Cosmic Injustice Alert: Jason Kilar Got WarnerMedia Revved Up … Only to Get Kneecapped By John Stankey?
Wednesday’s WarnerMedia Upfront presentation elegantly showcased a media company that’s finding its legs in the streaming era. But it just got waylaid by an executive who has overseen tens of thousands of lost jobs and billions of dollars of destroyed wealth
After a tough direct-to-consumer launch for HBO Max, which was slowed by studio production delays and distribution impasses, a brutal corporate restructuring, and a nasty battle with the Hollywood creative community in which he was proven right, soon to be former WarnerMedia CEO Jason Kilar has his division humming.
Wednesday’s WarnerMedia upfront sizzle reel, which featured a clever interstitial showcasing how HBO Max and TNT successfully share sci-fi drama Snowpiercer, with each platform driving audience to the other, made a compelling case for a media company that is figuring out how to best build new-platform growth, while stabilizing aging linear channels.
We already knew going in that the metrics were headed in the right direction—domestic HBO subscribers were up around 2.7 million in the first quarter, while overall WarnerMedia Q1 revenue had grown 9.8 percent to $8.5 billion.
If you’ve tuned into HBO Max recently, you don’t need an earnings report to tell you the SVOD service has found its creative footing. New series like gritty crime drama Mare of Easttown and multi-generational comedy Hacks have, just within the last few weeks, created buzz for a platform that had its hands tied for its first 12 months with production shutdowns. There are other new shows coming down the pike for HBO Max, and early successes like Kelly Cuoco comedy drama Flight Attendant are set to return.
With a cheaper ad-supported iteration of the HBO Max service on the way, there’s reason to believe the subscriber growth will only accelerate, and folks will stop complaining about the $14.99-a-month Max price tag.
On Monday, as reports surfaced that Kilar was negotiating with AT&T on a severance package, Variety ran a snark-headlined article, astutely noting the irony of Kilar, who oversaw the layoffs of thousands of employees across WarnerMedia film and TV divisions last fall, getting it in the back, in a Machiavellian style reminiscent of HBO mega hit Game of Thrones.
But this makes it sound like Kilar had it comin’—a hatchet man, with blood on his hands, who died by the same hatchet. Kilar actually did much more for AT&T and WarnerMedia than just fire people, and there’s probably a lot less cosmic justice to this story than that ... at least, until someone finds a way to pink slip John Stankey.
The concurrent narrative to AT&T’s shocking spinoff and merger of its WarnerMedia assets with Discovery Inc. is that Kilar’s fate was decided when a scuttled AT&T-sponsored golf event put AT&T CEO Stankey and Discovery President and CEO David Zaslav on what would become a hyperactive email thread, from which a $43 billion deal was eventually borne.
It’s been amply reported that Zaslav, an executive paid $137 million in 2018 to stick around after Discovery purchased Scripps Networks Interactive, and who was just given a four-year contract extension, is the big winner in this game, inheriting the throne of the combined WarnerMedia/Discovery global empire.
With Discovery reporting modest early success for its global direct-to-consumer push—it says it’s up to 15 million subscription streaming customers globally as of Q1—it could be argued that Zaslav hasn’t accomplished anything more than Kilar has in terms of the current “streaming wars” crucible. And both executives couldn’t get to where they needed to go—that is, scale needed to compete with Disney and Netflix—without a majorly disruptive merger of some kind.
For those of us who like synergy, symmetry and coherence, it’s harder to stomach that Stankey, a man who has helped engineer nearly 55,000 job cuts over the past four years following massive Trump-era corporate tax breaks for AT&T, once again got to pull a trigger on something like this.
As CEO of the erstwhile AT&T Entertainment Group, Stankey was put in charge of AT&T’s disastrous integration of DirecTV, the satellite TV company the telecom paid $49 billion for in 2015 and which was recently valued at around $15.5 billion at the time AT&T spun it off to private equity interest.
AT&T’s failed DirecTV-led video strategy under Stankey, which included the shooting-star-like flameout of virtual pay TV service DirecTV Now, dovetailed into the telecom’s even more calamitous $85 billion purchase of the erstwhile Time Warner Inc. in 2018.
Pivoting almost entirely away from the smoldering DirecTV brand like it never even happened, AT&T under former CEO Randall Stephenson doubled down on Stankey, anointing him CEO of the rebranded Time Warner Inc. empire.
By the time Kilar arrived in the spring of last year, Stankey and his crew were about to launch a direct-to-consumer streaming service, without any of its planned original shows, or app support on the two biggest connected TV device ecosystems, Roku and Amazon Fire TV.
Here you go!
Stankey, who took home $21 million in compensation in 2020, had just gotten promoted to the top AT&T job, with Stephenson put out to pasture, placed on the AT&T board with a $64 million golden parachute, much to the chagrin of AT&T's growingly agitated activist shareholder community.
Back in Dallas, with Stankey's boots on Stephenson's old desk, invoices started to appear for expensive network infrastructure projects related to these things called 5G and fiber-to-the-home. And stories began to circulate the halls about something else wealth-destroying Time Warner Inc. had been involved with decades ago ... something about AOL, and the fools gold of the fully vertically integrated media company.
For AT&T, and to a lesser extent Verizon, breaking the shackles of sunk costs, biting the bullet, and getting back to what they're good at, voice and data connectivity, probably makes sense. But maybe with the folks in charge of the expensive media adventures not calling the shots this time? Shouldn't someone be held accountable for so many derailed careers, so much lost shareholder wealth, so much ... corporate failure?
Guess not. Elliott Management, one of the most activist AT&T shareholders of them all, issued a note Wednesday, backing Stankey.
As Stankey was quietly planning an about face to the cataclysmic media business gambits he helped lead AT&T into, Kilar went to work. He stabilized the HBO Max launch, right-sizing linear networks that had lost 20% of their distribution in recent years, retrofitting marketing efforts to conform to the social media era, making deals with Roku and Amazon, and figuring out the tense back-and-forth of creative compensation in a new windowless era. For a career tech exec operating in the more Byzantine culture of Hollywood, it wasn't always smooth for Kilar. But things seemed to be working out, and his efforts seemed to have culminated in Wednesday's almost surreal tour de force WarnerMedia Upfront presentation, taped before Monday's bombshell.
Stankey? Turns out he was making plans to join Zaslav at Pebble Beach ...
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Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!