WarnerMedia Boss Looking for Larger OTT Video Audience

Size matters to WarnerMedia CEO John Stankey. The new boss at the former Time Warner (Turner, HBO and Warner Bros.) wants to bring scale to WarnerMedia’s slate of pending and existing direct-to-consumer platforms.

And that begins with HBO. As has been previously reported, Stankey seeks to up the premium channel’s original content slate through increased spending and year-round releases.

“My goal is to give the HBO team the resources to greenlight additional projects already in the development funnel,” Stankey said on the July 24 fiscal call. “That would keep consumers from jumping in-and-out of [HBO Now]. If we can smooth [program] scheduling, then we drive down churn, improve retention and subscriber growth.”

Second-quarter (ended June 30) operating income at HBO remained essentially flat at $530 million. Growth in revenue was offset by increased expenses, including programming and marketing costs. Programming expenses increased 15% due to higher original and acquired programming costs. The increase in marketing costs was related to original programming. Operating income included $39 million of costs related to the AT&T merger.

AT&T CEO Randall Stephenson said traditional and new-age media companies are all pursuing the same goal of selling directly to consumers.

“The modern media company must develop extensive direct-to-consumer relationships,” he said. “And we think pure wholesale business models for media companies will be really tough to sustain over time. The recent valuations of media companies are reinforcing this point.”

Both Stephenson and Stankey contend bundling WarnerMedia brands is the best way to bring larger audiences to individual OTT platforms. AT&T has about 170 million customers across its various distribution channels, including mobile, satellite, broadband and telecom.

“If you put CNN.com, Otter Media (which AT&T co-owns with The Chernin Group) and Bleacher Report together, there are almost 200 million unique monthly users to each of those sites,” Stephenson said. “This is a scaled direct-to-consumer business.”

The CEO believes that personalizing content and advertising through OTT video will create “unique” consumer experiences.

“It’s pretty exciting,” Stephenson said.

Stankey said that since the close of the $85 billion Time Warner acquisition, corporate has been busy with the “blocking and tackling” that comes with a merger, including integrating corporate and staff functions, and aligning corporate management as part of $2.5 billion in group synergies.

The executive wants to expand audiences for OTT ventures, including HBO Now and recently launched DC Universe platform.

“They’re all good within their own right, [but] they generate what I would consider to be small-scale audiences,” Stankey said. “A company our size, we want to be generating audiences in the tens of millions. Not in the single-digit millions.”

The executive believes WarnerMedia’s strong brands are more powerful when bundled together than as stand-alone properties.

“So, over time we are going to think about how the discreet brands we have [can be unified] into a more consistent, more-focused experience,” he said. “That starts to bring some scale.”

 

WarnerMedia Home Entertainment Ends Q2 with 18.2% Market Share

WarnerMedia (previously Time Warner) July 24 reported select second-quarter results (ended June 30) following its acquisition by AT&T.

Warner Bros. reported operating income of $256 million, up from $225 million operating income during the previous-year period — and excluding $81 million of costs related to the AT&T merger. Revenue increased 11% ($318 million) to $3.3 billion.

Theatrical revenue was essentially flat as the prior-year (2017) quarter included a more favorable mix of home entertainment and theatrical releases, which was offset by higher television licensing revenue of theatrical product in the current-year quarter.

WarnerMedia (Warner Bros., HBO and Turner) no longer reports physical and digital sales of Warner Bros. or HBO original titles. The company said sales of DVD, Blu-ray Disc and digital titles helped home entertainment finish the period with 18.2% market share, No. 2 in the market behind Walt Disney Studios Home Entertainment.

Second-quarter Warner home entertainment releases included Father Figures, Paddington 2, 12 Strong, The 15:17 to Paris, Game Night and Tomb Raider. That compared with Fist Fight, The Lego Batman Movie and CHiPs in the previous-year period.

Paddington 2 has generated packaged-media sales of $3.2 million on 165,000 discs since its April 24 retail release, according to The-Numbers.com.

Current third-quarter packaged-media releases include Rampage (July 17), Ready Player One (July 24), Life of the Party (Aug. 7), Tag (Aug. 28) and Ocean’s 8 (Sept. 11).

HBO Home Entertainment second-quarter releases included Ballers: The Complete Third Season and Vice Principals: The Complete Series. That compared to Veep: The Complete Fifth Season, Silicon Valley: The Complete Third Season, Divorce: The Complete First Season and The Young Pope: The Complete First Season in the previous-year period.

Heading into the 2018-19 television season, Warner Bros. Television is producing more than 75 series across all networks and services, its highest number ever, and is producing 34 shows for the broadcast networks, 23 of which are returning series.

WarnerMedia Boss: HBO Has to Up its Game

NEWS ANALYSIS — The status-quo at HBO apparently isn’t good enough for the new boss at WarnerMedia — AT&T’s corporate shell comprising Turner, Warner Bros. and HBO following its $85 billion acquisition of Time Warner.

The award-winning premium network behind “Game of Thrones,” “Big Little Lies,” and “Westworld,” has to increase “hours of engagement,” John Stankey, who replaced Time Warner CEO Jeff Bewkes at WarnerMedia, reportedly told a company townhall meeting with HBO CEO Richard Plepler last month following the merger.

As reported by the New York Times, Stankey wants HBO programming to become habitual in a consumer market he says is driven by portable devices that capture their attention “every 15 minutes.”

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

Tough words to hear for a signature network that has 40 million domestic subscribers (nearly 150 million globally) and was often lauded by Bewkes (a former boss at HBO) during his fiscal calls.

Specifically, Stankey believes increased consumer interaction with programming will generate data, which he says enables better monetization of content and is “very important to play in tomorrow’s world.”

With HBO spending about $2 billion on original content — a quarter what Netflix is spending — Stankey hinted operating budgets could be increasing.

He said HBO would have to transform from a boutique operation to generating content that has wider appeal.

“We need hours a day,” Stankey said. “It’s not hours a week, and it’s not hours a month. We need hours a day.”

Indeed, HBO Now, the standalone $15 monthly SVOD service, reportedly has about 5 million subscribers — less than 10% of Netflix’s domestic sub base.

Stankey told employees they should be happy AT&T and not another media company such as Fox or Disney acquired Time Warner due to the lack of job overlap. At the same time, he said HBO has to make money at “the end of the day.”

“We do that,” interjected Plepler, according to the Times. “Just not enough,” responded Stankey.

A curious statement, indeed, considering HBO generated about $6 billion in operating profit in 2017.

Plepler deftly diffused the situation saying HBO did as well as it could with the hand it was dealt at Time Warner.

“And we well understand that that is not going to be sustainable going forward,” he said.

Warner Bros. Bowing ‘DC Universe’ SVOD Service

Warner Bros. in August will beta-launch “DC Universe,” a first-of-its kind subscription streaming video service affording access to exclusive content and experiences “not available anywhere else.”

Subscribers will have access to original live-action and animated series, classic TV series and films, a curated selection of digital comic books, breaking news, an expansive DC-centric encyclopedia, social media connections and exclusive merchandise.

Operation of “DC Universe” will be managed by Sam Ades, GM and SVP, Warner Bros. Digital Networks, based in Burbank. Ades formerly served as the SVP, direct-to-consumer, for DC Entertainment, where he was responsible for creating and executing DC’s digital marketing strategy.

The service (dcuniverse.com) will be available in the United States at launch on iOS, Android, Roku, Apple TV, Amazon Fire TV, and Android TV, as well as the Web.

“Developing new ways for consumers to access some of our most popular and iconic brands and franchises as well as exclusive new content whenever they want, on the devices they choose, is one of our studio’s top priorities,” Craig Hunegs, president, Warner Bros. Digital Networks, said in a statement.

With an undisclosed price-point, “DC Universe” was first disclosed last year, and jump-started following AT&T’s $85 billion acquisition of Time Warner (including Warner Bros.). A mandate of the deal is leveraging Warner Bros.’ assets through digital channels.

“We are investing in and creating original, high-quality shows, including the new ‘Titans’ series, and curating the most beloved nostalgic content, while at the same time elevating the comic reading experience to new heights. Nothing this robust has ever been offered to fans before,” said Jim Lee, chief creative officer and publisher, DC Entertainment.

At the heart of “DC Universe” will be an exclusive original live-action and animated series based on DC’s iconic characters. Developed by Warner Bros. Television, “Swamp Thing” and “Doom Patrol” are scheduled to debut in 2019, following live-action adventure series, “Titans,” which premieres later this year. Warner Bros. Animation is also developing a slate of animated TV series based on existing fan favorites, including “Harley Quinn” and the third season of “Young Justice: Outsiders” animated series, which are both scheduled to debut in 2019.

The platform’s launch will also include all four original Supermanmovies, as well as a selection of animated movies, including Justice League: The Flashpoint ParadoxGreen Lantern: First Flight, and Wonder Woman. The service will also feature classic TV shows, including the first two seasons of “Batman: The Animated Series” and the original “Wonder Woman” series available for the first time in HD.

The “DC Universe” comics reader will feature access from a smartphone or tablet to a living room screen. Subs can scroll through their favorite comics. A curated selection of thousands of DC comics will be available to subscribers from a library that includes decades of comics creations.

“We wanted the ‘DC Universe’ comics reader to be a blend of art and technology that would further enhance fan’s experiences of the live-action and animated programming,” said Dan DiDio, publisher, DC Entertainment. “This hand-curated selection … gives fans a thematic digital long-box to carry with them … or lets them watch exclusive video content on a big screen followed by the comic that inspired it.”

 

FilmStruck Bows Service in France and Spain

FilmStruck, the online movie subscription streaming service owned by WarnerMedia, has launched operations in France and Spain.

The subscription video on-demand service, which entered the international marketplace with its U.K. launch in February, offers French and Spanish consumers a diverse movie catalogue from the Warner Bros. library and the Criterion Collection library, as well as other global and local content partners.

The service offers a range of critically acclaimed movies across many categories – independent, classic, cult, contemporary and world Cinema – and also features curated themes and exclusive bonus material, including cast interviews, original artwork, Criterion mini-documentaries and hosted introductions.

With a strong emphasis on catering to different audiences with local content, FilmStruck content for each market reflects local curation expertise. The service for France will draw on local content partners Carlotta Films, MK2, RKO and StudioCanal, while the service for Spain will team with local content providers Wanda, Caramel and A Contracorriente Films, among others.

“Rolling FilmStruck out to these additional markets is a significant next step for us,” Aksel van der Wal, EVP, Turner International’s Digital Ventures & Innovation Group, said in a statement. “France and Spain both have a rich heritage in and love for movies, as well as being rapidly developing SVOD markets, which makes them both exciting markets to tap into with what we believe is a fresh and differentiated offering working with fantastic content partners.”

The expansion of the service into France and Spain comes shortly after DV&I and WBDN announced the appointment of Kerensa Samanidis to the role of GM, FilmStruck, International. Samanidis joins from the British Film Institute where she was head of digital products and distribution overseeing BFI’s digital strategy.

Departed Turner CEO John Martin Was a Friend of Home Entertainment

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

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

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

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

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

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

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

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

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

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

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

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

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

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