WarnerMedia undergoes major reorganization as HBO Max gets higher priority

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Two of WarnerMedia’s top executives, Bob Greenblatt and Kevin Reilly, are leaving the company as CEO Jason Kilar begins to plan the company’s future with a tighter focus on HBO Max.

Greenblatt oversaw all of the company’s direct-to-consumer lines and oversaw WarnerMedia as a whole; Kevin Reilly was WarnerMedia’s content chief. He also served as president of TBS, TNT, and TruTV. As part of the shakeup, Andy Forssell (a former Hulu executive who worked alongside Kilar at the streaming company now owned by Disney) will oversee all of HBO Max, according to The Hollywood Reporter.

With Greenblatt and Reilly out, Warner Bros. CEO Ann Sarnoff and HBO programming president Casey Bloys will oversee a new group combining WarnerMedia’s studios and networks. The new group will combine “original production (content studios) and programming capabilities currently spread across Warner Bros., HBO, HBO Max, TNT, TBS and TruTV,” according to a letter from Kilar to employees obtained by The Hollywood Reporter. Kilar added that the new group “will oversee all WarnerMedia television series and motion picture development, production and programming” to ensure HBO Max is “successful globally.”

Effectively, WarnerMedia is even more all-in on HBO Max than it was before.

In his letter, Kilar emphasized priority around the company’s new streaming product, HBO Max. That’s also what led to the reorganization. Kilar explained in the letter that in order for WarnerMedia to succeed in a rapidly shifting industry — one that is shifting to a streaming-focused audience — it is “vital that we change how we are organized, that we simplify, and that we act boldly and with urgency,” he wrote.

“Because of the gift that is the internet, we have what I believe is one of the greatest opportunities in the history of media, which is to deliver our beloved stories and experiences directly to hundreds of millions of consumers across the globe,” Kilar wrote, adding, “The pandemic’s economic pressures and acceleration of direct-to-consumer streaming adoption places an even higher premium on these points.”

Kilar outlined the five steps WarnerMedia is taking to accomplish his goal of turning HBO Max into a much bigger product. They include:

1. We are elevating HBO Max in the organization and expanding its scope globally.

2. We are simplifying how we organize our studios.

3. We are creating a consolidated International unit focused on scale and efficiency.

4. We are bringing our key commercial activities into one group to allow us to operate more strategically.

5. We are making other structural changes that will help us operate more effectively and efficiently.

Meeting the goals above “means that we will be reducing the size of our teams, our layers, and our overall workforce,” Kilar wrote, acknowledging “this is a lot to take in.” That might be especially true for the team, considering Kilar joined WarnerMedia just a little over 90 days ago.

Greenblatt and Reilly are two of the most executive members of WarnerMedia’s team, and both have long storied careers within the industry. From 2003 to 2010, Greenblatt served as Showtime’s president of entertainment — a period of time that saw shows like Dexter, Weeds, and Nurse Jackie air on the network. He then became NBCUniversal’s chairman for many years, before moving over to WarnerMedia as chairman in March 2019. He was tasked with overseeing the launch of HBO Max.

Reilly, who started his career at NBC and helped develop Saved by the Bell and the pilot for ER, has touched just about every aspect of the television industry, with stints at Fox, FX, and Turner before AT&T acquired TimeWarner in 2018 for $85 billion. His contract was supposedly extended through 2022, but “rumors have swirled that WarnerMedia brass was considering an overhaul of HBO Max’s programming strategy, with Reilly under the microscope,” according to The Hollywood Reporter.

HBO Max’s launch hasn’t gone as smoothly as executives at AT&T — and WarnerMedia — may have expected. New AT&T CEO John Stankey told analysts on an earnings call a couple of weeks ago that HBO Max amassed 3 million new subscribers, and an additional million activations came through AT&T platforms (including existing HBO subscribers who upgraded to Max for free).

That conversion rate is disappointing; the company already had more than 30 million subscribers it could move over to HBO Max from its linear HBO customer base and HBO Now. Stankey on the call specifically noted it was difficult getting people who subscribed to HBO through cable packages to sign up for HBO Max, adding that it’s an area WarnerMedia wants to improve on in the future.

It didn’t help that much of HBO Max’s launch lineup was hindered by the pandemic, and not being on two of the most popular streaming devices, Amazon Fire or Roku, likely had a significant impact on initial signups. Plus, HBO Max faced general consumer confusion over what the product actually was — how it differed from HBO Now or HBO Go — and touted a much higher subscription cost ($15 a month) than its competitors.

These are all areas that Kilar and his reorganized team will focus on going forward, on top of an international expansion that the CEO mentioned in his letter. The changes are not going to be easy, Kilar wrote, but he stressed how he views them as necessary to compete going forward.

That said, we are successfully navigating a pandemic together and I know that, however challenging the above changes may be, we will also successfully navigate them as well,” he wrote.

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