The executive reshuffling at WarnerMedia will not result in “massive” layoffs, despite reports to the contrary, and was not preceded by changes to the T&E policy or other penny-pinching moves by the AT&T-owned company, according to CEO John Stankey.
The longtime AT&T executive addressed those and many other topics during an interview with Deadline after the organizational reset that adds former NBCU Chairman Bob Greenblatt as chairman and head of direct-to-consumer. Stankey also recalled the process of shaping the new structure during the long period of review and litigation of the merger; the state of the yet-to-launch WarnerMedia streaming service; and reports of a culture clash between Dallas-based telecom giant AT&T and its new media assets.
“On the margins, there will probably be some” layoffs, Stankey said. “But this notion that there will be massive layoffs is wrong. When you’re picking up an organization and moving it to a different leader, there’s no duplication. Jeff [Zucker] picks up Sports, he doesn’t have a sports organization. He’s just picking up a function that’s moving over there. That’s not a driver of layoffs. That’s just a change of leadership.”
Employees have been shaken by the high-profile exits in recent days of veteran executives Richard Plepler at HBO and David Levy at Turner. Some veteran media observers like MoffettNathanson analyst Craig Moffett have painted a grim picture of AT&T coming in to ruthlessly cut costs, including many first-class flights and closer scrutiny of any expense over $100,000 for parties or other purposes. “I’ve been here seven months and not one person has come in here and asked for my approval to do a party or an event, nor have I asked anyone about a party or an event, nor has anything changed about the travel and entertainment policy,” Stankey said.
The media division CEO emphasized that any job cuts will focus on areas of clear overlap, such as HBO and Turner affiliate sales, which will be consolidated. “We will approach customers one time as WarnerMedia now,” he said. “Does it mean that we have replication in programming? No, we are investing more in programming. Does it mean we’re doing less around technology development that we were doing two months ago? No, we’re scaling technology development. Does it mean that we don’t have to market and promote our brands aggressively? … No, we’ve got to do more of that.”
Due to the winding path of AT&T’s $81 billion acquisition of WarnerMedia, Stankey had more than a year and a half to look closely at the assets, executive teams and other moving parts before finalizing the restructuring. He attended every proceeding in federal court in Washington during the six-week trial of the government’s lawsuit aiming to block the merger on anti-competitive grounds. He had been handed the reins of the former Time Warner a few months before the government’s surprise lawsuit was filed in November 2017, so he was able to make deliberate decisions as the legal process unfolded.
“I certainly had an opportunity to watch what worked and what didn’t work,” he said, jokingly adding that he “wasn’t in my office more than an hour” after starting the role before getting input from the executive teams. The final structure, which adds sports to news chief Zucker’s plate and some TV networks and Otter Media to Warner Bros. boss Kevin Tsujihara’s portfolio, was cemented within the past six to eight weeks, he said.
Greenblatt and Stankey connected months ago during the latter’s orientation and networking phase, as he spent more time in LA and got to know the industry’s key players. While Greenblatt is best-known for his programming savvy and hasn’t had a pure tech role in the streaming realm, Stankey said he had the right background for a scale-oriented, data-driven project like the forthcoming WarnerMedia offering. “Bob has the kind of broad purview on content development and markets that I think is critical of being an architect of that kind of scaled approach,” he said. “He’s proven himself working what I would call straight down the fairway of the mass market in his time at NBC. He’s demonstrated his ability to understand and curate for more niche and focused audiences during his time at Showtime. And to have taste and have judgment that can work across that and work with people and teams that are very capable in their own right, and guide them … Bob’s got a unique lens on that.”
Stankey declined to offer fresh details about the streaming service, saying its name and pricing and other specifics would likely be revealed soon before its launch, which will be in a beta version by the end of 2019, with a more full-bodied rollout in 2020.
As to reports of a culture clash between the engineering-minded telecom troops in Dallas and the Hollywood-oriented workers across WarnerMedia, he acknowledged, “I am a different guy” than most of his direct reports. “I’m the one person who’s kind of rolled in from that other culture” at AT&T. Despite certain benefits to that outsider view, he continued, “the downside is that they don’t know me and I don’t know them, and trust in the executive suite takes a little bit of time to develop.”
Once those connections are made, Stankey argued, the larger objective is attainable. “The reason we’re running so hard” toward a direct-to-consumer streaming app, he said, is that the company must abandon the traditional view in media circles that getting 25% market share is a win. “You need to have a relationship with virtually all customers out there if you’re going to compete with the Googles and Amazons and Apples of the world,” Stankey said.