AT&T CEO John Stankey said on Thursday that he feels better about the state of film and TV productions amid the coronavirus pandemic, but the outlook for the theatrical business remains uncertain nearing the end of the year, with the recovery likely to be “choppy.”
He also admitted that the Tenet release was no “home run,” even though he said he was “happy” the studio went ahead with the theatrical release. And he once again declined to comment on whether the company will sell a part of pay TV arm DirecTV, but called pay TV “a mature business.”
Asked on the company’s earnings conference call about the state of production, Stankey started saying “I’m breathing easier” before adding that was likely “a bad analogy” amid the pandemic. “I feel much better about the restart of production,” he then said, given that the company exited about 180 productions in February, but now has about 130 up and running as of last week “in some shape or form.” He added there was no need to get back to all 180, adding “there is some stuff we rationalized.” Overall, he concluded that “I think we are out of the woods,” and, most importantly, that will help HBO Max.
Theatrical production is also underway, but Stankey said there was “not great visibility” on the future of the theatrical business, adding that the company has tried some experimentation. “I can’t say we walked away from the Tenet release and say it was a home run,” he said.
When it comes to the sustainable reopening of cinemas, Stankey said that visibility remains limited and the holiday season will be the “next big checkpoint.” Warner Bros. may need to make “game-time decisions” about whether to move more films into theaters or delay more movies. “We’re still committed to putting some content” into cinemas where it makes sense, the AT&T CEO said, but warned he was “not optimistic” for a “huge” theatrical recovery late this year or in early 2021, predicting the business would remain “choppy.”
Stankey also lauded “important organizational moves” by WarnerMedia to position the company for further direct-to-consumer growth. “I am pleased with how the WarnerMedia team is responding to a challenging environment.” He didn’t provide more details about possible next steps in this effort though.
WarnerMedia went through a summer reorganization that included the departure of WarnerMedia Entertainment chairman Bob Greenblatt, with the studio’s content divisions being combined into one unit overseen by Warner Bros. chief Ann Sarnoff. Recent reports though have suggested the entertainment unit could be eyeing thousands of additional job cuts to reduce its cost base by around 20 percent.
AT&T recently closed the $1.1 billion sale of a majority stake in Central European Media Enterprises as part of its effort to reduce its debt load. It had acquired the stake in the Prague-based TV networks operator when it bought Time Warner, now WarnerMedia.
AT&T CFO John Stephens signaled during a September investor conference that the telecom giant wouldn’t sell advertising technology unit Xandr despite reports it was exploring that option. “Advertising continues being an important part of our business, … and that is not going to change,” including making ads more efficient with data for clients and AT&T itself, he said.
However, the company has been understood to be looking at selling slightly more than 50 percent of DirecTV.
Anime outfit Crunchyroll has also been believed to be on the auction block, while AT&T is believed to have abandoned a previously eyed potential sale of WarnerMedia’s video gaming unit Warner Bros. Interactive Entertainment, which owns and develops the Mortal Kombat fighting franchise, as well as games based on intellectual property owned by the Hollywood giant.
WarnerMedia has focused much of its attention on growing streaming service HBO Max, which it launched in late May. Stankey on Thursday’s call reiterated plans for an international rollout next year, with a focus on Latin America and parts of Western Europe. And he said the launch of an advertising VOD version of the service will be a key part of the firm’s strategy to make HBO Max a service that can attract as broad a user base as possible.