WarnerMedia CEO Jason Kilar used a conference appearance this week to reflect on a chaotic year that saw him enrage most of Hollywood, reshape one of the world’s biggest media companies, get surprised by a merger, and learn he will soon lose his job.
At the conference, Kilar expressed more than a few regrets about how things have gone in that job, the biggest ever held by a streaming-first executive in a traditional Hollywood media company (though ViacomCBS’ recent decision to put Awesomeness TV founder Brian Robbins in charge of both Nickelodeon and Paramount Studios comes close).
For all the regrets Kilar expressed last week, though, I’m just not sure he should feel too bad about how it’s all turned out. At the least, his set of decisions in a muddled and chaotic year were no worse than any other head of a major entertainment company lurching through the past year of continuing COVID craziness, and better than many.
Tops on Kilar’s list of regrets was the “compressed” time frame in which WarnerMedia communicated Kilar’s most consequential decision: releasing all of Warner Bros’ 2021 movie slate, beginning with 2020’s Christmas Day launch of Wonder Woman 1984, on HBO Max the same day the features hit theaters.
The messaging to dozens of profit participants in those movies took place over a scant week, instead of what Kilar suggests now should have been a far more expansive time frame that perhaps would have assuaged some of the sensitive egos and pocketbooks involved.
Doing the Right Thing
“We endeavored to do the right thing in terms of communication,” Kilar said. “In hindsight, we should have taken the better part of a month to have the 170 conversations.”
Realistically, a more relaxed time frame for communicating such a momentous, game-changing decision may have helped in the direct conversations. But it also would have risked widespread leaks and possibly enough industry blowback that the plan might have been scuttled. And that could have been disastrous, given the way the year has played out, with theaters dead in the water the first half of 2021 and still struggling badly.
Importantly, Kilar also made sure those conversations included some very large checks, reportedly between $200 million - $300 million in total. That appears to have been enough to smooth most of those ruffled feathers (except Christopher Nolan’s; he stomped off to Universal to make a $100 million movie about atomic bombs that may not arrive until 2024).
“We said from the start that we were going to treat every single film as though it were a blockbuster from an economic perspective for participants, that we were going to be fair and generous, and that we were going to do the right thing,” Kilar said.
For comparison, it took Disney months “to do the right thing” with an upset Scarlett Johansson, who filed suit three weeks after Black Widow debuted poorly in June. That suit, which also settled this week, could have been headed off if Disney and Bob Chapek had copied Kilar back in January.
It’s difficult, most of a year later, to recall the uncertainty clouding theatrical exhibition last winter. Even with promising vaccines on the way, there was no telling how soon the industry would return to normal.
And the industry still isn’t back, despite all the exultation about Disney’s Shang-Chi and the Legend of the Ten Rings.
Is ‘Shang-Chi’ a Hit?
Yes, the latest installment of the Marvel Cinematic Universe drew critical raves, fan adoration, and a month’s worth of box-office wins.
But Shang-Chi still grossed only $386.9 million worldwide, a nice number mid-pandemic but pretty miserable by Marvel standards. After all, it likely cost $200 million to make and another $125 million to market, had a holiday weekend to itself, and none of the PVOD alternative distribution that so enraged Johansson.
Kilar’s decisions gave HBO Max a year’s worth of big-name releases, maximized the theatrical marketing push, and arguably helped the tattered theaters survive. Indeed, for all their rage, the theater owners at least were guaranteed a steady stream of worthwhile movies if they actually had screens open and customers coming.
It also pushed the competition to step up their movie game. Netflix, for instance, is touting the 41 feature-length shows it plans to release this fall. Feature-length online releases will be a big part of all the major streamers, including HBO Max, which will release 10 films next year exclusively even as it moves beyond Kilar’s 2021 commitment.
That’s part of more than $18 billion WarnerMedia will spend on programming this year, as it goes dollar for dollar with Netflix, Amazon, Apple and others. As Kilar noted, that brutally high spending is “probably unsustainable” for all but a very few players. At least HBO Max is positioned to be one of them.
The big decisions didn’t stop with that day-and-date release announcement either. WarnerMedia is ending its HBO presence on Amazon Prime Video Channels, which will cost an estimated 5 million subscribers initially.
That’s a big hit, but long-term it’s almost certainly a smart move as HBO Max asserts more control over its own destiny. It allows WarnerMedia to build a direct billing and marketing relationship with those former Prime Video subscribers, while keeping a big chunk of revenue that was going to one of your biggest, richest competitors.
As it is, WarnerMedia is still issuing guidance that it’ll finish 2021 with between 70 million and 73 million HBO and HBO Max subscribers. That’s not Disney Plus levels, but it’s a sturdy base to build on, especially given the relatively high cost (and average revenue per user) that HBO Max enjoys.
And finally, Kilar said he regrets that he’ll almost certainly be unemployed by this time next year, after a surprise AT&T decision to merger WarnerMedia with Discovery, eliminating Kilar’s position.
“I would far prefer this adventure to go on for 10 or 20 more years,” Kilar said. “But that’s not the way corporate America works.”
True that, as too many former WarnerMedia employees have found out over three years of reorganizations, restructurings and layoffs.
Kilar will be in their shoes soon. But I’m guessing, given the resume he built in reshaping a stubbornly backward-looking Hollywood studio for the streaming future, that Kilar won’t be unemployed any longer than he wants to be. And those regrets he has will probably be the last thing on his mind.
David Bloom of Words & Deeds Media is a Santa Monica, Calif.-based writer, podcaster, and consultant focused on the transformative collision of technology, media and entertainment. Bloom is a senior contributor to numerous publications, and producer/host of the Bloom in Tech podcast. He has taught digital media at USC School of Cinematic Arts, and guest lectures regularly at numerous other universities. Bloom formerly worked for Variety, Deadline, Red Herring, and the Los Angeles Daily News, among other publications; was VP of corporate communications at MGM; and was associate dean and chief communications officer at the USC Marshall School of Business. Bloom graduated with honors from the University of Missouri School of Journalism.
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