HBO CEO Leaving Amid AT&T Demand For More Shows, Higher Profits

HBO CEO Leaving Amid AT&T Demand For More Shows, Higher Profits

HBO CEO Richard Plepler has announced his retirement from the company, less than a year after AT&T bought it and the rest of Time Warner Inc. Plepler’s departure is thought to be the result of ongoing conflicts with the leadership AT&T brought in as a result of the merger and is being reported as confirmation of rumors that began in June 2018.

After the Time Warner acquisition, AT&T called a town hall-style meeting at HBO and told company employees that the channel’s historic focus on producing a relatively small number of shows at an exceptional level of quality was over.

“We need hours a day,” John Stankey, CEO of the WarnerMedia division, said at the meeting. “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.”

“I want more hours of engagement,” Stankey continued. “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.”

Game of Thrones. Image by HBO
Game of Thrones. Image by HBO

Plepler’s departure comes after a year of reportedly jockeying for position with Stankey, and while Plepler took pains to be gracious in his departure memo, the rumor mill suggests he had less autonomy and control post-acquisition. Turner President David Levy is also leaving the company.

If you like HBO’s current model, this new directive to create a Netflix-sized firehose of content isn’t exactly a positive direction. HBO’s has historically focused on creating a relatively small number of very high-quality shows. Plepler had already made comments about how this approach wouldn’t be sustainable going forward, and that the growth of competitors like Netflix would require HBO to invest in more content. Stankey’s remarks about the need to step up were made at the same meeting, implying that however much the two executives may have agreed on-stage, they still saw things differently when it came time to setting goals and priorities at the network.

The problem, of course, is that while Netflix creates far more content than HBO, much of what Netflix creates hasn’t historically been as good as HBO’s own work. It’s hard not to see this kind of event — an explicit priority on dumping out content, as opposed to an explicit focus on good content — as being part and parcel of the same kind of thinking that killed the curated film service Filmstruck. But it’s not clear that existing HBO customers simply want more content or that dumping more material on the service will result in an uptick in earnings. Then again, with Game of Thrones coming to an end, AT&T may simply be hoping to drive new revenue from other sources without shedding customers once the series is over. Either way, this seems to be an end of an era for HBO. Hopefully, the network’s reputation for quality doesn’t depart with its now-ex CEO.

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