Changes on the Horizon at HBO, While the DoJ Begins to Challenge the Purchase
posted Saturday Jul 14, 2018 by Scott Ertz
It was only a month ago that a federal judge rejected a governmental argument that AT&T's purchase of Time Warner would harm the industry. That rejection signaled the end of the fight for AT&T, who wrote their check and began the process of integrating the company into the AT&T business. The biggest immediate change was the name of the company; to prevent confusion with the former cable company, the company was renamed to WarnerMedia.
In addition to the name change, some staffing changes were made. For example, a new head was appointed, who oversees all of WarnerMedia. John Stankey, who has been an executive with AT&T for several years, was moved to the newest member of the company. According to audio obtained by NYT, some big changes are coming to WarnerMedia property HBO.
The biggest problem, according to Stankey, is that viewers are not spending enough hours per day with the network. In the recording, he says,
I want more hours of engagement. 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.
Longer engagement likely means more Netflix-style content. Netflix received more Emmy award nominations this year than HBO for the first time in 17 years because of its increased quality and quantity. This is the direction that Stankey would like HBO to follow. This will require one important thing to become a reality: government approval. Yes, the case was dismissed a month ago, which is how we got to this point, but it might not last.
The Department of Justice has filed an appeal, stating that they had met the burden of proof. AT&T's general counsel, David McAtee, is definitely confident in the company's ability to win the appeal, saying,
The court's decision could hardly have been more thorough, fact-based, and well-reasoned. While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the D.O.J. has chosen to do so under these circumstances.
While the government likely doesn't have a chance of winning this case, the point is likely more to show that the Department of Justice is going to be strong against big mergers. This is in stark contrast to quick approval of the Disney-Fox merger, which was completed before the deal was even finalized. In fact, the quick approval was partially responsible for the deal closing in the first place, since Fox didn't feel that the Comcast offer would be approved.