AT&T’s plans for its newly acquired Time Warner unit came into sharper focus Friday as the telecommunications company re-christened the division WarnerMedia and unveiled a new executive structure. It also announced the departure of a key executive, John Martin, who has led Turner, the company’s sprawling cable-TV operation for more than four years.
In a memo to employees, John Stankey, the AT&T executive charged with running the Time Warner properties, said the company intended for the daily operations of HBO, Turner and Warner Brothers to “see little change.” And yet, he continued, “because we are now a subsidiary of AT&T Inc., many of the redundant corporate support functions between our companies at the HQ/holding company level will be eliminated in the coming months. That said, we will continue to maintain a small operating staff in support of the media company.”
The moves are among the first in AT&T quest to use the former Time Warner as leverage to create a big business by melding its massive telecommunications footprint with the distribution of popular content that runs the gamut from HBO’s “Game of Thrones” to Adult Swim’s “Rick and Morty.” The content business, once dominated by providers like CBS, Viacom and 21st Century Fox is fast being taken over by technology giants who can stream video favorites to consumers via smartphone, laptop or connected-TV set. “We have a unique opportunity to truly lead in the transformation that’s taking place across media and entertainment, direct-to-consumer distribution and technology,” Stankey said in his memo. ” We are at a rare inflection point where the direction and structure of the content and distribution industries — which are central to how almost everyone on the planet relates to society and those around them — gets shaped for future decades.”
To get there, however, AT&T will put its own structure over its new acquisition.
“They’ll slowly seep their own people in over a period of years,” predicted Hal Vogel, a veteran media analyst., “You should expect more management changes and departures to take place in six months or so when AT&T has learned enough about the business to decide what to do with it.”
With Martin leaving, Turner’s senior executive team — Turner President David Levy; Turner International President Gerhard Zeiler; and CNN Worldwide President Jeff Zucker — will report directly to Stankey. The moves, Stankey said, give him a chance “to work more closely with more Turner leaders and accelerate my personal learning of the business as we define our shared priorities across the company.” Turner has been Time Warner’s main driver of operating income, bringing in nearly $4.5 billion in 2017, compared with nearly $2.2 billion from HBO and approximately $1.76 billion from Warner Brothers. Before the sale, Martin had been seen as potential successor to Time Warner CEO Jeff Bewkes.
Richard Plepler and Kevin Tsujihara will continue as heads of HBO and Warner Bros., respectively. Kevin Reilly is expected to renew his deal to stay as head of TBS and TNT.
Bewkes is expected to retire after a transition period. The departing Time Warner chief taped an-eight minute farewell to staff, predicting the sale to new ownership will enable the company to produce better content and reach a wider audience.
“In a media landscape increasingly dominated by Google, Apple, Facebook, Netflix, and Amazon we face digital competition that’s stronger than ever,” said Bewkes. “But worthy competition has always forced us to become stronger ourselves, and I have every confidence that we can achieve even greater success in the years to come.”
Bewkes and Martin are the biggest names among those leaving, but several other senior executives will also depart. They include Howard Averill, Chief Financial Officer; Gary Ginsberg, EVP Corporate Marketing and Communications; Karen Magee, Chief Human Resources Officer; Carol Melton, EVP Global Public Policy; and Olaf Olafsson, EVP International and Corporate Strategy. Stankey named a new coterie of senior executives: Paul Cappuccio, Executive Vice President Industry Policy and Government Affairs; Keith Cocozza, Executive Vice President Communications and Public Relations; Jim Cummings,Executive Vice President and Chief Human Resources Officer; Pascal Desroches – Chief Financial Officer, WarnerMedia and Turner Administrative Officer; Priya Dogra, Executive Vice President Corporate & Business Development; and Jim Meza, Executive Vice President and General Counsel.
The announcement won’t quell anxieties among the rank-and-file. Internally, film and television staffers in Time Warner’s Burbank studio and midtown Manhattan offices are bracing for more layoffs as AT&T looks to find efficiencies.
The company’s new name, Stankey said, stems largely from a desire to avoid confusion with other entities that were once part of the entertainment unit, such as Time Warner Cable. “Our consumer research suggests this confusion isn’t going away any time soon. So, it is easier and more economical to change the name, than invest in advertising to resolve the confusion,” he said.