO Max on May 27, with a planned ad-supported VOD option set for 2021. Speaking from the corporate office Sept. 15 during the Goldman Sachs 29th Annual Communicopia Conference, CEO John Stankey said the linear pay-TV business afforded the telecom upwards of 28% household share, which he said doesn’t work in today’s connectivity/entertainment ecosystem.

John Stankey

Stankey said rollout of HBO Max and requisite high-speed Internet business could result in AT&T having upwards of 70% household share going forward.

“We really need products and services that maybe have different characterization within the home,” Stankey said. “Hopefully a little bit lower price point that can be in more households and I think that’s why HBO Max is so attractive.”

The executive said he couldn’t be more pleased with the Max rollout despite scuttlebutt the service has underperformed with consumers and existing HBO subscribers indifferent to switching platforms. Stankey said comparing Max with Netflix or Disney+ is counterproductive, adding that Disney had a very different “set of plays to run” than WarnerMedia and AT&T had available.

“We’ve done incredibly well … growing the combination of HBO and HBO Max customers,” Stankey said. “HBO had been stagnat[ing] at a [certain] customer count. The only time it went up a little bit was when a new season of ‘Game of Thrones’ would come out, and then it would kind of work back down the backside.”

The CEO said hours of engagement among Max subs is higher than for HBO pay-TV subs, without elaborating on the number of actual Max members.

“And that’s a good thing for the future, because the more times a week, the more times a day that a customer wants to go and touch an [Max, AT&T] application, the more relevant you’re going to be over time,” Stankey said.

He said Warner Bros. remains in the “middle innings” of a “nine-inning game” understanding the COVID-19 impact on theatrical distribution. Stankey said the studio would continue experimenting with all avenues of distribution, including premium VOD, transactional VOD and theatrical going forward.

Indeed, Warner Bros. again delayed the sequel Wonder Woman 1984 until Christmas Day, from Oct. 2, the previous date to which it was delayed.

“We’ve got a few more to play out,” he said. “And I don’t think we’ll know exactly how it plays out until we’re ‘back to normal,’ where people are moving around in society without fear of risk and that means the concentration of the number of people getting into a building.”

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.”

Stankey: Movie Industry ‘Better Served’ With Alternative Distribution Options

With major theatrical exhibitors pushing back re-opening screens to consumers due to surges in coronavirus infections in parts of the country, WarnerMedia continues to re-evaluate how it will distribute its slate of new-release movies.

Speaking on the July 23 AT&T fiscal call, CEO John Stankey said he welcomed alternate distribution channels afforded studios and consumers during the pandemic. The successor to CEO Randall Stephenson was asked if Warner Bros. would delve further into releasing movies direct to consumers in their homes — beyond the May 15 offering of animated Scooby-Doo movie Scoob!

Stankey said he would be surprised if “coming out of COVID” the movie industry didn’t see “some adjustment” how new titles are distributed beyond the traditional 90-day theatrical window.

While stressing that theaters continue to play an important role in the distribution of studio movies, including titles such as director Christopher Nolan’s espionage thriller Tenet, which Stankey contends is meant to be seen on the big screen rather than in the living room, the executive said ongoing uncertainty on the market’s return to normal forces a reboot of traditional distribution.

“I don’t know when theaters are going to re-open,” Stankey said. “There’s no question the longer this [shutdown] goes on, there’s going to be some content on the margin [that we look at and] say, ‘it may be better served’ to be distributed in another construct. I love the fact we have that option now.”

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Stankey said premium VOD and subscription streaming video platform HBO Max afford studios distribution options for previously earmarked theatrical releases. Will Wonder Woman 1984 head to PVOD? Stankey doesn’t think so.

The sequel to the 2017 hit Wonder Woman, the new franchise installment from director Patty Jenkins, was supposed to open on June 5, was later moved to Aug. 14, and is now slated for October in the United States.

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“I would be very surprised if that was the case,” he said. “We’re going to take a piece at a time. It’s nice to have the [D2C] reality.”

Without naming titles, Stankey reiterated Warner’s current box office slate has been “retooled” for direct-to-consumer distribution.

“Yes, there are going to be some shifts as we move forward here,” he said.