John Stankey Speaks HBO Shake-Up Why He Doesn't Want to Cave to Trump's Jeff Zucker Demand

"You can't be happy to be in 25 percent of households, and think it's going to be a sustainable economic equation against Amazon, Google, Netflix and others," said John Stankey of AT & T's distribution assumptions.

The first step in WarnerMedia's reconfiguration in an attempt to compete with deep wash content rebels, including Amazon and Apple, came Monday with CEO John Stankey's announcement of an expected exercise and property adjustment.

Shake-up saw HBO CEO Richard Plepler leaving the company and former NBC Entertainment mayor Robert Greenblatt employed as lead monitoring entertainment assets (including HBO) and forthcoming direct to consumer properties (set to launch in the fourth quarter) while CNN chief Jeff Zucker leave sports for his portfolio and Warner Bros. head Kevin Tsujihara added global children and young adults to their field.

In an interview with The Hollywood Reporter Stankey emphasized that the changes do not streamline the efforts; AT & T has taken over $ 1[ads1]80 billion of debt to buy Time Warner for $ 81 billion and spent millions defending the merger against a justice ministry's appeal, ending less than a week ago.

"What we did today is not about layoffs and cost savings," said Stankey on Monday. "It's about getting your organization configured to invest more elegantly in our content and using it on a variety of distribution platforms."

Stankey spoke about breaking down silos, his ambitions for WarnerMedia's OTT platforms and why he never thought to let Jeff Zucker go.

There has been excitement and disturbance in the creative community about the future of HBO, where Richard Plepler had a lot of autonomy What steps have taken to reassure the creative community through this transition?

I think Richard was a great executive; I have no questions about it, but those who came before Richard [also] built the HBO mark in what it is today Casey Bloys will continue in that role with the same charter he has today. Creators will work with him because of his approach. It will not change. Casey has been very clear in send this message to the creative community the past 48 hours and assure them that what we do is still the same, and we are still open for business. But we need to find a way to do something different and notice and content to a new level.

During a city hall on HBO, last year a mandate to produce more content, to go wider and to have HBO resources to do so. Netflix spends $ 8 billion annually on content. What kind of resources do you go against HBO?

Just look at the release schedule for HBO between last year and this year, and you will see that for each month of the year there is a meaningful and significant content that is released to the customer base that will keep our audience engaged throughout the year . I think it's an improvement over the position that HBO was last year. There is a much better way to run a customer base so they know they can come back to a product and find something refreshing and interesting. And I would argue that the content that people should see and look at is of the quality and characteristic that we want to see from the HBO brand. That's what we tried to characterize when we talked about it a year ago – how do you take HBO and the great features it has and get even more out of it? That's what our direct-to-consumer offers are all about. HBO is the anchor, and then they have other places that people can jump into other brands and other experiences. Maybe that's not what the HBO Charter has been. That's what we're going to do.

Why is Bob Greenblatt the right person to navigate it?

You really need someone who can look at the broad portfolio of content and tags to make sure you have the overall architecture Not true. Bob is a unique individual in this industry. He has accomplished going straight into the fairway with common things and has proven with his work on NBC that he can build and maintain the audience in some of the most challenging broadcasting dynamics. And yes, he has also had tremendous experience as a key maker and curator of his time at Showtime. How much do we have to invest to build it? Well, see, we invest as much in WarnerMedia as Netflix does every year. In some cases, we keep it to ourselves and in some cases we are licensing it to them. Our ability to build tailor-made content and quality is truly unique in terms of its own production capacity. And now, Bob will make the decision on how much we should keep on our own platforms and how much we will license to third party distributors. He's got the choice of garbage when it comes to what he needs to do to build the right audience. We do not provide guidance on what that number is. But as the customer base grows, it will obviously maintain a bigger and bigger investment.

But do you want to keep more content internally when your direct consumer platforms grow?

I think it is very safe to say that several of our content will be distributed on our own platform, but we will also make some of these products available to others to distribute as well. We do not see this as a zero amount game. I expect these extended offerings and these increased libraries on our direct-to-consumer product will also be available to affiliate distributors.

Do you have any concerns regarding subscription training?

I won T characterize it as a subscription fatigue, but I think there is a limit to the amount of discretionary expenses that a customer will put into buying entertainment overall. That is, so limited in number; I don't know where that cutoff is, but it's probably somewhere around three or four [subscriptions services per household]. And what tells you is that it must be a product of the scale. It must be a product that has a wide opening of content available to what appeals to a home or family base. The reason we had to bring these qualities together is that the only way we can get hold of them is to use our total assets. And then we remove the friction about how our divisions cooperate with each other so that we can bring an offer together and on a scale of an organization that is uniquely incentivized and motivated to do so, rather than being part-time. [19659003] What is your mandate for Jeff Zucker regarding the new sports assets in his portfolio? Should Turner Be More Aggressive When Going For Rights?

It is clear that one of the things we want Jeff to work with is to ensure that we have a large number of live and event-oriented hours on the networks that go ahead. And where we stand today, we would like to see that increase. Jeff has two truly significant digital features, our two best and most significant across the AT&T firm: CNN.com and Bleacher Report. It is a great opportunity to make these assets one place under a leader to start exploiting them more effectively than dividing them today. So it will be one of his many challenges.

There are not many top sports rights – NFL, NBA (which Turner has) or MLB – available in the short term, though.

There is no immediate first-time property that comes up right now. But it is an insatiable appetite for live entertainment, sports and otherwise. And I think it's emerging sports that with the right kind of business development can become tomorrow's great audience advertising. Our job is to use our properties to start building these properties. A good example might be what we do with AAF [the Alliance of American Football, founded by Charlie Ebersol and Bill Pollan]. We start distributing it on a streaming platform and working with the league to develop it over time. We expect that if we do it correctly, it will be network-based content. Jeff's role is not necessarily to go out and find the simple game, the existing sport. It's going to find those that haven't come up, which are likely to be better suited to the demographics that come up. They tend to be faster games, more focused games, whether it's e-league-related stuff or digital gaming.

Last year there was speculation that you would let Zucker go to appease President Donald Trump and smooth the way for the merger. Was it ever discussed?

No. I'm glad Jeff is here. And I've been glad Jeff is here from day one. There has never been any discussion about letting Jeff go. Number one, he has done a good job. And number two, it would send a very bad signal to the rest of the community if that was the kind of thing we were going to cave for. We spent a lot of money fighting a lawsuit. If it was as simple as letting Jeff go, we could probably have done it before we spent hundreds of millions of dollars fighting it. ( Laughs .) We felt very strongly at the position we were in, that it was right to do for this country and its institutions.

Why do you think Trump was so against the merger?

I don't know. This is so behind me right now. I am so happy that this complaint is complete and the Justice Department has realized that they are not able to pursue this further and we are officially done. And I can go on to do what I need to do to innovate for this company.

This seems to be a ringing endorsement for Kevin Tsujihara and the Warner Bros. team.

You think it's an approval of a theatrical organization at Warner Bros. That appeared in a year that cursed near any other studio would be incredibly proud of having the win-loss relationship and what they managed to achieve. And not just about cross-films like [those of] DC, but the whole slate they set out and borders, and the barriers they broke from an artistic quality perspective, in terms of diversity and inclusion. It is an organization that had a banner year. There is an approval of what Kevin and [Warner Bros. Pictures Group chairman] Toby [Emmerich] have done over the past three years to relocate that organization and give it focus.

What is your view of theatrical windows? Do you think the best picture Oscar for Netflix's Roma would have sent the wrong message?

I absolutely believe that art is best represented in theatrical debuts for many parts of the content. If it wasn't a theatrical window and it was not possible to look at something in a kind of setting, then we would see different art that was created. I think it plays a very important role in the future. Now, I think 100 percent of the movies being knocked out are better seen in a theater? No. Or is it not a segment of the population who wants to see something earlier in the life cycle, and whatever you do, they will not leave their house and will ever see it? Yes. A rising tide lifts all the boats.

Are you going to unload your stake in Hulu to Disney?

We absolutely stated that we do not see it as a strategic element in our portfolio going forward, and to the extent that we get a fair deal on the value of it, we are open to selling it. Of course, as a matter of practice, we do not speculate on M & A.

How many participants do you need to make your direct consumer products viable?

I will tell you how we think of direct consumer and why we are so committed to moving in this direction: In an environment where the media is moving in scale and where consumption must be on a scale, 25 percent market an acceptable equation. The reason we put the WarnerMedia companies together is to build a scaled product so that we can aggregate what kind of audience we need in the future, so we have a ratio of 60 to 70 percent of homes in the United States. Although it is for a small service that is only $ 10 or $ 15 a month. To get this scale, to make the economy produce and distribute in the future, you have to think over the next few years that you will be able to penetrate most US households. You may not be happy to be in 25 percent of households and think it's going to be a sustainable economic equation against Amazon, Google, Netflix and others. That's how I think about what our aspirations for penetration are.