AT&T CFO John Stephens said the redundancies currently affecting WarnerMedia should not be seen as a course correction after the May launch of HBO Max, but rather as a ‘refocusing’ of the company.
The executive discussed the reduction of about 600 employees of WarnerMedia and many other topics during an online performance Tuesday at the Oppenheimer Technology, Internet & Communications Conference.
Beginning Friday and continuing this week, the restructuring was punctuated by the departure of entertainment president Bob Greenblatt and HBO chief executive Max Kevin Reilly. The two were installed as the main architects of the streaming effort by John Stankey when he oversaw WarnerMedia. Earlier this year, Stankey became CEO of AT&T and former Hulu chief Jason Kilar took over at WarnerMedia.
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The reorganization reflects an effort to become ‘super-hyper-focused’ on direct-to-consumer streaming, Stephens said.
“All of these groups are then focused and speak with one voice and, honestly, allow some streamline of support services and back office and G&A services,” Stephens said. ‘So we can take that and continue to invest that money in the ability to put out the best content. I see it as more of a reorganization of the company. … This is a transformation of improving things, not because we needed something to adapt, but because we strive to become even better than the launch was, to become even better than WarnerMedia’s old has performed. “
When asked about the company’s overall priorities for the second half of 2020, Stephens did not wait. “The biggest thing, the most exciting thing for us is HBO Max,” he said.
The service’s May 27 debut was “really successful,” Stephens said, describing Stankey’s characterization to Wall Street analysts as “flawless.”
The company revealed in its most recent quarterly report that HBO Max had attracted 4.1 million sign-ups, both from new consumer outreach and from existing HBO subscribers who activated their access to Max. That number was not an official subscription note and also briefly dropped the 10 million existing HBO customers from the launch that had access to HBO Max through their AT&T wireless or pay-TV subscriptions. However, executives said it set HBO Max on track to reach its five-year target of 75-90 million worldwide subscribers, 50 million of which are in the US
“In this challenging environment, we have actually grown HBO customers in total,” Stephens said.
The streaming effort is going “well and we are really excited about the future, not only for HBO but for HBO Max, not only for our digital platforms, but honestly for what it will do for our ability to grow glass fiber, to grow wirelessly , take our existing wireless customers to the elite packages that include HBO Max. ”
Stephens was asked about the company’s net debt, which was initially $ 180 billion, as it began to deepen its acquisition of Time Warner. As of June 30, it was $ 153 billion. “We will continue to pay debts,” the CFO said.
In the current climate of favorable interest rates, the cost of AT & T’s debt is not a major concern, Stephens said. The company recently closed debt at rates below 2%, close to historic lows. “It compares very well with the days when we had much less debt,” but pay rates closer to 7%, he said. “The issue is actually the quantity of debt. 150 is a large number. Bringing that into a more comfortable number, where the market is more comfortable “remains a priority,” he added.
