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.”

WarnerMedia Inks Shaquille O’Neal to Multi-Platform Deal

WarnerMedia’s Turner Sports has signed NBA Hall of Famer Shaquille O’Neal to multiyear extension that will expand the outsized personality’s media scope beyond the hardwood.

A 15-time NBA All-Star and four-time NBA Champion, O’Neal will continue in his role as studio analyst for TNT’s Sports Emmy Award winning “Inside the NBA,” along with the “NBA on TNT Tuesday Night” franchise.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

He’ll also appear on NBA TV and contribute to NBA.com. His NBA TV airtime will include a new show in development on “The Business of Basketball,” with more details to be announced at a later date. O’Neal will expand his “Shaqtin-a-Fool” franchise to include new genres and platforms, contribute podcasts to the WarnerMedia Podcast Network.

“Shaq is so critical to our success, and such a huge part of the heart and soul of our coverage,” Jeff Zucker, chairman, WarnerMedia News and Sports, said in a statement.

Tara August, SVP of talent services and special projects at Turner Sports, said O’Neal’s appeal to consumers resonates beyond sports.

Follow us on Instagram

“His fun, infectious personality is engaging, entertaining and beloved by fans,” August said. “We’re thrilled to extend and deepen our relationship with him for many years to come.”

WarnerMedia CEO Not Concerned With HBO Max Sluggish Start

Speaking recently on CNBC’s “Squawk Box,” WarnerMedia CEO Jason Kilar said he is “not at all concerned” with the slow start for subscription streaming service HBO Max, saying the platform was in a “really good position” based on previous estimates.

“If you look at last year at what we hoped we would be at the end of 2020, which is 36 million HBO and HBO Max subscribers, we announced just recently we are already north of 36 million, and obviously the number is going up every day,” Kilar said.

Kilar was hired May 1 to aggressively guide the former Time Warner company into the digital age — underscored by the May 27 launch of HBO Max. Since an initial observation period, Kilar has implemented massive corporate downsizing resulting in the elimination of about 600 positions across Warner Bros., Turner (except CNN) and HBO.

The former Hulu founder brought in fellow Hulu alum Andy Forssell as GM, spearheading marketing, consumer engagement and worldwide rollout of Max in a crowded SVOD market dominated by Netflix, Amazon Prime Video — and Disney-owned Hulu.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Despite HBO’s brand recognition, subscriber/consumer adoption of Max has been slow. The service has attracted about 4.1 million subs through parent AT&T’s most-recent fiscal period, despite HBO having more than 35 million existing pay-TV subs. Undermining conversion efforts are ongoing negotiation challenges between WarnerMedia, Roku and Amazon Fire TV — the latter two key to third-party OTT video consumer adoption.

Follow us on Instagram

Consumer adoption of Max pales in comparison to Disney+, which attracted 10 million sign-ups in its first 24 hours last November, and now has more than 60 million subscribers. In addition, NBCUniversal’s upstart Peacock service has generated more than 10 million subs. NBCUniversal owns CNBC.

Kilar argued that when comparing “apples to apples,” Peacock subscriber conversion of linear-TV subscribers isn’t demonstrably better than Max. He said Disney+, on the other hand, has the advantage of leveraging a 100-year-old family brand known globally.

“[Disney] did exactly what they should have done and kudos to them,” Kilar said. “Ours is a very different journey. I would argue ours is a bigger outcome because we are going after all members of the family. The opportunity is bigger, but it does mean the journey is going to be different because we don’t have a 100-year-old surgically-precise brand around families, specifically with kids under the age of 9.”

Kilar was asked if the HBO brand has become confusing to consumers due to the myriad access points, including HBO, HBO Go, HBO Now and Max. He agreed, saying both HBO Go and HBO Now are being “sunsetted,” with the end result continuing to drive users to HBO and the brand’s quality of programming.

“We want people to think of our stories as being a cut above,” Kilar said.

Ron Sanders Exits WarnerMedia, After Storied Career, in Management Reorganization

Veteran Warner Bros. Home Entertainment executive Ron Sanders is among a group of key executives who are leaving the company in the wake of a management restructuring implemented by new WarnerMedia CEO Jason Kilar.

Sanders, president of Warner Bros. worldwide theatrical distribution, and president of Warner Bros. Home Entertainment, has been an integral part of the studio’s retail management for nearly 30 years.

Sanders joins Jeffrey Schlesinger and Kim Williams as the latest high-profile executives among a reported 600 employees let go following the Aug. 7 departure of Bob Greenblatt and Kevin Reilly.

The latest cuts were first reported by The Wrap.

Sanders was named president of worldwide distribution for the entire motion picture group in January 2018, retaining his responsibilities as home entertainment chief. In that role, which he assumed in 2013, he oversaw the global distribution of home entertainment products from Warner Bros. Pictures Group, Warner Bros. Television Group and Warner Bros. Interactive Entertainment. He was also responsible for the studio’s video game publishing business, and helped build WBHE into the industry’s largest digital distributor of films and TV shows through VOD and EST.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“Ron is an exemplary executive and Warner Bros. was lucky to have him as one of their senior leaders for so long,” said Amy Jo Smith, president and CEO of DEG: The Digital Entertainment Group, where Sanders had held several key leadership roles, including chair. “Ron played a key role in guiding and growing DEG and we will also be grateful for his involvement, his support and his scruples. He’s such a good guy.”

Sanders joined what was then Warner Home Video in 1991 and learned the business from some of the most talented executives of the day, led by then-division president Warren Lieberfarb.

“I hired Ron from Procter & Gamble, where he was a regional sales manager, and nurtured his growth,” said Warren Lieberfarb, hailed as the “father” of DVD. “I promoted him over the years, and he was eminently qualified. I am sure the future will offer him many more opportunities.”

According to a column by Media Play News publisher and editorial director Thomas K. Arnold, “The 1990s were a remarkable time in home entertainment: We saw the rise of sellthrough, the development of direct sales and, of course, the launch of DVD, birthed at Warner by Lieberfarb and his team. … Anyone who knows Ron Sanders, who has worked alongside him, knows how incredibly hard it is to dislike him. When he says something, he means it. When he makes a promise, he follows through. He looks you in the eyes when he speaks to you; he is passionate about the industry, about Warner Bros., about business, about life.”

Sanders ran Warner’s rental business during the tumultuous mid-1990s period of consolidation and copy-depth incentives. He moved into consumer sales just as DVD was taking off and in July 1998 was sent to London as managing director of the United Kingdom and Ireland divisions. A year and a half later, he was promoted to head of the entire EMEA (Europe, Middle East and Africa) region, overseeing Warner’s home video operations in 28 territories.

He returned to the United States in 2002 and was appointed president of Warner Home Video in October 2005. In May 2013 he was named president of Warner Bros. Worldwide Home Entertainment Distribution, with oversight of the global distribution of home entertainment products from Warner Bros. Pictures, Warner Bros. Television, and Warner Bros. Interactive Entertainment (WBIE).

“Throughout this well-deserved rise, Sanders has remained remarkably grounded,” Arnold wrote in his column. “He and I used to swap stories about chauffeuring our kids to soccer games. … Mindful of his experience living with his family in London, Sanders endowed a study abroad program at his alma mater, Auburn University, where he also served on the Harbert College of Business Advisory Council.”

WarnerMedia CEO Jason Kilar Shakes Up Management; Kevin Reilly, Bob Greenblatt Out

Former Hulu CEO Jason Kilar was hired 90 days ago to shake up WarnerMedia and make the branded upstart SVOD service HBO Max competitive with Netflix, Amazon Prime Video, Disney+, Peacock — and Disney-owned Hulu.

Kilar took a major step Aug. 7, letting WarnerMedia chairman Bob Greenblatt and Kevin Reilly, chief content officer for HBO Max and president of TNT, TBS and truTV, go in a major management reorganization. Andy Forssell, who worked with Kilar at Hulu, has been hired to oversee Max.

Jason Kilar

Warner Bros. CEO Ann Sarnoff, who replaced Kevin Tsujihara, and Casey Bloys, president of programming at HBO, will spearhead a combined oversight of studios and networks. No other management changes were disclosed.

Greenblatt and Reilly are industry veterans, with the former leaving NBCUniversal to help launch Max. Reilly has held executive positions at NBC, Fox, FX and Turner.

Kilar, who outlined the changes in a letter to staff, outlined five areas he seeks to improve: HBO Max’s scope and importance within the company; simplifying studio internal structure; creating a consolidated International unit focused on scale and efficiency; bringing our key commercial activities into one group; making other structural changes for efficiency and company effectiveness.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The management changes aren’t surprising since Max launched with what some observers have characterized as an underwhelming consumer response. AT&T CEO John Stankey said Max generated 3 million subs through the second quarter, ended June 30, adding another one million thus far in the current quarter. With more than 30 million HBO pay-TV subs, including HBO Now, the conversion rate is disappointing.

“Because of the gift that is the Internet, we have what I believe is one of the greatest opportunities in the history of media, which is to deliver our beloved stories and experiences directly to hundreds of millions of consumers across the globe,” Kilar wrote. “The pandemic’s economic pressures and acceleration of direct-to-consumer streaming adoption places an even higher premium on these points.”

‘HBO Now’ Rebrands to ‘HBO’ on Amazon Fire TV; No Deal Yet on HBO Max

HBO Now, the subscription streaming video service launched in 2015, is slowly being absorbed into the HBO brand — and ultimately HBO Max.

WarnerMedia July 30 disclosed it has reached a deal with Amazon for continued support of HBO Now for Amazon Prime members. The new deal, which replaces an agreement set to expire July 31, will give subscribers continued access through a standalone app and via Amazon Channels beginning Aug. 1. The extension mirrors an agreement between WarnerMedia and Roku for HBO Now access on the streaming media device’s platform.

Distribution of HBO Max on Amazon Fire TV and Roku, however, remains unresolved. On AT&T’s fiscal call, CEO John Stankey said about 3 million Max subscribers accessed the platform through WarnerMedia, leaving more than 33 million HBO subs in the U.S. who have yet to activate the free Max app.

Amazon founder/CEO Jeff Bezos July 29 was asked before the House Anti-Trust Subcommittee whether the e-commerce behemoth uses its “gatekeeper” status to extract content and other giveaways from WarnerMedia in exchange for allowing Max on Fire TV.

Bezos said he did not know the details of the negotiations but said he thought a deal would eventually be produced. He said there could be scenarios, “if we’re just talking in the abstract,” where it could be inappropriate for Amazon to withhold access and other scenarios where it would be “very normal business and very appropriate” to deny access.

“I think this is kind of  [negotiating between] two large companies … is kind of normal,” Bezos said.

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.

Follow us on Instagram

“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.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.”

WarnerMedia: HBO and HBO Max Subs Top 36.3 Million

Following the May 27 launch of HBO Max, observers have been on high alert for any subscriber data from the upstart subscription video-on-demand platform. They’ll have to keep waiting for now.

WarnerMedia July 23 disclosed it had 36.3 million combined U.S. subscribers to HBO Max and HBO, up from 34.6 million on Dec. 31, 2019. It isn’t clear whether the 1.7 million sub increase is related to Max exclusively or a combination of HBO, HBO Now and HBO Max. In the quarter, WarnerMedia announced it would shutter HBO Go, which enabled HBO pay-TV subs on-demand access to programming.

WarnerMedia is the company formed by AT&T’s acquisition of Time Warner, including Warner Bros., HBO and Turner.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Regardless, the coronavirus pandemic continues to negatively impact entertainment companies not named Netflix. WarnerMedia reported second-quarter operating income of $1.9 billion, which was down 18.4% from operating income of $2.32 billion during the previous-year period. Revenue plummeted 23% to $6.8 billion from $8.83 billion last year.

Warner revenue for the quarter dipped 3.9% to $3.3 billion from revenue of $3.43 billion in the previous-year period. The decline was driven by the absence of theatrical releases, lower video game and other revenue, partially offset by higher television revenue, including internal sales to HBO Max — WarnerMedia’s new subscription streaming video-on-demand platform.

Follow us on Instagram

Studio operating expenses totaled $2.6 billion, down 11.1% from $2.92 billion last year. The decline was primarily due to the production hiatus and lower marketing expenses partially offset by higher film and production costs associated with HBO Max sales.

HBO revenue dropped 5.2% to $1.6 billion from $1.68 billion, driven by lower subscription revenue due to domestic linear subscriber declines, partially offset by growth in digital and international, including HBO Latin America following WarnerMedia’s May acquisition of the remaining interest in this entity.

Content and other revenue also decreased as a result of lower content licensing. HBO operating expenses totaled $1.5 billion, up 32.5% versus the second quarter of 2019, driven by increased programming expenses related HBO Max.

Turner revenue for the second quarter dropped 12.4% to $3 billion from $3.42 billion, driven by lower advertising revenue primarily from the postponement of the NBA season. Subscription revenue declines were also down due to lower regional sports network revenues and unfavorable foreign exchange rates.

Operating expenses totaled $1.4 billion, down 37.2% from $2.23 billion last year, driven by the timing of sports costs associated primarily with the delayed NBA season.

FuboTV Drops WarnerMedia Content, Raises Subscription Prices

Online television service FuboTV has joined other digital TV platforms raising prices while at the same time restricting access to select third-party content. The service is bumping up the monthly fee $5 across its bundles: Base ($59.99), Family Bundle ($64.99), and Ultra ($84.99) — emulating a recent 30% price hike by Google-owned YouTube TV.

Online TV pioneer Sling TV remains the only platform that has not raised prices.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“Sometimes to help us bring you new channels at the best value, and to deliver premium features like live sports in 4K, we need to remove other channels and adjust subscription prices,” Fubo said in a media statement. “Turner networks will be leaving as of July 1, and subscription prices will be changing.”

Indeed, 11 channels from WarnerMedia and Turner have been dropped, including TNT, TBS, CNN, CNN International, CNN en Español, HLN, Cartoon Network, Adult Swim, Turner Classic Movies, truTV and Boomerang, when a carriage agreement couldn’t be reached.

Follow us on Instagram

“We are disappointed that our deal with fuboTV is not being renewed, as we have been working with them and were open to a potential renewal,” WarnerMedia said in a statement.

Meanwhile, FuboTV has added Disney content, including ESPN, ESPN2, ESPN3, ABC, ABC News Live, Disney Channel, Disney Junior, Disney XD, Freeform, SEC Network and ACC Network, FX, FXX and National Geographic, among others.