Warner Bros. Understands "Importance" of "Big Theatrical Releases," AT&T CFO Says

Scoob! - Publicity still 1- H 2020
Warner Bros. Pictures

"We are interested in new ideas, whatever is best for the consumer, but we will continue to work with our partners," says John Stephens about the on-demand launch of 'Scoob!' and calls HBO Max "a real bargain."

WarnerMedia's Warner Bros. will "continue to work with theater owners" even though it took animated film Scoob! straight to premium on-demand instead of waiting for cinemas to reopen after the novel coronavirus pandemic, John Stephens, the CFO of WarnerMedia owner AT&T, said Tuesday.

Speaking at the virtual MoffettNathanson Media & Communications Summit in a session that was webcast, he was asked about Universal Pictures' premium VOD push that has drawn a sharp response from cinema groups and how Warner Bros. is thinking about that strategy. 

"Our launch of Scoob! took a different path than normal because of the virus, and we'll learn from that," he said about the Friday release, but highlighted that "we understand the importance of … big theatrical releases" for the exhibition sector. Stephens concluded: "We are interested in new ideas, whatever is best for the consumer, but we will continue to work with our partners."

Asked about the pandemic's impact on the entertainment unit, the executive said production delays were causing challenges for Warner Bros. and would delay original content for upcoming streaming service HBO Max, but said production shutdowns also preserve cash, "so will see what this balance is."

Stephens also highlighted that "ratings on CNN have more than doubled" in recent weeks as audiences look for news amid the pandemic, and HBO also "continues to do well." Overall, he said "our mix of assets" would allow the company to hold up better financially than peers that have theme parks and other operations hit hard by the virus crisis.

How does management feel about the impending HBO Max launch for a price point that is above others in the sector amid the pandemic that has seen people spend more time with streaming services, but also cut the pay TV cord? Stephens predicted that the higher price would be "accepted" as the service promises more content that is also appealing to "many different" demographic groups, calling it "a real bargain" at the "right price point." 

On cord cutting, the AT&T CFO said he expects "the trends we are seeing will continue to some extent," explaining that the firm has seen consumers "try to conserve money" amid the virus, "throwing a wrench in our plans." But he said the company has seen that partially offset by stronger broadband trends and cost cutting.

Asked about WarnerMedia CEO John Stankey's recent appointment as the new CEO of AT&T this summer, Stephens said he expects no changes to the company's broad strategy, saying it would remain "very consistent."