- The heads of AT&T’s HBO and Turner are stepping down, signaling how the phone company plans to run its newly acquired media businesses.
- Rumors are flying that there will be deep staff cuts after a reported plan by AT&T to combine HBO and Turner.
- The shakeup has ad agencies wondering what AT&T’s strategy is as the crucial TV up-front season nears.
Two top AT&T executives are leaving the company, and insiders say it’s a harbinger of cultural changes and widespread layoffs at the company now that it has a court go-ahead to move forward with its $85 billion purchase of Time Warner.
HBO CEO Richard Plepler and Turner president David Levy are leaving in what are among the biggest changes at AT&T since the phone giant moved to acquire the media giant. With nearly 60 years of combined experience at their respective companies, Plepler and Levy were closely associated with making, respectively, HBO a premier entertainment business and Turner an innovative cable company.
Their departures followed a Wall Street Journal report earlier in the week that AT&T was in talks to hire the former NBC exec Bob Greenblatt to oversee a combined HBO and Turner.
That news, coupled with the departures of Plepler and Levy, has heightened staff concerns about how the Dallas-based phone company would put its stamp on its newly acquired New York-centric media and entertainment properties, now WarnerMedia, according to insiders.
There also was frustration about hearing the news through the press and not AT&T itself. One person described the atmosphere at Turner as being “like a funeral.”
“The first thing they did was fire the two heads of the business that we most worried about,” another insider said. “That doesn’t bode well on Plepler’s side for the creative culture and on Levy’s side for the ad culture.”
The potential combination of HBO and Turner speaks to how John Stankey, an AT&T longtimer who was put in charge of WarnerMedia last June, plans to run the company, another insider said.
Historically, Time Warner operated its units, such as AOL and Time Inc., separately from each other, which made it easier to spin them off if and when the time came.
But in this case, combining HBO and Turner would enable AT&T to unify the way it sells video to consumers. WarnerMedia is working on a direct-to-consumer streaming service that will have HBO at its core, combined with other WarnerMedia content.
‘We’re going to see really big reductions’
The idea of a mashup of the companies also has some buzzing that layoffs are ahead.
“I’ve heard they are talking 30% cuts,” a person with close ties to the company said. “We’re going to see really big reductions — I’m hearing it will be across the board. The places it will probably hit hardest is where the return will be the biggest. The number of people making over $750,000 [at Turner] — in a phone company, there aren’t.”
WarnerMedia hasn’t responded to a request for comment.
Beyond cuts, there are questions about how the HBO and Turner cultures themselves will mesh.
“HBO is slow-growth, versus Turner, where you’ve got to sell ads every day,” that person said. “Some people describe HBO as a mushroom farm. You go around Turner, and you’ve got people bouncing off the walls.”
“Turner has been known as being incredibly innovative, willing to take risks,” a media buyer said. “Is there going to be any more of a conservative approach, given AT&T heads are coming in and will Turner continue to embrace a trailblazing spirit?”
One area of the company that seems to be safe is CNN, where Jeff Zucker remains as head, and AT&T executives have made indirect comments that it’s status quo. “We’ve been reassured over and over that WarnerMedia doesn’t have any desire or intention to shake things up at CNN,” an insider at the news network said.
A combined HBO and Turner could be a way to pool information about how people consume all their content and, combined with AT&T’s distribution pipes, there could be big benefits to marketers, said Amanda Richman, US CEO of the agency Wavemaker.
Agencies have questions
The shakeup has agencies wondering what the strategy is, especially with TV about to enter its crucial TV-selling season in a couple of months.
“We’re about to enter the up-front, and David was key to setting that strategy,” Lyle Schwartz, head of investment for GroupM, said. “Do they have a plan for someone stepping up. Is it going to be status quo or signal a change in their approach to the marketplace. It might have a significant impact on what I recommend to clients. I hope to see some clarity of vision.
“Turmoil always happens with things are left open too long. We’re in the beginning of March and in 60 days is the up-front. That’s a period of time you don’t want this change.”
This is a subscriber-only story. To read the full article, simply click here to claim your deal and get access to all exclusive Business Insider PRIME content.