WarnerMedia Plans Thousands of Job Cuts in Restructuring
October 08 2020 - 3:04PM
Dow Jones News
By Drew FitzGerald, Joe Flint and Benjamin Mullin
AT&T Inc.'s WarnerMedia is preparing a restructuring that
seeks to reduce costs by as much as 20% as the coronavirus pandemic
drains income from movie tickets, cable subscriptions and TV ads,
according to people familiar with the matter.
The overhaul, which is expected to begin in the coming weeks,
would result in thousands of layoffs across Warner Bros. studios
and TV channels like HBO, TBS and TNT, the people said.
Rivals including Walt Disney Co. and Comcast Corp.'s
NBCUniversal have also cut jobs in recent months as the film and TV
business struggles.
"Like the rest of the entertainment industry, we have not been
immune to the significant impact of the pandemic," a WarnerMedia
spokesman said, adding that the company would reorder its
operations to focus on growth opportunities. "We are in the midst
of that process and it will involve increased investments in
priority areas and, unfortunately, reductions in others."
This is the second wave of substantial cuts at the company,
after WarnerMedia eliminated more than 500 jobs at Warner Bros. in
August.
The current size of WarnerMedia's workforce couldn't be learned.
Its predecessor company employed about 26,000 people before
AT&T acquired the business in 2018. The telecom and media
giant's overall workforce has steadily declined over the past two
years through layoffs and attrition. AT&T employed 243,000
people at the end of June.
The move is the latest by WarnerMedia chief Jason Kilar to
remake the Hollywood icon since he took control of the division in
May. The former Hulu boss ousted many of the unit's top executives
in August and rolled all production operations into a single unit
under Warner Bros., suggesting more positions could be at risk.
AT&T has staked much of its media-focused strategy on HBO
Max since the streaming video service launched in late May. About
4.1 million subscribers had activated the streaming app about a
month after its launch, lagging cheaper rivals from Netflix Inc.
and Disney. Overall HBO subscriptions, which include viewers
watching the slimmer premium channel through cable TV bundles,
still rose to about 36 million.
That early growth hasn't offset deeper declines at the
commercial entertainment cable networks TNT, TBS and TruTV, which
used to be known as the Turner networks. The company's other cable
networks include news channels CNN and HLN as well as Cartoon
Network.
TBS and TNT dodged disaster earlier this summer once
professional baseball and basketball games returned, bringing
viewers and ad dollars back after months of reruns. But the TV
advertising market has yet to recover, and the networks are
expected to report higher sports-rights costs in the third quarter
that could further erode their profitability.
The virus has also wreaked havoc on the Warner Bros. movie
business. It released the expensive science-fiction movie "Tenet"
when theaters around the country were just starting to reopen, a
gamble that didn't pay off as the film flopped. The disappointment
led the studio to push "Wonder Woman 1984" from an October open to
the end of this year. "Dune, " which was supposed to open during
the holiday season, won't premiere until next year at the earliest,
and "The Batman" has been bumped from 2021 to 2022.
AT&T Chief Executive John Stankey said in a recent interview
with The Wall Street Journal that the company's media bets will
take years to pay off but were the right choices long-term. He also
said the company was reviewing all its operations. "There's nothing
that's sacred anywhere in the business," Mr. Stankey said.
"WarnerMedia is no exception to that."
AT&T agreed to pay about $85 billion for Time Warner in
2016, but the deal was held up for nearly two years by a federal
antitrust challenge. AT&T shares have fallen about 28% so far
this year, lagging behind rivals like Comcast and missing out on
the stock market's record run.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com, Joe Flint
at joe.flint@wsj.com and Benjamin Mullin at
Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
October 08, 2020 14:49 ET (18:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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