NEW YORK (Reuters) – AT&T Inc is restructuring its WarnerMedia business, according to a memo sent to employees on Monday and seen by Reuters, as it girds for a streaming video battle with Netflix Inc and Walt Disney Co.
FILE PHOTO – An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni/File Photo GLOBAL BUSINESS WEEK AHEAD
The restructuring comes ahead of an anticipated round of significant layoffs and cost cuts and right after the resignation of two high-profile executives – Richard Plepler, the head of HBO and David Levy, president of Turner Broadcasting.
AT&T, which cleared its last regulatory hurdle last week after winning an appeals court decision challenging its $85 billion deal to buy Time Warner, aims to reinvest savings into its programming businesses. It will launch an early version of its HBO-led subscription video streaming service late this year.
Traditional media companies are playing catch-up to Netflix, which has built a 150-million subscriber, global direct-to-consumer video streaming service by spending heavily on Hollywood television and movie talent.
Disney, which paid $71 billion to buy Twenty-First Century Fox Inc’s film and television assets, is also set to launch its Disney+ streaming service by the end of 2019.
AT&T shares opened down 1.2 percent at $30.44 on the New York Stock Exchange.
“At a time when we must shift our investment focus to develop more content for specific and demanding audiences on emerging platforms, we can’t sustain a model where we invest one dollar more than necessary in the administrative aspects of running our business,” WarnerMedia Chief Executive Officer John Stankey said in the memo. “Put simply, our priority is to direct resources to product development and innovation.”
Robert Greenblatt, a former executive at Comcast Corp’s NBCUniversal unit, will oversee premium cable network HBO, cable channels TNT, TBS, Tru TV and the upcoming video streaming service as chairman of WarnerMedia Entertainment.
CNN chief Jeff Zucker will add oversight of sports programming across the company as chairman of News and Sports.
Kevin Tsujihara will continue to run Warner Bros Hollywood and TV studios and add two new businesses to his responsibilities, including a newly created kids and young adult group.
The overhaul will bring together kids programming from across the company, including storied franchises Hanna-Barbera and Loony Tunes. Tsujihara will also oversee the licensed consumer products business across the company.
WarnerMedia has also consolidated advertising sales and affiliate sales under one division to be run by Gerhard Zeiler, newly appointed chief revenue officer. Zeiler was president of Turner International.
Reporting by Kenneth Li; Editing by Jeffrey Benkoe