AT&T Begins Trying To Screw Up HBO In Earnest

from the ill-communication dept

If you haven’t noticed by now, big telecom companies aren’t particularly good at wandering outside of their core competencies. They’ve been government-pampered monopolies so long, innovation, creativity, and competition are concepts that are utterly foreign to their underlying genetics.

Nowhere has that been more apparent than big telecom’s attempt to pivot to streaming and online advertising. Verizon’s first foray into media, you’ll recall, was a short-lived “tech news” website called Sugarstring, which was quickly shuttered after the telco banned its reporters from discussing subjects like net neutrality or government surveillance. That was followed by a botched joint venture with RedBox. And Verizon’s failed Go90 and Oath efforts, which involved mashing together two failed nineties brands (AOL & Yahoo), then pretending that would be enough to do serious battle in the space.

AT&T is now following closely in Verizon’s footsteps in the wake of its $86 billion merger with Time Warner (and HBO). The company this week made more than a few headlines when news broke that longtime HBO CEO Richard Plepler, responsible for the lion’s share of HBO’s success over the last 29 years, would be stepping down. The reason? While most news outlets beat around the bush, it’s because he had a hard time getting along with hard-headed AT&T executives:

According to people familiar with the matter, this is an issue of autonomy. Plepler wanted to run HBO, and new WarnerMedia CEO John Stankey, an AT&T veteran, was effectively running HBO. Plepler had ideas about technology and international expansion that didn’t jibe with Stankey’s vision, according to a person familiar with the matter. The two are also “different people” and didn’t have the closest relationship, another person said. So after six years of running HBO autonomously, Plepler told Stankey earlier this month he wanted to leave, two of the people said.

If you’ve been watching this saga unfold, that shouldn’t be surprising. Hints of trouble in the new union emerged last summer during an all hands on deck meeting, where AT&T executives effectively told HBO executives they should stop focusing on this whole quality thing, and begin thinking about quantity and user data monetization:

(AT&T’s John) Stankey described a future in which HBO would substantially increase its subscriber base and the number of hours that viewers spend watching its shows. To pull it off, the network will have to come up with more content, transforming itself from a boutique operation, with a focus on its signature Sunday night lineup, into something bigger and broader.

?I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow?s world.?

Except creatives do their best work with a healthy degree of autonomy from left-brained bean counters. They don’t want the god-damned phone company, for which creativity and innovation is an foreign construct, meddling too heavily in their production decisions. And not too surprisingly, a number of HBO and Time Warner employees have groused to Recode’s Peter Kafka that AT&T doesn’t really have any idea what they’re doing (a point kind of downplayed in his piece):

More recently, when I called an HBO source to get their perspective on AT&T?s plans for WarnerMedia, that person described the plans as ?inchoate,? an adjective that has rattled in my head ever since. If they?re willing to say that to a reporter, imagine how they really feel.

I’ve studied AT&T for twenty years of my adult life. This is a company whose leadership is really very good at a long list of things. They’re good at running networks (usually), lobbying the government to hamstring competition, and finding creative ways to rip off its own customers, taxpayers, and even the disabled. What they’re not so good at is creativity, innovation, and actual competition, since their near-total domination over state and federal regulators–and the lack of competition in their broadband businesses–means those particular attributes have rarely been exercised.

Like Verizon, AT&T has spent the better part of the last two decades getting millions in taxpayer subsidies for fiber networks that were never fully deployed. Also like Verizon, AT&T executives have a bone-grafted jealousy of Silicon Valley’s domination of online advertising and video. But both companies have no earthly idea how to get there without cheating. As a result, their efforts quite often wind up looking like a doddering grandpa who is simply trying too hard to fit in:

AT&T first thought it would be a good idea to pay $67 billion for satellite TV provider DirecTV on the eve of the cord-cutting revolution, seemingly oblivious to the fact that satellite TV was just about to become irrelevant. That fact was quickly made obvious by the massive video subscriber losses AT&T and DirecTV have witnessed as users quickly cut the cord for streaming alternatives. While the deal’s initial subscriber growth provided some benefit in terms of greater leverage in programming negotiations, they’ve been bleeding subscribers ever since. It was the first big hint that AT&T didn’t actually know what it was doing.

AT&T then spent another $86 billion to acquire Time Warner, hoping that control over this must-have content would somehow magically cement its supremacy in video in concert with the DirecTV deal. But the mammoth debt from both mergers quickly drove AT&T toward nickel-and-diming both customers and competitors alike in a bid to get its financial head above water. This resulted in competitors like Dish dropping HBO from their lineups entirely due to cost, and even its newfound streaming customers have been fleeing for the exits in record numbers due to price hikes.

A lot of AT&T’s thinking is typical of big telecom, where growth for growth’s sake is encouraged and executives think you can merge your way to success. And while that might work in the competitively-addled broadband sector, the tight-margin, ultra-competitive streaming space is an entirely different animal. AT&T allegedly now wants to fuse HBO with Turner Media with an eye on churning out shorter-form, quickly-monetizable schlock at scale. It’s the precise opposite of why HBO, one of several companies they just spent billions on, has long been so successful.

AT&T is a company for which ethics, quality, and creativity are alien phrenology, and if you’ve spent more than five minutes watching AT&T do business, it’s apparent in everything it touches. Plepler smelled the odor on the wind and got out while the getting was good. Other talent is going to follow, and the brain and talent drain is going to create entirely new issues. While it’s likely HBO will continue trucking along semi-functionally for a few years on the backs of projects already in the pipeline, it’s hard to think AT&T’s influence won’t have a decidedly negative impact on the pioneering channel over the long term.

Even AT&T’s knack for cheating and lobbying aren’t likely to save AT&T from its own bad impulses, or secure supremacy in the face of something entirely foreign to the Dallas-based telecom giant: actual, meaningful competition.

Filed Under: , , , , ,
Companies: at&t, hbo, time warner

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “AT&T Begins Trying To Screw Up HBO In Earnest”

Subscribe: RSS Leave a comment
nasch (profile) says:

Re: Re: Old AT&T

The current AT&T is nothing more than a re-named Cellular One

According to Wikipedia, it’s basically Southwestern Bell, the old AT&T, Time Warner, DirecTV, and a couple of Mexican phone companies. So if it is in fact just Cellular One, than a substantial rewrite of the article is in order.

Anonymous Coward says:

Re: Re: Re: Re:

Actually, this could be done brilliantly. Imagine a witch trial where the witch must sit in a chair and chose between two colas. Should she chose Pepsi and not Coke, obviously she is a witch and should be burned at the stake. You could even have the evil wizard substitute RC Cola for both of them.

Monty Python could make it work.

John85851 (profile) says:

Re: Re: Re:

GoT is ending this season so it’s probably too late to add ads for Coke and Apple.

But the new Watchmen TV series, which HBO hopes will replace GoT in the pop culture world, is set in an alternate 1980’s. So there’s every opportunity to add product placement for almost anything you can think of. In fact, seeing Coke and Apple in the Watchmen world would only increase the realism… or that’s what a typical marketing executive would say.

coward (anon) says:

Re: Re: Re:

I expect John Oliver to be one of the first to leave due to meddling. JO isn’t going to put up with being told what he can and can’t talk about and most of what he does talk about is too far left and controversial for a company as staid as ATT&T. Fortunately for us, JO won’t have any trouble getting a job on another network or streaming service.

any moose cow word says:

AT&T wants their cake and eat it too, but there’s no free lunch.

They didn’t want to be a "dumb pipe" ISP, so they jumped into the value-added services game to complete with cable. After they decided they didn’t want to actually invest THAT much into infrastructure to support the required bandwidth, they tried their hand a vertical integration by adding WarnerMedia. However, that strategy only works with a solid foundation to build on. The home video market is shifting away from scheduled broadcast to Internet streaming, which requires a even more bandwidth to support–the very investment AT&T abandoned in its quest for easy money. The attrition from their own network leaves cable to rule the Net on the end user side. Unless AT&T changes course, the media empire they sought to establish will be solely dependent upon their cable competitors to reach the eyeballs they so desperately covet. That’s an ultimately unprofitable proposition, but they refused to make the investments needed to avoid it.

Anonymous Coward says:

Everybody on the AT&T and general live-action television side of this merger looks like they’re going to have a rough time. Meanwhile, the animation side of things looks like it’s getting more streamlined in a good way. Cartoon Network, Adult Swim, and Boomerang are now under the same group as Warner Bros, Crunchyroll, Rooster Teeth, and VRV. Even though CN and Warner Bros. were part of the same company before the AT&T merger, they were in different divisions and never really got along. This led to some really good DC cartoons getting canceled by CN or put in bad slots to almost intentionally get them canceled.

Look, I know AT&T sucks and that this merger has larger negative implications, but animation as a medium is something I absolutely love, and looking at the restructuring of AT&T’s animation infrastructure in the merger gives me good feelings about the kinds of stuff that’ll be created under it in the future. I gotta look on the bright side in this instance.

ECA (profile) says:

Time warner/hbo

Strange thing to understand here…
Just cause you bought them dont mean YOU, know how to run them..
It Dont mean you are willing to PAY the OLD CEO’s the money they WERE getting or MORE. to do the job you want done..
It Dont mean that you have looked at other services that are ALREADY there, and seen that many have been Abandoned, Abused, Litigated, Stomped on, beat up, and havnt improved since about 10 years ago, BEFORE the lawyers jumped to the net. And found those system had problems..
Go look at HULU, before you do anything, LEARN from what they did/went thru..BEFORE they were bought out..
Go look at Crackle/Sony, before Sony got them..

Then think for 1 second..What did we do to Netflix… Can you get access to other systems and NOT be charged for access to the customers you WANT???
Can you compete with:
And Many others….
That have already setup sites and services that you are going to Need to learn the bad parts of building this system..

ALL of you ISP’s and such, beat on those that WERE building up interesting services… You didnt offer them money, you didnt offer them a buyout…you STOMPED on them. between you and the movie/music industry…you could of had a PRE BUILT service with a dedicated person setting it up and building it up…FOR CHEAP…
NOW, that everyone knows whats going on, and WHAT these services are worth…What are you going to pay the person to DEAL with the headaches…??

I will bet, the ISP’s will be another Flash in the pan..AGAIN. If it dont start up and run CHEAP they will drop it again.

Please excuse, my right hand has some nerve problems..and its very much, not fun..

ECA (profile) says:


" pay $67 billion for satellite TV provider DirecTV on the eve of the cord-cutting revolution, seemingly oblivious to the fact that satellite TV was just about to become irrelevant. "

when most of this started, it wasnt to bad, but the corps THOUGHT, they could get money by raising prices to pay THEMSELVES back for money spent..
ANd people QUIT…the prices were/are high, anyway, so why pay more.

Old days..
If you could show your customers would not pay OVER a certain price, then you had power over those trying to use your system..
NOW, they dont even try to figure this out.. they have the idea that anything LESS then 100% of the people paying is a loss. And they base all their acocunts on this number…and show a Loss.
they kept throwing things AT us and REQUIRE us to have certain channels WE GOT TIRED OF, or didnt watch at all…30% Love ESPN, but 100% of the customers HAD to pay for it, if they wanted it of not..
Insted of Giving us what we wanted, or something Better, they Threw Everything at the channel line up, thinking that WE’ would like something, or Let us PAY for everything, anyway.. and prices went UP, and up and up..

In reality you could watch 3 months of WHAT you wanted and then Turn off Cable, for 6-9 months…Get it back and you didnt miss 90% of it is REPEAT..

I also find it funny that the cable corps and channels ARNT behind us helping get movies into PUBLIC DOMAIN…as it owuld make all of the old videos FREE TO BROADCAST…
OH! I forgot, they added something about, …IF’ a movie is doing REAL good, they cna BUY BACK the Rights to it to make more money…

nerdrage (profile) says:

Interesting times.

By this time next year, both Disney and AT&T will have launched their Netflix/Amazon competitors, maybe Apple as well, and we’ll get to see the goods. My quatloos say Disney will succeed, AT&T mmmmmaybe, Apple forget it. The benefitter of all this could be CBS All Access. To succeed, they need a couple of major competitors to fall on their faces. They just might get their wish.

Billie says:


It’s apparent how shortsighted AT&T is. By taking HBO off of Dish, they have cut off a number of both Baby Boomers and rural or country people. In the country phones aren’t used for streaming that often. And AT&Ts reception often isn’t that great. I think they would be surprised at what percentage of the HBO audience is over 50. Streaming may be the future. But not for several years for many. By not acknowledging this demographic they are going to lose money. I predict that Direct TV Will lose many of those customers who switched to Direct TV after a year. AT&T and Dish could do a good faith promotion and run HBO on Dish for the airing of GOT. Because one thing seniors and rural people have are children and grandchildren who wouldn’t like it if they believe that a company is intentionally doing something against them. After all seniors and country folk tend to be patient. GOT will come out on DVD. And though illegal DVD ‘s can be dupicated. Besides I see GOT parties where friends get together. I see young people who can stream sharing their download with those who cant. You see country folk often have places they can go to get together. I think AT&T may think they are gainning now. But in the long run this move is going to hurt them for many years

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...