AT&T CFO on WarnerMedia Reorganization and Layoffs: A ‘Natural Progression’ in Shift to Streaming

The broad restructuring at WarnerMedia is a “natural progression” for the media conglomerate to hone its focus on HBO Max, according to John Stephens, AT&T’s chief financial officer.

WarnerMedia laid off hundreds of employees Monday across Warner Bros., HBO and DC Entertainment. That came after a major management shakeup under new CEO Jason Kilar, under which HBO Max content leaders Robert Greenblatt and Kevin Reilly were let go and Warner Bros. CEO Ann Sarnoff assumed additional oversight over content for HBO Max and basic cable networks. Andy Forssell, general manager of HBO Max, was put in charge of a new entity’s HBO Max business group and will oversee international expansion.

“This is a transformation of, making things better not because we needed to adjust anything but rather because we’re aspiring to get even better than the launch was, to get even better than WarnerMedia has traditionally performed,” said AT&T’s Stephens, speaking Tuesday at the Oppenheimer Virtual Technology, Internet & Communications Conference.

Stephens said about the restructuring, “It’s a natural progression of getting real focus, as I said, on our [direct to consumer] business, on our HBO Max business.” But he also acknowledged, “these transitions are tough and there are a lot of good people that have been involved in this.”

With the new structure, WarnerMedia’s content operations are consolidated under “one leader,” said Stephens, referring to Sarnoff’s expanded role. Stephens voiced support for the decisions by Kilar, the ex-Hulu boss who took over the reins in May. “Jason’s a really good leader, he knows his business,” Stephens said.

For the second half of 2020, “the most exciting thing for us is HBO Max,” Stephens said, claiming the launch was “really successful.” He noted that WarnerMedia grew HBO customers overall with the launch of HBO Max, with 4.1 million activations of HBO Max in the first month after launch, although that means the majority of existing HBO customers had not yet accessed the new streaming product.

Regarding the overall impact of COVID-19, Stephens said the AT&T wireless and broadband businesses have performed well despite the challenges while for WarnerMedia the pandemic “really shut things down” including with the shutdown of the NCAA basketball tournament.

As people work remotely, “that connectivity into people’s homes is really important… that really was, you know, a tailwind for us,” he said. On media side, “it’s forcing us to look at new ways to distribute content,” as with Warner Bros.’ “Scoob!” direct-to-digital release.

Given uncertainty about when theaters will be reopening, Stephens added, there “may be further delays in some of the titles we release and some of the big theatrical activity.”

Warner Bros. is releasing Christopher Nolan’s “Tenet” in 70 overseas territories starting Aug. 26 ahead of the U.S., where it will be released in select cities over Labor Day weekend starting Sept. 3.