Inside HBO Max, the $4 Billion Bet to Stand Out in the Streaming Wars

HBO Max cornucopia
Max-O-Matic for Variety

A starry group came together for a meeting at Courteney Cox’s Malibu beach house on Oct. 5, 2019. Had the papa­razzi gotten wind, pandemonium would have surely ensued.

Cox invited her five “Friends” co-stars — Jennifer Aniston, Lisa Kudrow, Matt LeBlanc, Matthew Perry and David Schwimmer — for a rare reunion dinner. The gathering was memorialized in a grainy six-shot selfie that Aniston posted a week later when she joined Insta­­gram.

Before the former co-stars got down to reminiscing, however, there was business to attend to. The top brass from WarnerMedia had made the trek earlier in the day to Cox’s home to discuss the latest plans for the Warner Bros. TV sitcom that made its stars household names in the mid-’90s.

Bob Greenblatt, Kevin Reilly and Sarah Aubrey — the executives leading the charge for WarnerMedia’s ambitious HBO Max streaming venture that bows May 27 — came by to explain exactly what the company’s new on-demand streaming service was and how it would showcase the 236-episode library of “Friends.” They outlined their vision for a global platform to compete with Netflix, Amazon, Disney and others in TV’s new frontier of the direct-to-consumer cavalcade.

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Irena Gajic for Variety

Then the trio broached the idea of some form of “Friends” reunion event to propel the service.

“We didn’t talk a lot of business, but we did talk about how maybe this could happen,” says Reilly, chief content officer for WarnerMedia Entertainment and Direct to Consumer.

Courting the “Friends” cast was one of the more glamorous tasks on what has been a 14-month marathon to get HBO Max off the ground.

The investment is the biggest bet to date made by AT&T to realize the promise of its $85.4 billion acquisition of Time Warner. The directive last year from then-WarnerMedia CEO John Stankey — the AT&T veteran set to become CEO of the telco giant in July — was a galvanizing force for company insiders at a time when HBO, Turner and Warner Bros. rocked by management upheaval and the exit of top executives from the previous regime.

Bringing WarnerMedia boldly into the streaming wars has been job one for Greenblatt ever since the NBC, Showtime and Fox veteran was recruited to lead WarnerMedia Entertainment and Direct to Consumer in March 2019. The timetable for HBO Max’s target spring 2020 launch date was incredibly aggressive — a challenge that Greenblatt believes helped Team Max power through its planning even as it faced a huge curve­ball with the pandemic lockdowns that began in mid-March.

“We didn’t have the luxury of spending three to six months figuring out what product we wanted to build and what the service should or shouldn’t be,” Greenblatt says. “All of our decisions had to be made quickly.”

AT&T has pledged to invest $4 billion in HBO Max over the next three years. That includes the cost of programming for the service as well as lost WarnerMedia earnings from steering movies and TV shows to HBO Max that otherwise would have been licensed to outside buyers.

“AT&T is a massive company. They’ve got the scale and the financial resources to back a direct-to-consumer platform that really does compete head-to-head with the big boys,” says John Hod­ulik, the UBS telecom analyst who has covered AT&T for 20 years. “It’s the right thing for them to do from a capital allocation standpoint. Do you continue to invest in the distribution that is slowly dying, or do you invest in the growth area? Generally, you invest in growth.”

The hope is that HBO Max is built up over the next few years to be a multipurpose platform for the global distribution of WarnerMedia content as well as an engine for bundling subscriptions to AT&T’s wireless and data services. The fear is that an underwhelming HBO Max would tarnish or, worse, be a financial strain on HBO proper. The pay TV pioneer generated operating income of $2.3 billion from revenue of $6.8 billion in 2019.

“Everyone involved in [HBO Max] feels the pressure of doing something that is worthy of the title of the network,” says Greg Berlanti. The prolific Warner Bros.-based multi-hyphenate is shepherding numerous series for HBO Max, including a big-budget take on “Green Lantern.”

The team behind HBO Max has had to roll with the pandemic punches in the last mile before its scheduled start. Plans for the “Friends” reunion to launch the service were scuttled by the lockdown, but the special (with a payday of $2.5 million per star) remains a go, as soon as shooting in person is practical and schedules align. Nor will there be the same quantity of HBO Max originals as expected for the launch and on through early 2021.

Marketing campaigns had to be rebuilt almost from scratch when key events including the March Madness college basketball tournament, which is carried by Turner networks, were hastily scrapped.

“All of a sudden all of our marketing organized around sporting events, Comic-Con — now all these events were not happening,” says Andy Forssell, a Hulu and Otter Media veteran who is executive VP and general manager of HBO Max. “Those plans were redone from the bottom up at the last minute.” Warner­Media chief marketing officer Chris Spadaccini led the charge.

“We didn’t have the luxury of spending three to six months figuring out what product we wanted to build and what the service should or shouldn’t be.”
Bob Greenblatt

On the production side, more than 30 HBO Max projects were shuttered as a result of the pandemic. Aubrey spent her last Friday in the office — HBO Max for now has set up shop in Turner’s Burbank office building, around the corner from the Warner Bros. lot — and called producers for those shows to discuss the extraordinary circumstances and commiserate. They also scrambled to get a few projects set up with remote editing tools.

“It’s important for them to hear directly that we’re here to support the production,” Aubrey says. “Some people were like, ‘Oh, are you going to use this as a reason to cancel the show?’ We all felt it was really important to put a personal message of assurance behind that.”

Greenblatt admits he was worried that the widespread shutdowns would present a bigger hardship than it’s been to have executive teams communicating by Webex video meetings and text messages.

“Can the last lap of this all be done at home? Miraculously, the answer is yes,” Greenblatt says. “It’s still shocking to me that it was all still able to carry on, even the tech side of it.”

On March 20, early in the lockdown, Stankey convened a videoconference call with Greenblatt and other key lieutenants. The group had settled on May 27 as the launch date months before but still hadn’t made it official to the public. On the call, Stankey observed that “the world has changed” and asked the team how it was feeling about the launch. “Across the board everyone was like, ‘Let’s go,’” Forssell recalls. “There really wasn’t a lot of debate about it.”

Stankey marvels at the progress that has been made in barely a year. He first started thinking about how Time Warner assets could be used to support a Netflix-esque streaming platform at the time that AT&T began the secret due diligence process on the Time Warner acquisition in the summer of 2017.

“Imagine sitting here today without having this opportunity in front of us,” Stankey says. “Imagine [AT&T] walking into this industry not being in a position to do what we need to do to compete.”

Four years ago, it was clear to Stankey and outgoing AT&T CEO Randall Stephenson as they weighed the purchase of Time Warner that the pay TV foundation of the company’s television businesses was in a state of transition.

“We had to change the business model, and we had to change our mindset around it,” Stankey says of the reengineering required within HBO, Turner and to a lesser degree Warner Bros. “It wasn’t just the arrival of Netflix. Any [consumer-centric] industry that is going to be relevant moving forward is going to have to have a direct relationship with its customers.”

The question of the price tag for HBO Max was a parlor guessing game until WarnerMedia unveiled the $14.99 target as part of its Oct. 29, 2019, Investor Day presentation. The company had little choice, because to go much lower than $15 would cause HBO to be in breach of its traditional MVPD carriage agreements, which still generate the lion’s share of HBO’s revenue.

Existing HBO customers will get HBO Max as an add-on at no extra charge. This means that HBO Max needs to grow subscribers at a steady clip from the HBO-only starting point to make the investment pay off. AT&T has forecast reaching 50 million HBO Max subs in the U.S. by 2025 and 75 million to 90 million worldwide.

Stankey was amused by the intense focus on HBO Max’s price amid the streaming wars. “There are all kinds of opinions about price. Every member of the board of directors had an opinion about the price,” he says. But in his experience, “price is the easiest attribute to change in a product. It’s the 20-pound sledgehammer in marketing.”


Jeremy Legg had heard it all before, many times. WarnerMedia’s chief technology officer counts himself as among the few surviving executives who came to Time Warner through the AOL acquisition in 2001. Over the years, Legg has worked up many a Power Point and spreadsheet presentation for combining content from Time Warner divisions with cutting-edge distribution platforms.

When HBO decided to go over the top with the stand-alone HBO Now broadband app in 2014, consideration was given to the possibility of adding more Time Warner-related content to the service. In the end, in part because HBO, Turner and Warner Bros. operated as separate entities, the decision was made to keep HBO Now exclusive.

When Legg met with Stankey after AT&T reached its agreement to buy Time Warner in October 2016, the prospect of creating a streaming service was the first thing the incoming boss wanted to talk about. Legg couldn’t help noticing Stankey’s determination to get it done.

All of the enthusiasm about the merger possibilities was put on ice for 20 months while AT&T battled the Justice Department’s efforts to block the acquisition. In June 2018, two days after AT&T prevailed in the antitrust trial in D.C. federal court, the telco closed the deal, although it was under orders to keep the Turner assets separate from the rest of what AT&T renamed WarnerMedia while the government pursued its appeal.

By the fall of 2018, Stankey had given Legg a new mission and job — overseeing technology for HBO and Turner. That would facilitate the larger goal of having the units collaborate on the tech and content to power the new streaming platform.

Another key decision was to build the infrastructure for HBO Max on the back of the existing HBO Now streaming platform rather than starting from scratch.

“John’s analogy to me was, ‘We’ve got a 200-horsepower car. I need you to build me an 800-horsepower car,’” Legg says.

In late November 2018, around the time Stankey outlined the broad strokes of what he called “a software experience wrapped around creative excellence” at an AT&T investor day presentation, AT&T marketing executive Brad Bentley was tapped to serve as general manager of WarnerMedia direct-to-consumer.

Bentley, who had worked with Stankey in his previous job at AT&T Entertainment, was not destined for a long run, leaving after eight months as it became clear he was not a good fit, according to sources. But Stankey’s other significant streaming appointment at the time was well-equipped to seize the moment.

“We had to change the business model. any [consumer-centric] industry that is going to be relevant is going to have to have a direct relationship with its customers.”
John Stankey

Reilly’s expansion of duties in December 2018 from chief content officer for Turner to steering programming for HBO Max was the first of many signals that AT&T was reallocating resources from Turner’s TNT, TBS and TruTV to the new service. Barely six weeks after Reilly’s appointment, he enlisted Aubrey, who had served as head of development for TNT, to do the same job on a larger scale for HBO Max.

By the time Greenblatt arrived at WarnerMedia three months later, the content roster in the works for HBO Max was growing — Reilly and Aubrey were taking eight to 10 pitches a day at one point last spring — but the new entity needed a permanent creative team to call its own.

“Everyone was lending a hand because they had to and because it was exciting,” Greenblatt says. “But we knew we couldn’t move quickly if we were asking people to do two jobs. We had to fire up a network, in old-fashioned terms.”

The decision to organize the offering around the HBO brand did not come immediately. Thought was given at the outset to creating a Warner Bros.-branded service.

“We knew that Warner Bros. had a very high recognition in terms of the shield itself; people understand that it means quality,” Reilly says. “But Warner Bros., unlike, say, Disney, has never been a consumer-facing brand. You know, you don’t go to ‘Warners Land’ for vacation.”

Over the first few months of 2019, the burgeoning streaming team went into deep research mode, examining the pay-TV marketplace and HBO’s place in it. That gave Reilly and Aubrey a direction to go in developing original programming and curated library product that would appeal to demographics beyond HBO’s affluent adult stronghold.

“HBO speaks to certain audiences and demos, but there are lots of demos they don’t speak to,” says Greenblatt. “Kevin and Sarah did really good work defining what the Max originals should be. It’s younger and with a more female skew. We’re focused on filling out the kids and family audience in a big way.”

With moves such as ordering a new iteration of the millennial sudser “Gossip Girl,” which aired on The CW from 2007-12, HBO Max’s originals strategy early on was pegged by many as being geared to young women. Aubrey waves that off.

“We tend to lean female just to be complementary to HBO’s statistically male bent, but that’s only like a slight tip off 50%,” Aubrey says.

Similarly, she dismisses as overblown the sentiment that there’s confusion in the creative community over having two different HBOs in the marketplace competing for product. (HBO is based in Santa Monica, while the HBO Max team is in Burbank.) She notes that she and Francesca Orsi, HBO’s executive VP of drama, have even taken pitch meetings together, working out between them afterward who would pursue a project. One such program was an adaptation of Alice Hoffman’s novel “The Rules of Magic,” which ultimately was ordered to series as a Max original.

One producer who has been working with HBO Max on a project says the infrastructure for productions and talent was a little chaotic at first as the company staffed up quickly under Greenblatt.

Reilly and Aubrey have been very hands-on with development and on multiple shows ordered straight to series, in contrast to the lighter-touch approach found across town at Netflix. That’s been grating to some — one producer was said to have been asked to change the color scheme of a credits sequence — but refreshing to others. “They definitely feel like they are making art there,” says the producer. “It’s not bad. They care about what they are doing.”

On Feb. 26, 2019, AT&T got the news it was waiting for out of Washington, D.C. The Justice Department’s appeal of the antitrust trial ruling was denied. There were no more obstacles to the complete the integration of Turner into WarnerMedia. Stankey ensured that the sledgehammer came out to tear down the walls that had historically divided HBO, Turner and Warner Bros.

“How does somebody make a decision about where the next incremental dollar of programming goes and what platform it should be put toward? It’s hard to do that when you have three separate [bottom lines],” Stankey says.

As Greenblatt oversaw HBO and Turner integration efforts, the technical work and content development for HBO Max continued apace. For many, it’s been months and months of seven-day workweeks. But there’s a strong spirit of mission and a recognition that AT&T leaders see HBO Max as the beacon of WarnerMedia’s future profits.

“If you can’t get excited about launching a multibillion-dollar global product with all the best content we have, why do you work in media?”
Jeremy Legg

“If you can’t get excited about launching a multibillion-dollar global product with all the best content we have, why do you work in media?” Legg says. “When are any of us going to get a chance to do something like this again?”

AT&T needs HBO Max to click with consumers to help justify its Time Warner purchase, especially as the telco’s 2015 acquisition of DirecTV has widely been seen as a costly misstep.

Otter Media CEO Tony Goncalves, who leads the development and general management of HBO Max for WarnerMedia, reiterates the unique opening that HBO Max represents for a company with the content assets on the scale of WarnerMedia.

“We’re doing this in a historical fashion” for a Hollywood heavyweight, Goncalves says. “The ingredients have been laid out, and we have the opportunity to make a gourmet meal.”

The expectations for the HBO Max feast are high as it follows on the heels of the heralded debut of Disney Plus and the entrance of Apple TV Plus, as well as Comcast’s fledging ad-supported Peacock service and ViacomCBS’ revved-up CBS All Access and Pluto TV services, to name a few. Consumers have been bombarded with streaming options in recent months.

The quality-not-quantity approach extends to the curation efforts of the vast libraries that HBO Max can draw from. Although WarnerMedia has some 45,000 hours of programming available in its own vault, the focus is on serving up the cream of the crop. HBO Max will launch with roughly 10,000 hours of library content. There will be films from Warner Bros., Turner Classic Movies and the Criterion Collection; Warner Bros. Television sitcoms; grown-up animation from Adult Swim; and, of course, the entirety of HBO.

“We didn’t want to just throw thousands of hours at the wall and hope we hit everybody,” Greenblatt says. “We spent a lot of time looking at and curating all of these different libraries.”

For Warner Bros., HBO Max is not only a new vehicle for showcasing its vast movie and TV vault, it’s also a hungry new mouth in the family to feed. The studio is producing a slew of original series — including numerous kid- and family-friendly titles, for HBO Max as well as a slate of feature-length movies. Among the first up is the Berlanti-produced “UNpregnant,” from up-and-coming helmer Rachel Lee Goldenberg.

To Ann Sarnoff, who was named CEO of Warner Bros. last summer, HBO Max offers an outlet that allows the studio to take more chances on projects from rising stars like Goldenberg.

“We have expandable capacity to produce,” Sarnoff says. “It’s not like we’re in a zero-sum game where we have to take things away from other buyers. HBO Max is a big priority for the company. We want to give them excellent product but continue serving our other clients at the same time.”

WarnerMedia expects to add technical features and applications to HBO Max every six to eight weeks after launch. The look of the service on May 27 is only the beginning. WarnerMedia is preparing to slowly introduce HBO Max in overseas markets. And it has been built in a modular fashion to allow for livestreaming and ad-supported content.

That’s just for starters.

“We’re now in the new era of aggregation platforms — whether it’s a Netflix or an Amazon or an HBO Max,” Stankey predicts. “You’re going
to see all content eventually move to these platforms with multiple forms of monetization. That’s how you offer the best content to consumers at the best value-oriented price. That’s how this matures over the next couple of years.”