Warner Bros. announced in early December that all of its scheduled films for 2021 would be simultaneously released in theaters and on HBO Max. This was a controversial decision, which has drawn fire from fans, professionals, and competitors alike, both with the decision itself and the way it was announced. Many of the performers and studios whose work was affected by the shift to HBO Max, such as Legendary Pictures, weren’t given much if any advance notice about it, which could seriously impact their bottom line in 2021.
John Stephens, the soon-to-retire chief financial officer (CFO) of WarnerMedia’s parent company AT&T, addressed the issue in a pre-recorded presentation on January 5. Stephens’ broadcast was given to an audience of virtual attendees at the Citi Global TMT West Virtual Conference, aimed at an audience of AT&T investors. To summarize briefly, Stephens argues that the WarnerMedia companies have a proven track record of both success and strong talent relations, neither of which are seriously affected by the move to VOD.
“This is a unique situation,” Stephens said to investors, regarding the COVID-19 pandemic, “and we can’t change that. That is just the reality. So we are trying to keep this system moving healthily forward and to utilize the great content that is already there.”
AT&T’s ties with the movie theater industry are “an important relationship,” he continued, “but it is having challenges, so we are trying to use these valuable pieces of content in the best way we can in coordination with the theaters. With HBO Max, we feel good about utilizing this in the best way we can and we’ll see how it goes. We are excited for it. We are positive about it.”
Stephens notably did not offer any kind of update on the current subscription numbers for WarnerMedia’s HBO Max streaming service, but did mention that the service was considered a driver for consumers to sign up for the highest-tier unlimited plans that AT&T offers. Back in December, AT&T CEO John Stankey claimed that HBO Max had 12.6 million subscribers; by comparison, Disney+ reportedly has just under 87 million, and Netflix had 195.15 million as of its third-quarter earnings report in November of 2020.
Much of what the various companies under the WarnerMedia/AT&T umbrella were doing in 2020, i.e. how many of them were moving fast and breaking things, can largely be explained by AT&T’s current debt load. The company ended 2019 over $153 billion in the red following its controversial merger with Time Warner in 2018, and has been leaning heavily on the various companies under its roof to help pay off the debt. This includes its recent decision to sell off Crunchyroll.
AT&T’s original plan was apparently to spend big in 2018, in order to preemptively dominate the then-nascent streaming market with WB’s lineup of hit properties. However, many of the companies under AT&T’s roof depend on services and events that were affected by lockdown measures, including live sporting events, movie theaters, TV production, and advertising revenue. As a result, AT&T suffered a 25% stock drop in 2020, at a time when many other forms of at-home entertainment were enjoying big audience spikes, and its year was punctuated by regular layoffs.
Stephens is scheduled to retire as AT&T CFO in March. Pascal Desroches has been named as his successor and is currently serving as AT&T’s senior executive vice president of finance.
Source: Deadline
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