Expect a lot more TV series, movies, and specials from HBO.
The premium TV brand is getting more money to spend on programming now that it’s owned by AT&T, John Stankey, CEO of AT&T’s new subsidiary, WarnerMedia, said on an earnings call with investors Tuesday (July 24). The telecommunications giant completed its $85 billion acquisition of Time Warner, HBO’s parent, last month.
Stankey did not reveal HBO’s new content budget, but said it would allow HBO to move forward with more of the projects it has in development. Stankey said there are a lot of projects HBO has wanted to pursue but couldn’t afford. AT&T plans to reinvest some of the money it will save by combining its business with Time Warner’s into the award-winning TV network.
That could mean more momentum on those Game of Thrones prequels, and other entertainment properties for which HBO has the rights.
AT&T is hoping more programming will prevent people from cancelling the service in between seasons of their favorite shows, like Game of Thrones or Westworld or Big Little Lies. It’s seen that behavior on its streaming platforms, like HBO Now, which costs $14.99 per month, more than rivals like Netflix, Amazon, and Hulu.
“We have customers jumping in and out based on scheduling,” said Stankey. “If we can smooth that schedule, we can drive churn down or improve retention and power additional subscriber growth.”
HBO is coming off a strong quarter that included the second season of Westworld and the critically acclaimed new series Barry. Subscription revenue rose 12.5% to $1.53 billion (pdf) during the second quarter of 2018. That’s up from an 8% boost the same period a year earlier.
The network doesn’t want to be Netflix, according to Stankey, constantly churning out content that’s all over the map both literally and figuratively, from local hits like India’s Sacred Games to low-brow Adam Sandler films and prestige dramas like The Crown. Stankey wants to stick to the “high, top quality” stuff the network is known for.
But Netflix, which is pouring $8 billion into its content slate this year, has a lot more money for wooing talent and creators. HBO, instead, has relied on its reputation as a talent-friendly network to land stars like Robert De Niro, Meryl Streep, and Gone Girl author Gillian Flynn. Deeper pockets could give it more of an edge there, as well.
Richard Plepler, CEO of HBO since 2013, used to say “more is not better, only better is better at one point” to stress that the quality of the network’s offerings was more important than quantity. He’s now changed his tune after the AT&T acquisition, according to a recording of June meeting with Stankey and the HBO staff that was obtained by Recode. “I’ve switched that now that you’re here to more isn’t better, only better is better, but we need a lot more to be even better.”