Meet Time Warner's New Boss: A Hollywood Outsider With a Grand Plan
"Investment in content is going to increase," says John Stankey in his first interview since being named to oversee HBO, Warner Bros. and CNN as he reveals AT&T's post-merger synergy strategy, Peter Chernin's potential role and the top priority for making a mark in showbiz: "We're going to have to earn our way in."
Not so long ago, John Stankey could hardly answer when asked to name a TV show or movie that he liked. But the 54-year-old head of AT&T's entertainment group — who will run Time Warner, assuming AT&T's $85.4 billion acquisition wins federal approval, as expected — says it became clear to him in the past year or two that he had to buckle down and watch some entertainment.
"I realized I had to spend more time getting exposed to what's out there," he tells The Hollywood Reporter in his first interview since he was tapped July 28 to run the to-be-renamed Time Warner. "It's part of my work routine." But he still doesn't seem to have much of a list of favorites. Looking for programs to watch with his wife of 26 years, he says he's seen all of Downton Abbey and some of Showtime's Homeland. But his wife is way ahead of him on HBO's Game of Thrones. His only appointment viewing? College football.
At 6-foot-5 with a deep voice and abundant self-confidence, Stankey looks and sounds like what he is: a metrics-oriented 30-year veteran of a telecom company whose first language is business-speak. Raised and educated in Los Angeles, he seems a bit more Dallas (home of AT&T) than Southern California at this point. But he's a graduate of Loyola Marymount and got his MBA from UCLA. And he was chief strategy officer when AT&T acquired DirecTV for $48.5 billion in 2015, a deal that made AT&T the biggest pay TV company in the country.
Among the many questions surrounding the Time Warner acquisition, the overarching one is: What will AT&T do with a company — home to HBO, the Warner Bros. studio, Turner Broadcasting and CNN — that outgoing chairman Jeff Bewkes has trimmed down and managed in preparation for a sale? There are two schools of thought. Some high-level industry observers believe AT&T will strengthen the assets, for example, by using its data on consumer habits to help the Turner networks withstand competition from giants Facebook and Google, or by increasing HBO's roughly $2 billion programming spend to help it keep pace with Netflix and Amazon. Others suspect that whatever AT&T may say now, it will eventually squeeze Time Warner like a lemon, offering its content at a discount to hold on to existing customers and wringing out cash to pay dividends.
Stankey dismisses the latter scenario. "This is an awful lot of overhead just to do that," he says. "I categorically disagree with the perspective that our goal is simply to run it and harvest cash flows." Instead, Stankey says the acquisition will help both AT&T and Time Warner thrive despite the rapid changes in their respective businesses. And he says that might give consumers of entertainment some more appetizing options, such as ads that are more relevant to individual viewers and less frequent. "We can't continue to jam an ever-increasing amount of advertising down consumers' throats in a 30-minute block," he says.
For sports fans, Stankey wants to explore questions such as how to offer programming in new ways. "Instead of having to watch a baseball game for three hours, can the content be reconstructed in the context of millennials?" he asks. "How do you allow people to come in and out of the game with social cues?"
But industry analyst Craig Moffett is a skeptic, saying he already sees signs that AT&T will squeeze its new acquisition because the company is trying to protect its "portfolio of businesses that are suffering from declining revenues." AT&T is primarily a telecom company, he adds: "They approach most businesses as, how can they help wireless?" The tell, he says, is that AT&T already has started offering HBO to its customers at a discount. He notes that DirecTV — which had an exodus of executives following the AT&T acquisition — was used in the same fashion. "What can [Stankey] point to at DirecTV that is going to give confidence to the longtime employees of Time Warner?" he asks.
But Stankey offers no apologies: "Somebody on the outside might say, 'They're giving [DirecTV] away.' The question is, how long is that [DirecTV] customer a customer, and how deep is the relationship?"
BTIG analyst Richard Greenfield lays out a more hopeful vision of AT&T's strategy — at least for HBO. "I hope he recognizes the importance of increasing the investment in it," he says. "HBO is severely underinvested relative to Netflix." (HBO's annual spend is about $2 billion versus Netflix's $6 billion.) He says AT&T can cut back on Turner expenses to harvest cash. "HBO is the incredible brand," he says. "There is such potential, and the window for capitalizing on it is shortening."
Stankey says AT&T sees great value in original content and wants to grow the Time Warner businesses, but he is vague as to how much it will spend and how soon (the fact that the Trump administration has yet to greenlight the acquisition likely is a factor in his reluctance to comment more substantively). "Over time, investment in content is going to increase," he says. "My goal would be to find a lane to continue to ramp up investment in content at a higher level than today and to benefit from some of the efficiencies, some of the synergies."
It's fair to say that Time Warner insiders are nervous about how Stankey will handle some of the entertainment world's most vaunted legacy properties. There are other suits with no direct experience creating content who are running famed media companies, but those execs spent much, if not all, of their careers in the business. NBCUniversal's Steve Burke rose through the ranks at Disney, and Bob Bakish put in a decade at Viacom before his surprise ascent. Sony's Tony Vinciquerra is a Fox veteran.
Stankey has been getting some Hollywood education from another Fox alum, Peter Chernin. The two met in 2013 when the Chernin Group and AT&T teamed up in an unsuccessful bid to buy Hulu. Chernin instead joined with AT&T to form the digital-video company Otter Media. (Sources say AT&T is now poised to acquire Chernin's stake of slightly more than 50 percent.) Stankey says Chernin has become "a great friend" who has "been very pointed" in teaching him about the entertainment industry. Chernin also has been pointed in ruling out an executive position at Time Warner, but the two seem likely to continue to do business. "Is there a possibility that we find opportunities that we're jointly interested in?" says Stankey. "I wouldn't rule that out."
Chernin says Stankey is "a really good guy with a dry sense of humor," but adds that he's also strategic and thoughtful. Chernin predicts his priorities will be to build "a genuinely targeted advertising business," to be aggressive about building up data-driven video-on-demand and about helping Warners get better at selling content, whether it's Harry Potter or DC Comics, to the right customers. "I don't think you're going to see John trying to greenlight movies and looking at rough cuts," says Chernin. "You'll see him trying to unlock the opportunity."
To that end, Stankey says Warners CEO Kevin Tsujihara won't be replaced: "He's a talented guy." Stankey expects to be in the loop if the studio intends to make, say, a $200 million movie, but "in terms of getting down to the specifics of what is the right content to make a $200 million bet on, that's not where I'm going to spend my time and energy."
Stankey is very clear that the entertainment industry has its own idiosyncratic culture and AT&T does not intend to try to change it. Instead, the company intends to approach with respect. "We're going to have to earn our way in," he says. "My job is to demonstrate that there is value we can bring."
A version of this story first appeared in the Aug. 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.