🎮 AT&T will end HBO as we know it
Edmund Lee and John Koblin, reporting for The New York Times:
AT&T executives said all the right things during the long prelude to the company’s $85.4 billion acquisition of Time Warner, which was completed last month. They acknowledged that the corporate culture of a Dallas-based telecommunications giant was different from that of the more freewheeling media and entertainment concerns in New York and California. They pledged to take a hands-off approach to the company’s crown jewel, HBO, which has won endless Emmys while generating billions in profits.
But the town hall meeting suggested that AT&T would not be a passive corporate parent. [...]
“We need hours a day,” [AT&T's John] Stankey said, referring to the time viewers spend watching HBO programs. “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.”
Continuing the theme, he added: “I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”
On the surface, this sounds like an astonishingly stupid plan. However, there is some logic.
The internet is slowly killing old media, including the cable bundle where HBO's parent company Time Warner lived.
Time Warner knew this and sold itself (including HBO) to AT&T.
AT&T spent billions on Time Warner because it wants to get into the advertising business and needs content to put around the ads.
Advertising is a horizontal business that monetizes best with lots of content so you can run more ads.
HBO is a vertical business that makes a small selection of content so good you have to buy a subscription (Game of Thrones, Insecure, Westworld, etc.).
As you can see, HBO's old model is completely counter to AT&T's plans for Time Warner!
John Stankey seems very upfront that AT&T will spend the next year dismantling HBO as we know it.
HBO employees are presumably unhappy about this, which is why this story (which is unflattering to Stankey and AT&T) was leaked to the NYT.
TLDR: AT&T wants to sell ads, not HBO subscriptions. Enjoy HBO's high-quality programming while it lasts.
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