Media

“HBO Max Is the Golden Child”: With C-Suite Shake-Up, WarnerMedia Sharpens Its Battle-Ax for the Streaming Wars

CEO Jason Kilar hit reset and put a Plepler vet in charge of HBO Max—while also seeking a new CNN product. Is he tearing up the Stankey playbook or just turning the page?

By Joe Pompeo

August 13, 2020

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In a string of interviews, Jason Kilar explained the rationale behind last Friday’s mid-summer surprise, in which the WarnerMedia CEO unveiled a corporate reorg that ousted the company’s top programming chief, Bob Greenblatt. The overhaul—which Greenblatt learned about in a call from Kilar less than two hours before the announcement went live because the news was starting to leak, according to sources familiar with how it went down—was designed to bring all of WarnerMedia’s content divisions under one roof as it marches into battle in the streaming wars, armed with its new flagship consumer product, HBO Max.

Ann Sarnoff, who’d been running Warner Bros. for the past year, is now in charge of the whole shebang, as head of a new studios and networks group. Casey Bloys, who rose to prominence as head of programming at HBO, adds HBO Max, TNT, TBS, and truTV to his portfolio, making him responsible for all of the company’s premium television in a role reporting to Sarnoff. Kevin Reilly, who had been running HBO Max and those three channels under Greenblatt, was also pushed out. “We had two content organizations, and they both worked on HBO Max,” Kilar told Bloomberg. “The tough decision I made was to go from having two to one. I think it’s the right thing to do for the company in the interest of focus.”

That’s all well and true, but some company insiders have an additional interpretation of the shake-up. As one of them told me of the Kilar move, “What no one has said is that John Stankey appointed a guy to take his place who spent three months looking at what Stankey did and completely reversed it. They ended up doing what should have been done at the start. If there’s one person who is responsible for one hit after another, and is very much liked and admired, that’s Casey.”

Greenblatt, a former NBC and Showtime honcho, joined the organization in March 2019 as chairman of the newly minted WarnerMedia Entertainment division, which rolled up HBO with erstwhile Turner networks TNT, TBS, and truTV. His top priority was to figure out how to expand and package HBO, the Turner channels, and the Warner Bros. library into a single service, eventually named HBO Max, that could compete with Netflix, Disney+, Amazon, Apple TV+, and the rest of the streaming space. At the time, Stankey was still CEO of WarnerMedia, which became his fiefdom following a long career as an executive at parent company AT&T. Greenblatt was Stankey’s answer to WarnerMedia post–Richard Plepler, the peak-TV guru who left HBO amid frustrations over a loss of autonomy under the channel’s new overlords at AT&T.

Stankey was named CEO of AT&T in April, succeeding Randall Stephenson. To fill the role he was vacating at WarnerMedia, he hired Kilar, a former Amazon executive and the founding CEO of Hulu. In the background, WarnerMedia’s revenues were taking a hit due to the pandemic, and HBO Max debuted in May to mixed reviews. AT&T has touted the 4.1 million customers that HBO Max racked up in the platform’s first month, but it’s unclear how many of those may have activated HBO Max through some bundle deal. Plus, that’s a drop in the bucket compared to, say, the more than 10 million sign-ups Disney+ logged in its very first day. To be fair, WarnerMedia has met its goal of a combined 36 million subs, across HBO and HBO Max, by the end of 2020. (There were a combined 36.3 million subs as of the second quarter.) But in an investor’s note last month, Wall Street analyst Craig Moffett wrote that HBO Max, “supposedly the salvation of an otherwise hemorrhaging WarnerMedia segment, has gotten off to a rather inauspicious start.”

The marketing around HBO Max fell short and there have been complaints about user experience. (That’s the domain of Andy Forssell, general manager of HBO Max, who now reports directly to Kilar in the new structure.) On top of it all, HBO Max lifted off without a hit of its own. The original programming it fielded didn’t break through, and a heavily promoted Friends reunion was pushed back due to COVID-19 restrictions. Current series with real heat have all emanated from Bloys’s roster at HBO proper—Watchmen, Perry Mason, Lovecraft Country, Succession, etc. Between all of that and the rather unwieldy management hierarchy, it seemed as good a moment as any for a reset, even if it caught the empire off guard. “It happened so quickly,” one of my sources said.

Someone else familiar with the inner workings of the company added, “This was the all-along plan, so I really think what ended up happening is, Jason came in, the existing market contractions happened faster than anticipated, he had a higher and accelerated demand for content across different platforms, and he said, I need one executive to run this content and programming group right now.”

The irony, as several sources pointed out, citing industry chatter, is that a year and a half after WarnerMedia commenced its big makeover, the team now in charge of taking its core offering, HBO Max, into the future, is largely a team (assembled by Plepler) that had transformed the company’s crown jewel into the standard bearer of Golden Age TV in the first place. As for the notion of Stankey’s playbook being blown up, not everyone under the WarnerMedia umbrella sees it that way. “A lot of people are seeing this as throwing everything out and starting from scratch, but this is just an evolution of what John Stankey put in place,” another source told me. “We used to think of ourselves as a media company that had a streaming platform. Now, the streaming platform is the priority. Even though we’re WarnerMedia, we’re really the HBO Max company.” (WarnerMedia declined to comment.)

In another one of his recent interviews, with the Hollywood Reporter, Kilar said, “It became pretty clear that we needed to have one content organization to make it easier for us to make decisions to greenlight the best possible stories that we can then take increasingly direct to consumers.” A WarnerMedia insider likewise noted, “Jason has said several times now that D2C is key to the future of the company.”

That focus extends to WarnerMedia’s news juggernaut, CNN. Sources told me Kilar is keen on developing a global direct-to-consumer offering for the network, something he has talked about internally both in group meetings and private conversations with CNN boss Jeff Zucker. “The trick is to create a new product, with all the foundations and brand prestige of CNN, that people would be interested in paying money for,” one source said.

In the second quarter, WarnerMedia’s revenue sank 23%, a plunge the company attributed largely to the industry-wide coronavirus slump. AT&T has debt to service, a dividend to keep afloat, 5G technology to invest in. The company has pledged to spend up to $2 billion on HBO Max this year and $1 billion each in 2021 and 2022, which pales in comparison to the budgets of established rivals like Netflix and Amazon Prime. I asked Moffett, the stock analyst, what WarnerMedia’s recent revenue troubles mean for its ability to compete in the streaming-content arena.

“AT&T is groaning under an enormous debt load,” he said. “They have no choice but to cut costs where they can. HBO Max is the golden child right now, so it’s the last thing they would cut. But what if competing with Netflix means they need to spend dramatically more?”

Joe Pompeo

Senior Media Correspondent