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WarnerMedia to cut thousands of jobs

AT&T's Warner Media will cut jobs as the company restructures amid COVID-19 challenges, according to reports. The Yahoo Finance On the Move panel discusses.

Video Transcript

ADAM SHAPIRO: Warner Media is going to cut expenses 20%. We know HBO, TNT, TBS. They're talking about massive layoffs. They're delaying movies like "Wonder Woman, 1984." There's going to be more of this. It isn't just going to be Warner Media, right?

DAN ROBERTS: Well, that's exactly right, Adam. And in fact, like many things right now, this is both a pandemic story and not a pandemic story. Because if you remember back in the old world, when AT&T Time Warner went through, there was a lot of consternation right away about what changes would take place at HBO.

There was a big all hands meeting, and there was a juicy report from inside that meeting. And there was a lot of anxiety. And I believe there were already some cuts being made. And then the pandemic hit. And so, in many ways, unlucky timing because that exacerbated the situation.

Of course, you could come out of this and see a situation that shareholders like because, sad though it is to see layoffs, you know, investors usually like cuts and slimming down. And I just want to remind everyone that slimming down was something that AT&T wanted to do with Time Warner and Warner Media already.

Now, of course, we have to ask the question of, you know, what happens with Warner Media's streaming offerings, especially at a time when so many new ones have launched? Some have thrived, arguably. You know, we'll see what happens with NBC Peacock, but it's in an OK spot. Some quickly bond. Quibi.

So let's see how Warner Media does. And let's see how that affects the cuts to come. But yeah, not really a surprise. And of course, there's also a report that ESPN, which is Disney-owned, is about to have layoffs. It just sucks. You hate to see it.

But it's also not at all surprising, not only because of what's happening with TV, and then look at movie theaters. You guys know I've been interested in this topic and following this closely.

But there is just no sign that people are ready en masse to go back to movie theaters. We just yesterday saw that a Disney Pixar movie, "Soul," that, actually, Disney had left its theatrical release for November, everyone said, really? And sure enough, that's going straight to Disney Plus.

JULIE HYMAN: And Dan, I'm still waiting for HBO Max to come to Roku. So that's my personal stumbling block, but, you know, looming over any of these kinds of media conglomerates, to me, it's sort of the ghost of AOL Time Warner, right? And the sort of difficulty, sometimes, in making media deals work, right? I mean, I don't know. Is this something that will be workable, coming out of the pandemic?

DAN ROBERTS: Well, that's a really good question. I mean, when do you call it, you know? How long does it take in hindsight to look back at a deal and say, oof, was that ill advised and ill born. Because you mentioned AOL-- fine, that's so infamous.

But in this case, you know, there was also a culture clash. I mean, what happened at HBO? You had Loeffler leave pretty quickly. You know, it was obvious that a lot of people at HBO said, this is not what we want, even if the financials made some sense.

So the jury is going to be out for a while, but suffice to say, now that the pandemic has hit, you can't separate the two, you know? We can no longer evaluate whether that was a good deal and a good tie-up without looking at the pandemic and the very unlucky timing of that.

So that's a good question. What happens, and when do you say, boy, this didn't work out? Or do you give it a year or two, and you say, well, they sure cut a lot of costs and slimmed things down and there was a period of adjustment, but it worked? It will take awhile before we can really issue a judgment on that.

ADAM SHAPIRO: But to Julie's point, if you expand your horizon, the ABC's Cap Cities deal did work. But then the environment changed. So the next question becomes, when do we get consolidation among all the streaming services, the way we saw in broadcast linear television some 20 years ago?

DAN ROBERTS: A very fair point, and you know, just yesterday, on "The Final Round," we talked to Lara Martin at Needham, who had upgraded Roku. And we talked about, is Roku still an acquisition target?

The reason I bring up that, you know, you talk about consolidation in the streaming space. We're still in the phase when new things are being launched. And it's remarkable, isn't it? Because you think we'll will hit a time when people say, mm, my plate's too full, I don't want more.

But actually, what analysts say is, people are still going to sign up for new ones. Soon enough, you've got to see, A, some fold and fail. We've already seen a couple. And then, B, some tie up. There's got to be-- you know, this is how it always goes, right? The cycle goes. New things launch, and everything ties up again. We were just talking about the chip industry. It's all consolidation.

So, you know, if Roku's an acquisition target, well, previously, you would have said, Disney is a candidate, but Disney is struggling mightily because of the pandemic. Previously, you would've said Amazon could buy Roku. But Amazon is under a bunch of regulatory scrutiny. So that's going to be really interesting. I would think it's still going to be awhile before you see a lot of tie-ups in the streaming wars.