Kevin Tsujihara Says WarnerMedia Shake-Up Isn't "a Cost-Cutting Exercise"

Kevin Tsujihara - 2016 CinemaCon - Getty - H 2017
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The Warners Bros. chairman and CEO is adding a new global kids and young adult business, Turner Classic Movies and Otter Media to his portfolio.

Acknowledging that “change is never easy,” Kevin Tsujihara, Warner Bros. chairman and CEO, assured employees that the WarnerMedia reorganization, unveiled Monday, will allow the studio “to form deeper and more meaningful relationships with our fans and consumers.”

As for the possibility of layoffs, Tsujihara told The Hollywood Reporter, "We don’t view this as a cost-cutting exercise. We view this as a better alignment of resources. We are not going into this with a head-count target of what we need to do. We want to grow profits."

The moves come after John Stankey, who was named by AT&T to head WarnerMedia in July 2017, reviewed the sprawling media company's businesses, deciding which operations should be combined and which kept separate. At the same time, there also had been ongoing discussions within Warner Bros. about how it needed to take a more integrated business approach to areas like competing for the kids business and reaching out to young adults — challenges the reorganization is intended to address.

While Bob Greenblatt is joining WarnerMedia, where he will have oversight of the company's combined television programming operations, including HBO and Turner's TNT, TBS and truTV, as well as the company's planned streaming service, Tsujihara, who oversees the film and TV studio, has been given additional responsibilities that include a new global kids and young adults business that brings together the family, kids and animation efforts from across WarnerMedia, including Cartoon Network, Adult Swim and Boomerang. Additionally, Otter Media, Turner Classic Movies and all activities around licensed consumer products development for WarnerMedia properties will be under his supervision. 

Many of the details of how the various units will be integrated still need to be worked out — a process that insiders say could take six to eight weeks. In addition to possibly integrating some of the individual units, it's also intended to align them more closely with other areas like games and consumer products and to use them for various cross-promotions.

For example, Tsujihara envisions Toby Emmerich, who heads the motion picture group, and his team, using platforms like Cartoon Network and Boomerang to more effectively promote upcoming movies like Space Jam and Tom and Jerry. "Hopefully, they will have access to marketing platforms that we couldn't access before. It was more of an arm's length transaction," said the exec. "To be able to have a platform like Boomerang, a platform like Cartoon Network, to promote those movies is very helpful."

While the film and TV production operations — while Peter Roth heads TV production, Kevin Reilly now serves as chief creative officer at Turner and will also develop programming for the streaming services — aren't expected to see dramatic changes, they have been charged with developing original programming for the WarnerMedia streaming service, which launches later this year.

In his staff memo, Tsujihara called Turner Classic Movies, which is now part of his portfolio, “a natural fit with Warner Bros., given we have the largest and most valuable film library in the business.” While WarnerMedia shut down FilmStruck, which offered subscribers access to classic movies last year, a curated version of TCM and the Warners library is expected to resurface as part of the streaming service.

Tsujihara also advised staffers that the new Kids/Young Adults/Animation operation “will be a fundamental pillar of our business,” reaching into film, TV, games and consumer products. 

He also predicted that the digitally driven Otter Media, which plays to the millennial/Gen Z audience, will provide opportunities for Warner Bros. and WarnerMedia to connect with those audiences more effectively. Some of the businesses under the Otter Media banner could also be brought into closer alignment with other Warners teams; Crunchyroll, for example, already has a strong animation business. And in addition to their online presence, Reese Witherspoon's Hello Sunshine as well as production company Gunpowder & Sky are also involved in film and TV production. Currently, the only area where there is large overlap between Otter Media and Warners is in the games business.

In Tsujihara’s own message to the studio’s troops, he hailed Greenblatt’s arrival, while also offering words of appreciation for Richard Pepler and David Levy, who are stepping down as the heads of HBO and Turner, respectively, saying “both have made tremendous contributions to the success of WarnerMedia and its predecessor, Time Warner, and both have been terrific partners to Warner Bros. and to me over the years.”

Tsujihara’s memo to staff on Monday is below.

Dear Colleagues:

First, I’d like to welcome our colleagues at Cartoon Network, Boomerang, Adult Swim, TCM and Otter Media to the global Warner Bros. family. I hope everyone has had the opportunity to read John Stankey’s message from this morning regarding some very important organizational changes that are redefining our parent company, WarnerMedia.

While change is never easy, a realigned WarnerMedia will be better-positioned, better-resourced and better able to compete on all fronts.  We are literally entering a new chapter in our company’s history.

I’ve known and worked with Bob Greenblatt throughout the years, and I’m looking forward to working with him and the newly combined WarnerMedia Entertainment to fully maximize our companies’ assets and efforts.  

Here at Warner Bros., incorporating Cartoon Network, Boomerang and Adult Swim into the company will truly make Kids/Young Adults/Animation a fundamental pillar of our business. This newly combined operation will allow us to take an integrated, global approach to all our kids and animation businesses (TV, film, games, consumer products) like never before, using the companies’ IP, talent and legacies to create an animation powerhouse.

Turner Classic Movies is also a natural fit with Warner Bros., given we have the largest and most valuable film library in the business. Partnering TCM and Warner Bros. will help us give fans more of what they want in new and exciting ways, while building on the Studio’s almost-100-year history as a leader in filmed entertainment.

Otter Media speaks loudly — and effectively — to the millennial/Gen Z audience and brings together highly passionate communities through content. Bringing our iconic brands, infrastructure and library together with Otter’s creative talent, reach and diverse set of communities will help us grow this important audience segment for Warner Bros. and WarnerMedia content and services. This move also enables us to create the scale necessary for passion-driven digital media companies to be successful.

Additionally, all activities around consumer products for WarnerMedia properties will now fall under the WBCP umbrella.

As we welcome these businesses into the Warner Bros. family, we are also reaffirming our commitment to being the number one destination for creative talent. We will continue to work with the industry’s best writers, directors, producers, actors, designers and developers to create the broadest and most diverse roster of film, television, game and digital properties. Warner Bros.’ production entities are an unmatched content engine, supplying both third-party and WarnerMedia platforms with the world’s best entertainment. And that’s not going to change. 

Warner Bros. is now positioned to form deeper and more meaningful relationships with our fans and consumers. Combined with AT&T’s reach and first-in-class technology, the opportunity is even bigger.

Finally, I’d like to acknowledge Richard Plepler and David Levy. Richard and David have been my colleagues and friends for more than two decades. Both have made tremendous contributions to the success of WarnerMedia and its predecessor, Time Warner, and both have been terrific partners to Warner Bros. and to me over the years. I’m sad to see them leave the company, but I know they’ll be hugely successful at whatever they choose to do next.

I’m sure you have many questions, and we’ll continue to provide additional information as it becomes available in the days and weeks ahead, including at the State of the Studio on March 14th. I hope you will join us.

Again, I’m excited about what’s ahead for Warner Bros. and for all of us. I’m proud to call all of you colleagues and I’m glad we’re on this journey together.