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AT&T Inc. CEO John Stankey has defended moves by the telco and media giant to shift its legacy theatrical business towards the streaming space with HBO Max amid the pandemic.
“It was a bold and aggressive swing; it was done with a lot of thought about what needed to be done in the subscriber space and the balance of value in our franchises between our theatrical and streaming businesses,” Stankey told analysts during a morning call following the release of AT&T’s fourth quarter financial results.
In Dec. 2020, Warner Bros. and WarnerMedia announced they would severely disrupt the theatrical window and send the entire 17-picture 2021 film slate to the HBO Max streaming service, debuting titles on the same day they would open in whichever theaters could admit customers, pandemic lockdowns allowing. Stankey reiterated that WarnerMedia put a focus on HBO Max as market conditions going into 2021 dictated future distribution plans.
“I would say the data points have come in and have been very consistent with the set of assumptions that we had at the front end of that,” he added, while pointing to rival studios following his studio’s lead and shifting their own tentpole releases to later in 2021 and 2022.
Stankey predicted a “very crowded theatrical field” for late 2021 and early 2022, which he added was unlikely to dramatically increase the number of consumers flocking to the local multiplex. Ahead of that long recovery forecast for the theatrical business, AT&T as part of its fourth-quarter results recorded around $780 million in impairment charges for its production and other content inventory at WarnerMedia, with $520 million resulting from the continued shutdown of theaters during the pandemic and the hybrid distribution model for the studio’s 2021 film slate.
“As we indicated by making the write off, we felt like was had a little bit of a spoiling asset here that needed to be moved and used more effectively, and this was the right economic call,” Stankey said. He added the decision to minimize poor box office returns and build up the HBO Max subscriber base during the pandemic “allows us to have options in our distribution and using this unfortunate set of circumstances around the pandemic for an opportunity to make lemonade out of lemons was the right call in this case.”
Stankey also appeared to touch on the backlash from movie theater owners, Hollywood directors and A-list talent at seeing movies originally destined for theaters suddenly show up in the streaming space. “There were some things on the margin that maybe we’d do a little bit differently, but at the end of the day, it’s going to get down to making sure people are fairly compensated and treated well and I think we know how to do that,” he argued.
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