With C-Suite Shake-Up, WarnerMedia Sharpens Its Battle-Ax for the Streaming Wars

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?”

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