In the beginning, there was HBO, the first-ever subscription cable network, launched 50 years ago this November. In the half-century since its founding, the service was the first (with corporate sibling Cinemax) to launch multiplexed cable channels, the first to transmit by satellite, making it a nationwide service, and the first to encrypt its satellite signal. Two years ago, the network went online in a serious way with the super-sized HBO Max.
Along the way, the company was notably profitable while collecting dozens of Emmys, including another 19 in 2021, continuing a decades-long status as TV’s gold standard for quality projects that also become zeitgeist-defining shows, from The Larry Sanders Show to The Sopranos to Game of Thrones to Euphoria. And after a stumbling start, HBO Max has very much found its footing online, upping the total HBO mass to 74 million subscribers and cementing a substantive presence in the ferocious streaming wars, despite its relatively high subscription price.
Also read: Jason Kilar Formalizes WarnerMedia Exit
By week’s end, however, maintaining that gold standard faces some new challenges. AT&T and Discovery Media say by then they should be able to close the deal that spins off HBO parent WarnerMedia into an uncertain, debt-laden future as part of Warner Bros. Discovery.
HBO Max will be, eventually, mashed up with Discovery Plus, mixing the former’s premium cable scripted prowess with the latter’s deep catalog of basic cable reality shows and how-to programming. What happens to the just-launched CNN Plus, as I wrote earlier this week, remains very much in question.
Also read: WarnerMedia Exodus: CRO Goncalves, CFO Biry, CTO Tom Follow Kilar, Sarnoff and Forssell Out the Door
To hear CEO-to-be David Zaslav and others tell it, the combination of HBO Max and Discovery Plus will be like peanut butter and chocolate, a mix made for consumer deliciousness.
But it’s certainly going to be a much leaner mix in some ways. The merged company will be borne with (and have to bear) some $48 billion in gross debt, according to filings, while generating roughly $23 billion in cash flow, much of it will go to finance its investments in programming, sports rights and more in mid-Peak TV.
Zaslav, board member-in-waiting John Malone and others have touted the potential for $3 billion in “synergies,” i.e., staffing reductions, from the merged operation. And it will need to invest heavily in technology to knit together its different streaming platforms, billing, customer relations and similar functions
Even granted overlap in back-office areas such accounting, HR, and the like, the merged company almost certainly will have to whack the front-office too.
The axe has already begun falling, beginning with Tuesday’s announcement by WarnerMedia CEO Jason Kilar that his last day is Friday.
But the axe is hitting plenty of others. On Tuesday, reports also surfaced of the immediate departures of Kilar lieutenant Andy Forssell, who oversaw both HBO and HBO Max, and Studios and Networks Group chairman and CEO Ann Sarnoff. Her now-eliminated position included Warner Bros. Pictures, HBO and HBO Max, Warner Bros. TV, TNT, TBS, Warner Bros. Animation and the Harry Potter Wizarding World, as well as consumer products and experiences.
To be sure, HBO as an institution has managed to navigate seemingly endless changes in its corporate overlords over the past 50 years, from Time/Sterling to Time Warner to AOL Time Warner to AT&T. It helped that leadership of HBO itself stayed relatively stable for years at a time, with notable executives such as Chris Albrecht, Sheila Nevins and Richard Plepler helping run the division as its own self-contained fiefdom as they presided over its rise to greatness.
That stability changed under Kilar, whose biggest legacy may have been the far-reaching reorganization of all of AT&T’s entertainment operations to batter down its many silos, and refocus operations on streaming first.
Over a few short years, before and during that big reorganization, many of the stalwarts behind HBO’s various successes departed, including Nevins and Plepler. Respected veterans such as Sarnoff and Casey Bloys came in under Kilar.
That HBO continued to have good successes, including hits such as Mare of Easttown, Lovecraft Country, and I May Destroy You, along with Emmy-nominated HBO Max originals such as The Flight Attendant and Hacks, suggests the company has a deep bench of creative talent. This spring, the company added The Gilded Age to its long list of hit prestige TV shows making a mark in the cultural conversation.
It’s certainly possible that even with yet more cuts on the way, and yet more leadership changes under Zaslav’s basic-cable team, that HBO/HBO Max will continue to thrive both financially and creatively. But, in a mild bit of irony, it’s another new HBO show that might prove a useful object lesson. ■
Lessons From a Different Dynasty
That show is Winning Time, about the somewhat unlikely rise to dynasty status of the Los Angeles Lakers NBA basketball team after Dr. Jerry Buss, a poker-playing USC chemistry professor turned savvy property investor, bought the team from Jack Kent Cooke in 1979.
The Adam McKay-produced project is entertaining and great fun, if not exactly scrupulous about many, many details of the actual story of the team’s rise to routine championship status.
But Buss and his team managed to make it happen. The bottom line — between all the financial maneuvers and out-of-the-blue inspirations (and the somewhat dumb luck to be able to draft all-timer Magic Johnson in his first year) — is that Buss and his new-look Lakers created a new kind of basketball experience, transformed the NBA and saved it from near-bankruptcy.
The team went on to win 10 NBA titles over the next 30 years, before Buss died in 2013 and left his six children equal shares of the trust that controls the team. Daughter Jeannie Buss, seen as a young woman in Winning Time, took over as the team’s leader and representative on the NBA Board of Governors.
But the team has had far less success in the nine years since Jerry Buss died, with the exception of winning its 17th title in the pandemic-shortened 2020 season.
Over that time, the team also has seen near-endless chaos, including an attempted putsch by one of the Buss brothers, the injury-riddled decline of Kobe Bryant’s last few years, and this year, the injury-riddled seasons of both its biggest stars, LeBron James and Anthony Davis.
On Tuesday — the same day Kilar, Sarnoff and Forssell began their departures — the Lakers were officially eliminated from playoff contention. The sublime James, an 18-time All-Star, had another remarkable year at 37, but was unable to play in the game because of a persistent ankle injury.
It’s not clear James, Davis or many of the team’s other players will be back next year. coach Frank Vogel is almost certain to be fired, and possibly general manager Rob Pelinka, too.
Turns out that talent, especially talent that can show up regularly, is really valuable, whatever kind of dynasty you’re running. Leadership matters, too. Like the Lakers, HBO has now seen repeated, significant turnover of much of its talent and leadership, with still more dislocation and uncertainty ahead.
Will an influx of Discovery executives and new hires bring the same development chops, talent relationships and industry leadership needed to keep HBO and HBO Max one of TV’s great dynasties even amid huge financial challenges and tough competition from other streamers? The ball is in Zaslav’s court. ￭
