July 9, 2018
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.