AT&T CFO John Stephens On HBO Max, Shuttered Production, Asset Sales & Debt

Jill Goldsmith
·3 min read

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AT&T chief financial officer John Stephens said the WarnerMedia parent is “optimistic” about HBO Max three weeks after launch and called the streaming service “a multi-year process, and so far so good,” promising to provide subscriber data on the next quarterly earnings call in July.

Speaking Wednesday at a CSFB Media conference, Stephens reiterated AT&T’s target of 50 million HBO Max subs over five years. He acknowledged production delays caused by COVID-19 caused some programming disruption but said Warner Bros.’ “100-year-old inventory” with shows from Friends to Big Bang Theory to cartoons provide a well of content to draw on.

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He noted that streaming service HBO Now saw a 40% jump in engagement in the early days of COVID. “We feel really good about how it’s gone.”

Consumers are currently trying to distinguish the new service from HBO Now, HBO Go, the app for pay TV subscribers that’s being phased out, and plain HBO.

HBO Max will help “refine” and “refresh” the HBO customer base and it “let’s us go international,” he said. “We are pleased [Hulu founder] Jason Kilar is taking the lead at WarnerMedia. He is very experienced in OTT products and launches and a strong addition to an already very strong team. We are optimistic. We remain optimistic.”

Stephens declined to confirm a previously floated 2021 launch for an ad-supported version of HBO Max, saying visibility in advertising is too low. “There’s a lot of discussion over how fast we come out, how long a recovery will take, and we are still very carefully analyzing it.”

“Quite frankly [at] the studio, production has really been on hiatus and while [agreement on restarting is closer] … we haven’t yet started production in the studio out of Burbank. We will see a delay, a push back in some of the productions coming out of the studio. … I would have expected Wonder Woman to be out by now or in next few days. It’s been delayed. Other movies [as well and] Scoob moving to direct to consumer. So we not only have those changes, we are learning from them and working with theaters owners” and exploring “changes to our schedules and our approach.”

There’s a raging debate launched by Universal’s Trolls World Tour about studios moving planned theatrical releases, like Scoob, directly to PVOD while theaters were shut.

Wonder Woman 1984 was slated for a June release, then August and now October.

Addressing AT&T’s massive debt load of over $150 billion –- a big chunk assumed in the acquisition of Time Warner – Stephens noted the giant telco has been paying it down gradually, and has been able to sell notes at attractive interest rates — a vote of confidence by the credit market.

It will continue to cull its portfolio for asset sales following deals (former or pending sales include CME, its stake in Hulu, Hudson Yards offices and other real estate, and cell towers). “We are constantly going through our portfolio… We have $500 billion balance sheet finding one or two percent to monetize should be expected every year.”

The company is reportedly looking to unload Warner Bros. Interactive Entertainment video game division (WBIE), which Wall Streeters have said could be worth $4 to $5 billion.

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