Commentary

ATT To HBO: You're Good, But Get Better

Here’s what AT&T wants from HBO in the future: More viewers, more time spent viewing, and basically more of everything TV-related.

This comes from John Stankey, new WarnerMedia CEO, per a New York Times story, which obtained a transcript of Stankey’s remarks during a town-hall type of meeting with HBO employees.

“We need hours a day ... It’s not hours a week, and it’s not hours a month. We need hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes,” he reportedly said.

Perhaps the key takeaway was what Stankey didn’t mention: Netflix.  

Although HBO continues to be a major revenue performer, rising 7% in 2017 to $6.3 billion, for Time Warner (now WarnerMedia), the suggestion is that HBO should be where Netflix is now: much bigger.

Netflix has over 117.6 million subscribers worldwide and 57 million U.S. subscribers. HBO is at similar levels here: 134 million subscribers worldwide; 54 million in the U.S.

Still, Netflix revenues are nearly than twice that of HBO: $11 billion.

For at least two decades, HBO has made big headlines with numerous Emmy awards -- well north of whatever ad-supported network lands in second place. But that’s not enough for AT&T.

When the cable industry was in its nascent stages in the 1980s and early '90s, it was assumed by many ad-free premium cable TV networks it couldn’t get the scale of the ad-supported networks. Still, premium cable TV ad-free networks did have generally higher-quality TV programming.

But decades later, all that has changed. Ad-supported cable boasts quality and awards. All this was followed by high quality at Netflix -- as well as Hulu and Amazon.  

Stankey’s problem, among others, is that viewers are grabbing small bits of entertainment at a time.

Should HBO be competing with consumers' attention while on mobile phones, tablets, or other technology? HBO’s thing is long-form TV -- traditional half-hour, hour long, and multi-hour-long TV shows and movies.

AT&T Stankey seems to be suggesting that as a big scale communications company, it wants all its businesses -- DirecTV, Warner Bros. movies, Turner networks, broadband, mobile phone -- to go for big consumer scale.

Does this mean HBO needs to diminish it’s high-quality, award-winning, sometimes narrowly target premium TV content to give AT&T what it wants?  Hmmm...

Here’s some math: AT&T paid handsomely for Time Warner -- $85.4 billion, which means an enormous debt load. The question is: What will step up to pay the bills? 

Seems HBO will be playing -- and paying -- a starring role.

1 comment about "ATT To HBO: You're Good, But Get Better".
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  1. Michael Kaplan from Blue Sky Creative, July 13, 2018 at 2:23 p.m.

    Without question, the most annoying media story of the week. HBO's new boss wants to destroy the very thing that's made HBO so incredibly successful, as if he doesn't understand the basic differences between the value propositions HBO offers its subscribers vs. what Netflix offers.

    So billions in annual profits isn't enough for you? Reconition that their product is demonstrably superior to any of its competition isn't enough for you? It's as if someone bought out Nordstrom, then immediately complained they didn't have the same foot traffic as WalMart.

    Knowing what happens when successful creative entities are taken over by clueless corporate types, I expect we are witnessing the end of a brilliant 30-year success story.

    (Full disclosure: Long ago, I worked at HBO as a freelance story analyst. And I learned the secret to their success -- and what set them apart from other networks back then -- was never about ratings, or how many hours of TV their subscribers watched per week. It was in how satisfied their subscribers were to pay an extra $10 or $15 a month for the priveledge of having HBO, whether or not they ever watched it. "It's not TV, it's HBO" wasn't just a great ad line, it was a genius strategy. And it's worked ever since. Maybe they should update it to "It's not Netflix. It's HBO."

    Naah, the suits still won't get it.

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