WarnerMedia Re-Opens Tsujihara Inquiry Regarding Inappropriate Behavior

WarnerMedia has re-opened an internal investigation involving Kevin Tsujihara, chairman and CEO of Warner Bros., regarding allegations he traded sex for auditions with an aspiring actress.

Tsujihara, the former home entertainment executive who became CEO of Warner Bros. in 2013 when the studio was owned by Time Warner, had been previously investigated for inappropriate behavior involving British actress Charlotte Kirk.

That investigation reportedly found no inappropriate influence by Tsujihara. Kirk did land small roles in How to be Single (2016) and Ocean’s 8 in 2018, in addition to auditions for other Warner movies.

When details of the affair, including efforts by Tsujihara, director Brett Ratner and business partner James Packer to placate Kirk were made public March 6 by The Hollywood Reporter, WarnerMedia re-opened the investigation.

“Whenever we receive new allegations, it is our standard practice to conduct an appropriate investigation. And that is what we will do here,” a WarnerMedia representative said in a media statement.

Lawyers for both Kirk and Tsujihara deny the CEO exerted any preferential treatment or pressure on behalf of the actress.

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The inquiry comes as Tsujihara had his role at WarnerMedia expanded to include oversight of Cartoon Network, Adult Swim, Boomerang, Otter Media, Turner Classic Movies and WarnerMedia’s licensed consumer products.

Indeed, Tsujihara’s long history in digital content distribution dates back to the dotcom era where he spearheaded Warner’s short-lived Entertaindom platform.

In an interview 10 years ago, Tsujihara questioned traditional distribution in a rapidly evolving digital age. He pushed for early electronic sellthrough movie release dates ahead of DVD, arguing EST margins were better than packaged-media’s cash cow status. And he advocated for early access to theatrical movies in the home at a premium price, otherwise known as PVOD.

It’s a progressive mindset that over time convinced Time Warner CEO Jeff Bewkes to put Tsujihara in charge of Warner Bros., arguing his digital vision and recognition of alternative distribution channels outweighed the status quo at the venerable film studio.

A legacy Tsujihara nurtures to this day spearheading stacking rights of Warner TV content to distribution partners across the ecosystem.

“At Warner Bros., what we want to do is take the show and put it on the most appropriate platform,” Tsujihara told Deadline.com in an interview.

Tsujihara was a big supporter of the studios banding together to create a digital storage locker for movies, first championing UltraViolet and later joining the other majors, sans Paramount, in Movies Anywhere — a platform that links to seven online retailers, including iTunes, Amazon Instant Video, Vudu, Comcast’s Xfinity Store, Google Play, Microsoft Movies & TV and FandangoNow.

In an interview last month with the Los Angeles Times, Tsujihara reiterated continued support for PVOD, despite the fact most exhibitors and Wall Street analysts consider it a failed venture.

“It’s about finding the right platform for the content,” he said. “If consumers want to be able to experience [a movie] in the home sooner, then they should have that. That’s where we’d like to see the movie business go.”

Kevin Tsujihara: A Misplaced Asset at WarnerMedia

As the dust settles from WarnerMedia’s management shuffle, with former NBC Universal executive Bob Greenblatt assuming chairmanship of the media company’s entertainment unit, including budding over-the-top video – Kevin Tsujihara, chairman/CEO of Warner Bros., expanded his duties to include – consumer products?

It’s an odd career move for Tsujihara, whose long history in digital content distribution dates back to the dotcom era where he spearheaded Warner’s short-lived Entertaindom platform.

In an interview 10 years ago, Tsujihara questioned traditional distribution in a rapidly evolving digital age. He pushed for early electronic sellthrough movie release dates ahead of DVD, arguing EST margins were better than packaged media’s cash cow status. And he advocated for early access to theatrical movies in the home at a premium price, otherwise known as PVOD.

It’s a progressive mindset that over time convinced Time Warner CEO Jeff Bewkes to put Tsujihara in charge of Warner Bros., arguing his digital vision and recognition of alternative distribution channels outweighed the status quo at the venerable film studio.

A legacy Tsujihara nurtures to this day spearheading stacking rights of Warner TV content to distribution partners across the ecosystem.

“At Warner Bros., what we want to do is take the show and put it on the most appropriate platform,” Tsujihara told Deadline.comin a March 4 interview.

Tsujihara was a big supporter of the studios banding together to create a digital storage locker for movies, first championing UltraViolet and later joining the other majors, sans Paramount, in Movies Anywhere  – a platform that links to seven online retailers, including iTunes, Amazon Instant Video, Vudu, Comcast’s Xfinity Store, Google Play, Microsoft Movies & TV and FandangoNow.

In an interview last month with the Los Angeles Times, Tsujihara reiterated continued support for PVOD, despite the fact most exhibitors and Wall Street analysts consider it a failed venture.

“It’s about finding the right platform for the content,” he said. “If consumers want to be able to experience [a movie] in the home sooner, then they should have that. That’s where we’d like to see the movie business go.”

Regardless, as WarnerMedia readies a branded OTT platform, Tsujihara is tasked with creating consumer product opportunities for Cartoon Network, Adult Swim, Boomerang, Otter Media and Turner Classic Movies, among others.

“The lion’s share of their profitability comes from affiliate sales and advertising,” he told Deadline. “So a vertically integrated entity would say, ‘How can we drive more consumer products revenue from these properties?’”

Apparently Tsujihara is looking forward to the vertical challenge – one not unprecedented in home entertainment. Former Disney home entertainment executive Bob Chapek transitioned to consumer products following years of peddling home video.

Now he’s chairman of parks and resorts since 2015 and considered by some Disney’s next CEO when Bob Iger retires.

Maybe Tsujihara is on to something.

 

Report: Trump Personally Sought to Block AT&T/Time Warner Merger

Despite claims to the contrary, President Trump wanted to block AT&T’s $85 billion acquisition of Time Warner — largely for political reasons, according to a report by The New Yorker.

According to the publication, which cited a “well-informed source,” Trump in 2017 called on former economic advisor Gary Cohn and then-chief-of-staff John Kelly to personally ensure that the Justice Department filed a lawsuit against the merger — which it did in November, citing antitrust concerns.

Trump, on the 2016 campaign trail, had said the merger would be bad for the country. According to the New Yorker, Trump’s decision was largely due to his dislike for Time Warner’s CNN news division, which he often called “fake news” in response to critical reports of his administration.

“The President does not understand the nuances of antitrust law or policy,” a former unnamed official told the publication. “But he wanted to bring down the hammer.”

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When a U.S. federal court judge ruled in favor of AT&T, the DOJ filed an appeal, which was rejected last week by an appeals court. The merger resulted in the creation of WarnerMedia, which includes Warner Bros., HBO and Turner.

The intervention by the Justice Department raised eyebrows at the time as it represented the agency’s first since it successfully blocked AT&T’s $39 billion acquisition of T-Mobile in 2011.

Indeed, The New Yorker stated Trump had no objection to 21st Century Fox’s $71.3 billion asset sale to The Walt Disney Co. by longtime supporter Rupert Murdoch, whose Fox News business remains an influential media asset to the President.

Bob Greenblatt Named Chairman of WarnerMedia’s Entertainment Unit; Kevin Tsujihara’s Role Expanded

As expected, AT&T March 4 named former NBC Universal executive Bob Greenblatt chairman of WarnerMedia’s entertainment and over-the-top video businesses. Greenblatt reports to WarnerMedia CEO John Stankey.

Greenblatt, who left NBC Universal six months ago, joins the former Time Warner company following last week’s exits of HBO boss Richard Plepler and Turner’s David Levy.

Greenblatt oversees HBO, TNT, TBS, truTV, and the company’s over-the-top video business. Kevin Reilly remains in charge of Turner programming, in addition to spearheading WarnerMedia’s pending streaming video service.

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Meanwhile, longtime home entertainment executive Kevin Tsujihara remains chairman/CEO of Warner Bros., while adding responsibilities involving children and young adult viewers.

Specifically, Tsujihara will now also oversee Cartoon Network, Adult Swim, Boomerang, Otter Media, Turner Classic Movies and WarnerMedia’s licensed consumer products.

CNN president Jeff Zucker adds the title chairman of WarnerMedia news and sports, while Gerhard Zeiler transitions from president of Turner International to chief revenue officer at WarnerMedia.

“We have done an amazing job establishing our brands as leaders in the hearts and minds of consumers,” Stankey said in a statement. “Adding Bob Greenblatt to the WarnerMedia family and expanding the leadership scope and responsibilities of Jeff, Kevin and Gerhard — who collectively have more than 80 years of global media experience and success — gives us the right management team to strategically position our leading portfolio of brands, world-class talent and rich library of intellectual property for future growth.”

HBO Boss Richard Plepler Departs

Longtime HBO executive Richard Plepler is leaving the pay-TV channel, following a series of management changes underway at WarnerMedia that reportedly include bringing in former NBC Universal executive Bob Greenblatt as a senior executive reporting to CEO John Stankey.

Plepler, who joined HBO in 1992, helped greenlight myriad hits for the platform, including “Game of Thrones,” “True Detective,” “Veep” and “True Blood.” He also oversaw the launch of HBO Now, the standalone subscription streaming service.

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“Hard as it is to think about leaving the company I love, and the people I love in it, it is the right time for me to do so,” Plepler wrote in a memo to staff as reported by Variety. “In the past weeks, I’ve thought a lot about the incredible journey of this company in the nearly 28 years that I have been blessed to be here. It’s a journey of great pride and accomplishment because so many of you, and many others before us, have made HBO a cultural and business phenomenon.”

Plepler’s departure comes 48 hours after a federal appeals court upheld AT&T’s $85 billion acquisition of Time Warner. It also comes a day after AT&T CFO John Stephens told an investor group that the telecom’s senior management did not wish to upend the culture at the entertainment unit that includes HBO, Warner Bros. and Turner with further personnel changes.

“They [had] a CFO [Howard Averill] and we have a CFO. Those kinds of head-counting synergies have been achieved,” Stephens said.

Of course, the handwriting was on the wall ever since AT&T first closed the acquisition last summer. Stankey, in a town hall meeting with employees and Plepler, strongly intimated that the status quo at HBO would not continue.

The executive said he sought to make HBO programming habitual in a market driven by portable devices that capture consumer attention “every 15 minutes.”

“It’s going to be a tough year,” Stankey said at the time. “It’s going to be a lot of work to alter and change direction a little bit.”

 

CFO: WarnerMedia Asset Better Than Expected; Disney Eyeing AT&T’s Hulu Stake

A day after a federal appeals court ruled in favor of AT&T’s $85 billion acquisition of Time Warner, resulting in the creation of WarnerMedia, CFO John Stephens said ownership of the parent to Warner Bros., HBO and Turner has been a fiscal home run.

“It’s turned out to be an asset that may be better than we expected. And we expected a lot,” Stephens told an investor group.

Speaking Feb. 27 at the Morgan Stanley technology, media and telecom conference in San Francisco, Stephens attempted to shoot down media speculation that layoffs and additional cost cutting would occur following the court’s decision.

“We’ve been very careful to set up a separate operating unit [with WarnerMedia] that’s a lot like Time Warner,” he said. “We wanted to protect the culture, we [didn’t] want a finance bean counter from a telephone company go in to what is a tremendously good asset.”

Stephens said results over the past nine months at WarnerMedia have been “consistently” good. They continue to generate cash, they continue to generate value, produce some great-value content.

“The performance of the people at Time Warner … I couldn’t be more pleased with,” he said.

Indeed, through Feb. 24, Warner Bros., led by Aquaman and Clint Eastwood’s The Mule, continues to top all studios at the domestic box office with 22.4% market share and $313.4 million in revenue, according to BoxOfficeMojo.com.

“They continue to generate cash, they continue to generate value … produce some great-value content,” Stephens said. “Sharing that really high-quality content is important.”

From a M&A perspective, he said supply-side integration, marketing, data analytics would be combined without infringing upon WarnerMedia’s culture.

“They [had] a CFO [Howard Averill] and we have a CFO. Those kinds of head-counting synergies have been achieved,” Stephens said.

Stephens said he expects the final season of “Game of Thrones” to drive HBO Now subscribership. He said AT&T is considering putting HBO on unlimited mobile wireless packages – with the increased revenue used to fund additional content spend.

“There’s benefits there that can fund some of those things,” Stephens said. “We want to have that same kind of [‘Thrones’] excitement year round.”

Separately, Disney is reportedly in discussions with AT&T to acquire its 10% stake in Hulu. When combined with Fox’s 30% interest, Disney could control 70% of the SVOD and online TV platform, along with Comcast’s 30% stake.

 

 

 

 

Appeals Court Denies DOJ Bid to Block AT&T’s $85 Billion Time Warner Purchase

A federal appeals court Feb. 26 ruled against the Justice Department’s attempt to block AT&T’s $85 billion acquisition of Time Warner, which led to the formation of WarnerMedia.

The court found that a lower court judge’s decision last summer approving of the transaction did not violate antitrust guidelines.

“The judgment of the district court appealed from this cause is hereby affirmed,” the court wrote in its ruling.

The Justice Department had argued that the merger would enable AT&T, which also owns DirecTV, to leverage its stake in the satellite operator to force pay-TV competitors to pay more for content from Warner Bros., HBO and Turner, which includes CNN.

Some observers speculated the government’s attempt to block the deal revolved more around President Trump’s openly hostile approach to CNN, which he has labeled “fake news,” and, along with other media outlets not named Fox News, an “enemy of the people.”

Indeed, the DOJ’s legal challenges represented the first to a corporate vertical merger in four years.

 

Warner Bros.’ Record Box Office Drives WarnerMedia’s Banner 2018

Spurred by Warner Bros.’ record $5.5 billion global box office, WarnerMedia generated more than $9.2 billion in revenue in 2018 — up nearly 7% from revenue of $8.6 billion when the company operated as Time Warner prior to the closing of AT&T’s $85 billion acquisition.

The media company comprising Warner Bros., HBO, Turner and Otter Media, posted Q4 operating income of $2.7 billion; and $5.69 billion for the year.

The company said it generated $564 million in fourth-quarter (ended Dec. 31, 2018) revenue from the sales of video games and home entertainment, which was down nearly 15% from revenue of $682 million in the previous-year period. For the year, revenue dropped nearly 45% to $1.08 billion from $1.93 billion in 2017.

Sales of packaged media and digital from movies and TV shows topped $1.56 billion and $416 million, respectively, in the previous-year quarter under Time Warner. WarnerMedia does not breakout home video revenue.

In 2018, Warner Bros. theatrical revenue was driven led by Ready Player One and the fourth-quarter releases Fantastic Beasts: The Crimes of Grindelwald and Aquaman, the latter grossing nearly $1.1 billion at the global box office to date.

Warner Q4 revenue topped $4.5 billion and included revenue of $2.1 billion from theatrical product, $1.8 billion from television product and $564 million from video games and home entertainment. Operating expenses totaled $3.7 billion, and the operating income margin was 18.1%.

HBO revenue in the quarter reached $1.7 billion and included $1.4 billion of subscription and $259 million of content and other revenue. Operating expenses totaled $1.1 billion and the operating income margin was 37.2%.

Turner Q4 revenue reached $3.2 billion, compared to $107 million in the fourth quarter of 2017. Revenue during the quarter included $1.8 billion of subscription revenue, $1.1 billion of advertising and $219 million of content and other revenues. Operating expenses totaled $1.9 billion, compared to $59 million in the fourth quarter of 2017. Turner’s operating income margin was 40.2% compared to 44.9% in the year-ago quarter.

The increases were predominantly due to the June 2018 acquisition of Time Warner.

 

AT&T Posts 267,000 DirecTV Now Q4 Subscriber Losses

Stop the funeral for pay-TV.

AT&T’s signature alternative — broadband-based DirecTV Now — suffered a major blow in the fourth quarter, ended Dec. 31, 2018.

The telecom Jan. 30 reported that the standalone online TV service lost 267,000 subscribers compared to gains of 368,000 subs in the previous-year period. The period included 65,000 free trial subscriptions.

AT&T attributed the decline to ending the service’s $35 monthly promotional pricing.

The tally does not include WatchTV, AT&T’s recent app-based $15 online TV service, which ended the year with 500,000 subscribers.

DirecTV Now ended the year with 1.59 million subs compared to 1.15 million subs at the end of 2017.

The subscriber loss is a shot across the bow for online TV, which launched in 2015 with Dish Network’s Sling TV. Hailed as an antidote to declining pay-TV – and SVOD – online TV offered premium TV channels without long-term contract at a fraction of the price of the traditional cable bundle.

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Yet, AT&T’s legacy U-verse pay-TV service added 12,000 subscribers, compared to a loss of 60,000 video subs last year. The distribution channel ended the year with 3.68 million subs compared to 3.63 million at the end of 2017.

The company ended the year with 14.4 million high-speed Internet subscribers, which was up a scant three-tenths of a percent from 14.35 million at the end of 2017.

Meanwhile, satellite service DirecTV lost 403,000 subscribers in the quarter – up 274% from a loss of 147,000 subs in the previous-year period.

El Segundo, Calif.-based DirecTV ended the year with 19.2 million subs – down 6% from 20.4 million subs at the end of 2017.

For AT&T CEO Randall Stephenson, reducing the company’s $183 billion debt load following the $85 billion acquisition of Time Warner is the No. 1 goal in 2019.

“In 2018, we generated record free cash flow while investing at near-record levels,” Stephenson said in a statement. “Our dividend payout as a percent of free cash flow was 46% for the quarter and 60% for the year, allowing us to increase the dividend for the 35th consecutive year. This momentum will carry us into 2019 allowing us to continue reducing our debt while investing in the business and continuing our strong record for paying dividends.

 

Trump’s Attorney General Nominee to Recuse Himself from AT&T/Time Warner Appeal

William Barr, President Trump’s pick to replace Jeff Sessions as U.S. Attorney General, reportedly is set to recuse himself from the Department of Justice’s ongoing appeal of AT&T/Time Warner merger.

Barr, who is set to appear before the Senate Judiciary Committee for confirmation hearings, has about $1.2 million in AT&T stock, according to financial disclosures reported by Reuters.

Barr also served on the Time Warner board from 2009 to 2018 when it was acquired by AT&T for $85 billion.

As Attorney General, Barr would oversee the government’s antitrust appeal, which claims the merger that created WarnerMedia is bad for consumers and that the federal judge in the original case erred in applying the law.

Reuters reports Barr informed Senator Amy Klobuchar (D-MN) of his decision.

“He told me he was going to recuse himself from the Time Warner-AT&T appeal because he was involved in that, the Time Warner side,” Klobuchar said.