A significant round of layoffs forecast last month at WarnerMedia is getting under way today. CEO Jason Kilar emailed staffers this morning, acknowledging the process is “painful” but also calling it a “critical” step in the AT&T division’s evolution. (See his full memo below.)
The entertainment outfit has seen multiple staff reductions since the acquisition of Time Warner closed in 2018. Historically, its three main units — HBO, Warner Bros and Turner — operated as mostly autonomous groups. Now, synergy is the mission, with teams being blended for the first time in decades and a lot of positions eliminated in the process. AT&T is laboring to reduce its $151 billion debt load.
COVID-19 has certainly taken a toll on revenue from theatrical film releases and TV advertising, but in large part the layoffs are part of a strategic revamp that has been long in the works.
Initial reports that 20% to 30% of costs will be eliminated in the new round of layoffs are too high, insiders insist, though the force of the reductions is sure to be felt across the organization. A town hall has been called for Wednesday. Kilar’s memo did not allude to any specific numbers or individuals.
Kilar, the former Amazon exec and founding Hulu CEO who took over WarnerMedia in May, oversaw a previous round of cuts in August in which about 600 jobs were eliminated. That wave was notable because it saw the two principal content chiefs of streaming service HBO Max — Bob Greenblatt and Kevin Reilly — depart the company.
The launch of HBO Max, the last in a series of billion-dollar bets on direct-to-consumer streaming was not a roaring success out of the gate. AT&T said last month that 8.6 million subscribers have now activated their accounts, however, a number the company says is slightly ahead of its projections. The target by 2025 is 50 million U.S. subscribers, and 75 million to 90 million globally. In combination with legacy subscriptions, HBO all together has surpassed 38 million total subscribers and execs have, not surprisingly, emphasized the combined number.
In 2021, HBO Max will add a lower-priced tier while also expanding internationally.
Here is Kilar’s full memo:
This is a very painful email to write. And for a number of you reading this, I realize it will be even more painful to receive. For this, I am sorry.
In August, I first shared news about how we were going to meaningfully change the organizational structure of WarnerMedia (which entailed, among other items, simplifying how we organize our entertainment studios, elevating HBO Max, and consolidating our commercial activities into one organization). Many of you have patiently waited to hear how the reorganization would affect you personally, which is both uncomfortable and stressful. Reducing this period of uncertainty was one of the many reasons we pushed so hard to get through this work as quickly and as thoughtfully as possible, although it probably didn’t feel fast enough. I want to thank you all for continuing to contribute your best, despite this challenging period and the additional pressure of everything else that has been going on in the world.
I’ve previously shared how critical it is for us to evolve how we operate in the context of best serving customers. As I mentioned a few months ago, this entails simplifying how we are organized, partnering with the very best storytellers, and leaning into world class product and technology as we share our stories directly with audiences across the globe. Our journey entails continuing to excel in our large, core businesses while at the same time investing in emerging businesses where we have the opportunity to meaningfully delight customers.
Today, we have arrived at a number of difficult decisions that are resulting in a smaller WarnerMedia team. This is a function of removing layers and the impact of consolidating previously separate organizations. Starting today in North America, we will be sharing which jobs are being eliminated and which roles have changed. We are continuing to review proposed changes in other countries across our non-US businesses, the timing of which will vary according to local regulatory requirements. Nothing about this is easy. But please know, these reductions are not in any way a reflection of the quality of the team members impacted, nor their work. It is simply a function of the changes I believe we must make in order to best serve customers. For those impacted, we will be offering severance and healthcare packages, in addition to professional services and team member assistance programs.
While I anticipate that organizationally, things will settle down materially in the weeks and months to come (we’ve worked hard to make this a process with a beginning, middle and an end), I don’t want to suggest that our future is static. Rather, our future is about inventing ever better ways to move the world through story … which entails embracing change. I have every confidence in this world class team to do just that.
Please join me in a Town Hall tomorrow at 2:00pm ET/11:00am PT where I will try and answer as many of your questions as possible. You can start to send your questions here.
To our colleagues who are leaving, I wish there were words to lessen today’s pain. Your contributions are a permanent part of this great company and today’s news does not change that. I am extremely thankful for all that you have done for this team and this mission. I hope that at some point you will look back on all of it with immense pride.
Until then, please stay well and safe.