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.