HBO faces a “tough year” following Time Warner’s recent acquisition by AT&T, the new head of Warner Media told employees, adding that the premium cable network “must get bigger and broader” to compete against streaming services like Netflix.
“We need hours a day. It’s not hours a week, and it’s not hours a month. We need hours a day,” new Warner Media head John Stankey said in remarks at a June 19 employee town hall obtained by the New York Times. “You are competing with devices that sit in people’s hands that capture their attention every 15 minutes.”
Stankey warned the employees that the transition following AT&T’s $85.4 million acquisition last month would not always be a smooth one. “It’s going to be a tough year,” Stankey said. “It’s going to be a lot of work to alter and change direction a little bit.”
Although AT&T executives had previously indicated they would take a hands-off approach to HBO, a consistent profit center that has dominated the Emmy Awards with well-reviewed shows like “Veep” and “Game of Thrones,” Stankey signaled that AT&T would seek to significantly grow both the network’s number of subscribers and their consumption of programming.
“I want more hours of engagement,” he said. “Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”
Stankey also indicated that a focus on premium programming like “Big Little Lies” and “Westworld” may have to change as well.
“As I step back and think about what’s unique about the brand and where it needs to go, there’s got to be a little more depth to it, there’s got to be more frequent engagement,” Mr. Stankey said.
According to the Times, Stankey also indicated the need for a “stepped-up investment” to expand programming, though he did not indicate what sort of budget the company had in mind.
Over the last three years, HBO has spent more than $2 billion annually on content, which has yielded nearly $6 billion in profit. Meanwhile, Netflix has dramatically grown its investment in programming to roughly $8 billion this year alone.
Richard Plepler, the HBO CEO who also participated in the town hall, noted, “We well understand that we played the best hand we could with the hand we had. And we well understand that that is not going to be sustainable going forward.”