WarnerMedia CEO Jason Kilar shook up the top ranks at the AT&T-owned media company today, consolidating all film, TV and streaming content under Warner Bros.’ Ann Sarnoff. The sweeping restructuring includes expanded responsibilities for HBO Max’s Andy Forssell and HBO’s Casey Bloys and the exit of top WarnerMedia/HBO Max executives Bob Greenblatt, Kevin Reilly and Keith Cocozza.
Like with any major consolidation, there will be a ripple effect. In his memo to staff today about the restructuring, Kilar spoke of “reducing the size of our teams, our layers, and our overall workforce.” There is strong speculation that more restructuring at the lower levels as well as major layoffs are coming on Monday that would impact more than 500 employees. I brought the issue up during a broad interview with Kilar about the goals for the new structure, his evaluation of the HBO Max launch and the company’s streaming strategy going forward, how long WarnerMedia will stay in the linear TV business, whether Warner Bros. continue to release movies like Tenet in theaters and whether the company would be interested in buying theaters.
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Here is what Kilar had to say about pending layoffs:
“I don’t have anything specific to share about layoffs, but certainly when you think why we are making these changes … going from two to to one content organization because I think that’s the best way to serve the consumer, interacting with talent in the simplest way possible. We are being very efficient and fast in how we work.
“In that situation, you do have two people that used to be in two different organizations. Now they are in one organization, and there is going to be some tough decisions. Now we have one person doing that, not two people doing that, given that we are one team now.
“Those decisions will be made, reductions will happen. But I don’t have any numbers or any specifics to share with you to that effect other than to say, we are going to be thoughtful, we are going to be kind, we are going to be empathetic. That’s incredibly important, and candidly, that makes today about two things:
“On one level, I’m excited about where we are going and how we are organized right now, but I’m also very sad and sorry because this is one of the hardest things to do, say goodbye to same beloved and incredibly talented colleagues which is clearly, in the case of Bob and Kevin and Keith is how I feel. They are some of the most talented executives in the industry. I know they are going to change the world, and I’m going to root for them every step of the way.”
In Kilar’s memo unveiling the management changes, which streamlined the content side of the company, eliminating multiple top layers at HBO Max, Kilar emphasized the importance of the streamer to the company. Here is more on what he wants to accomplish with the restructuring:
“I think there are three things that we should be transitioning to as a company.
“1. I want us to be more a consumer-oriented company as opposed to a wholesale oriented company. The history of the media companies has largely been wholesale. When you think about the last 100 years, whether it’s the Walt Disney Co., Warner Bros., Paramount, you name it, those companies have largely created great movies and great TV series and then they handed those things to someone else. And those companies then went directly to consumer, whether you are movie theater, a TV network or a retailer selling DVDs or packaged goods.
“2. Very much putting a premium on going direct-to-consumer. That is a really, really important part of our future, to have the opportunity to serve consumers directly.
“3. This is about going global. We [currently] have about a third of our revenue that is outside of the US. I think there is a chance for us to have 70% of our revenue from outside of the US and 70% of the consumers that we serve outside of the US
“That is what the changes today are very much a function of.”
The expansion of HBO Max will be one part of the global growth plans. CNN also is envisioned as a key element of that, along with WarnerMedia’s interactive business, Kilar said, giving major props to the cable news network:
“I think their ceiling is so high, and I’m very, very much a believer in news and information around the globe,” he said. “And frankly, we have the best brand in the world in CNN when we look at website traffic and the power of the brand. Also, we have a very strong interactive team of about 2,000 software developers that tell interactive stories; the opportunity to go global with that is very, very big as well.”
WarnerMedia’s shift from wholesale to consumer-oriented business with an emphasis on direct-to-consumer does not necessarily mean that the Warner Bros. movies would bypass movie theaters, Kilar said. Like other studios during the pandemic, which shut down movie theaters, Warner Bros. went straight to premium VOD with Scoob. Kilar indicated that the company’s movie distribution strategy will evolve but theaters will remain an essential part of it.
“Me and the team, we are big believers in theatrical because consumers care about theatrical. I’m not saying that it’s not changing over time because it is. I’m going to talk of me as a fan. One of the things I love to do – and I’m not alone – with my wife, I love to go out and see a great movie on Saturday night at the local cinema. It’s a fantastic experience with a communal experience you just can’t get on the couch. So I love that.
“That’s not to say that I don’t consume a lot of content on my iPad. A lot of people often frame these things as binary or mutually exclusive. I don’t see it that way.
“I very much see us being able to lean into theatrical, being able to serve consumers who want to be served that way and then of course we are going to be doing a lot of other things with film format that is direct-to-consumer.”
In light of today’s ruling to terminate the 71-year-old consent decrees that have restricted major studio control over the exhibition process, would WarnerMedia be interested in buying movie theaters? “I don’t have anything plans to buy movie theaters,” Kilar said.
When Kilar joined WarnerMedia, HBO Max was in its final pre-launch stage, and he famously said at the time that he “will be there to get water and food for people in the building and cheer them on.” Two months post-rollout, here is how he evaluates it.
“I was very happy with the launch for a couple of reasons,” he said. “There were no technical bugs. A lot of times, when you launch something as complicated in nature as a SVOD service, you are going to have issues when you launch. It happened with a lot if other companies before us. The fact that we launched cleanly and robustly is a great credit to the technical team that made HBO Max happen. I was also really happy with the user experience in addition to the content lineup, which obviously is very difficult to replicate if you are not WarnerMedia.”
Kilar would not elaborate on potential strategy changes for the platform but noted: “We have such an amazing opportunity to do interesting things in term of our recommendation algorithms, machine learning, personalization, search, multiple devices. There is so much good stuff ahead.”
One hurdle in the early going for HBO Max has been a lack of distribution deals with Roku and Amazon Fire TV. Expanding the platform’s distribution reach is a priority, Kilar said. “Absolutely, we won’t stop until we are on every device on the planet,” he said. “We have a fantastic start between Google, Apple and Samsung. … I believe that we will ultimately get those [additional distribution agreements] done, but obviously it’s a function of economics.”
While the linear TV business, especially the ad-supported one, has been facing enormous challenges, Kilar has no plans to exit it and believes the company’s networks might outlast all of their competitors.
“I think that you are going to see two things,” he said. “One is that those linear networks, distributed linearly — and by that I mean cable system, satellite systems — those are very big businesses because there are a lot of consumers that want content delivered in that way. So of course we are going to lean into that. We’re going to innovate, and we’re going to do that for a long, long time. We’ll be the last ones left in that environment I bet, because it’s a big business.”
While keeping the linear distribution going for HBO and the Turner network, WarnerMedia also will continue to expand their digital footprint with strong presence on HBO Max.
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