HBO is planning to produce 50 percent more original content this year, even as new owner AT&T reportedly plans significant layoffs across its Time Warner subsidiary.
WarnerMedia, the AT&T division created after its June 2018 acquisition of Time Warner, told Ars today that it is planning to reduce costs for “duplicative back-office functions,” while increasing investment in producing content. WarnerMedia today also issued a press release announcing a reorganization that will create four business divisions “around entertainment networks, live programming, content production, and affiliate and advertising sales.”
“From an HBO content perspective, and this is irrespective of today’s announcement, they are already increasing and looking to increase their original content by 50 percent this year,” WarnerMedia Senior VP of Corporate Communications Emile Lee told Ars.
Shortly after buying Time Warner, AT&T told HBO’s staff that it needed to produce more hours of video content and more profit, though AT&T also said it planned to increase investment in HBO. This would be a major change for a network that has succeeded for decades by producing a limited number of high-quality shows.
Last month, Deadline wrote, “With more financial resources from their new corporate parents at AT&T, HBO executives ramped up production to 150 hours of original programming for 2019, 50 percent more than 2018.”
Lee, who joined WarnerMedia in January this year, said there will be increases in content production company-wide, not just at HBO. “Going back to last year when the merger was announced, the focus was on how do we increase our content,” Lee said. For prestigious brands like HBO, the company intends to “put them into a position to create more content like what they’re known for,” Lee said.
New company structure
Today’s reorganization announcement came days after HBO CEO Richard Plepler and Turner President David Levy announced their resignations. Plepler, who had worked for HBO for nearly 28 years, was reportedly frustrated because AT&T reduced his autonomy.
WarnerMedia’s press release did not mention staff cuts, but several news reports say layoffs are coming.
“The consolidation of several units within WarnerMedia is expected to lead to significant staff reductions, people familiar with the matter said,” The Wall Street Journal reported today. “Cutting costs and streamlining operations is crucial for AT&T, which is currently saddled with about $170 billion in net debt, the most of any nonfinancial US company. After AT&T announced its plans to acquire Time Warner in 2016, it projected $1.5 billion in annual cost savings and another $1 billion in ‘revenue synergies.'”
A Reuters report said that AT&T’s restructuring of Time Warner “comes ahead of an anticipated round of significant layoffs and cost cuts.”
AT&T hired former NBC Entertainment Chairman Robert Greenblatt as chairman of the newly formed WarnerMedia Entertainment division, which will include HBO, TNT, TBS, truTV, and the “Direct-to-Consumer” business that is expected to develop a new streaming service by year-end. The new entertainment division “will provide the company with the agility and flexibility needed to build WarnerMedia’s brands across a variety of evolving distribution models with a more coordinated approach to the company’s original programming,” AT&T said.
“The new structure reinforces AT&T’s vision of bundling HBO and the former Turner channels as a streaming service offering augmented with original programming,” a Variety article said.
WarnerMedia’s press release said its News & Sports division will include CNN Worldwide, Turner Sports, Bleacher Report, and the AT&T Regional Sports Networks.
The Warner Bros.’ film, television, and games division “will add a new Global Kids & Young Adults business” that includes Cartoon Network, Adult Swim, and Boomerang, WarnerMedia said. The division will also include Otter Media, Turner Classic Movies, “and all activities around licensed consumer products development for WarnerMedia properties,” WarnerMedia said.
The reorganization will also “consolidate all WarnerMedia Affiliates and Advertising Sales Groups” in order to “unite all of the WarnerMedia network affiliate sales and advertising sales businesses to help benefit advertisers, distributors, partners and the company,” WarnerMedia said.
Cost cutting not the only goal
“This is not about cost cutting,” Lee told Ars. “We’re not looking to just cut costs. Part of this is putting ourselves and our organization in the best position to create content for specific audiences, and ensuring that our investments go to content development and innovation as opposed to duplicative back-office functions.”
Lee would not comment specifically about layoffs. “We haven’t made final determinations on the structure of each team,” Lee said. “We have committed to our employees that we are going to go through this exercise of looking at all of our organizations as quickly as possible. But ultimately, we haven’t made any determinations of what that is going to be.”
WarnerMedia spends more than $12 billion a year on content production, Lee said. HBO reportedly spends about $2 billion a year on programming.