The Audacious Bet Behind HBO Max - OZY | A Modern Media Company

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The looming launch is a make-or-break project for Warner Media and AT&T.

By Alex Barker and Anna Nicolaou

On the biggest day of his career, John Stankey arrived on the Warner Bros. studio lot in a cerulean blazer and sunglasses. It was an idyllic day, even by Los Angeles standards, and the sun beamed over the 100-foot Warner Bros. water tower like a spotlight. But on this October afternoon, the familiar gold-and-blue Warner Bros. shield, first erected in 1927, had been painted over in bright white lettering. The words “HBO MAX” towered over a sea of beige trailers and ficus trees, and punctured the skyline in front of the Hollywood sign.

This was supposed to be a triumphant moment, unveiling a streaming platform worthy of the $85 billion gamble satellite giant AT&T had made on the media industry when it acquired Time Warner in a deal that closed in 2018. As the CEO of WarnerMedia was whisked into a soundstage, flanked by deputies, employees pointed and whispered, “That’s John Stankey.” 

Onstage, Stankey invoked his company’s celebrated history of technological somersaults: its founder Alexander Graham Bell’s invention of the telephone, and the “four brothers from Ohio” — Harry, Sam, Albert and Jack Warner — who brought sound to picture and made movies as we know them. 

Stankey’s big pitch went smoothly. But just a few hours earlier, some of his entourage had been huddled in the Starbucks at the Friends’ “Central Perk” gift shop, lamenting their “bummer” of a strategy. One said she “would never do it like this”; the $15-a-month price for HBO Max was well above that for rivals like Netflix and Disney. Her male colleague signaled his agreement by banging his head against the worn wooden table.

That head-thud conveyed a feeling of anxiety familiar to most of mid-revolution Hollywood. Streaming has yanked America’s creative capital closer to its audience than ever before, its finest work beamed into homes on a whim. It promises to smash the old distribution guardrails — theater-release windows, television schedules, licensing — where show business has long made its money. 

Volume is often the enemy of quality. And yet, we live in a volume world now.

Bob Greenblatt, leader of HBO Max team

With that upheaval comes an era-defining commercial opportunity. But for the old media empires, it requires razing much of what came before. Even pre-pandemic, there were no easy choices. “It’s very difficult to give up on what you know how to do and a model that works. The whole media industry is trying to disrupt itself,” says Discovery CEO David Zaslav, speaking at his trademark mile-a-minute pace from his Long Island mansion. “And in history, that is littered with failure.”

Seven months on from his LA presentation, Stankey has been promoted to AT&T CEO, starting in July. And weeks before the launch of HBO Max, he has hand-picked another tech-minded outsider to succeed him at WarnerMedia: Jason Kilar. As the driving force behind the online video service Hulu in the late 2000s, Kilar, 49, is as close as Hollywood comes to a stretch-for-the-future maverick (a “full-on disrupter,” says Zaslav). Now his challenge is to reinvent old media’s most byzantine conglomerate for this brave new era.

HBO Max, WarnerMedia’s answer to Netflix, launches in the United States on May 27 (a European version is still years away). It lands at a time when the coronavirus pandemic means that production has gone dark, talent is confined to their homes and 36 million Americans are unemployed. This economic cataclysm has, in Hollywood, only accelerated the power shift toward internet companies. Netflix has broken its own records for customer growth, while Disney’s operating profits have dropped by 91 percent, with its movies shelved and theme parks shuttered. The Murdochs are bringing in Deloitte consultants to restructure their businesses. 

Kilar’s mission suddenly has a fierce urgency. In his hands are some of the most legendary, profit-spinning, award-hoarding entertainment companies in the history of movie- and TV-making. WarnerMedia, formerly Time Warner, is behind classics such as Casablanca and Citizen Kane and fan favorites like Harry Potter and Friends

And then there is HBO. Synonymous with prestige television for many, its shows gave a confessional texture to modern America: the 1990s New Jersey mobsters of The Sopranos; the single women in Sex and the City’s ode to New York; The Wire’s brutal dissection of urban life. The fantastical dragons and dynasties of Game of Thrones became so popular that the internet sometimes buckled under the weight. 

AT&T’s ambition is to bring all of this to a platform able to compete in a world in which TikTok, Twitch and Fortnite hold more sway with young people than broadcast television does. To earn its $85 billion price tag, WarnerMedia needs to crank out enough shows to keep subscriptions growing and AT&T’s mobile-phone customers tethered to their contracts. 

Bob Greenblatt, who joined WarnerMedia from NBC in 2019 and leads the HBO Max team, says the ritualistic NBC television lineup that he devised just two years ago is now little more than “the pony express,” referring to the time when mail was delivered by horseback. But he also cautions against aping the Netflixes and Hulus of the world: “Volume is often the enemy of quality. And yet, we live in a volume world now.”

One former Time Warner executive lays out the problem facing Kilar and Greenblatt plainly: “You have to expand [HBO] to get your subscriber base up. Question is, can you do that without blowing up the town?”


The media world once turned around its tycoons: the Murdochs, the Redstones, the Disneys and the Turners, all larger-than-life characters who provided fodder for HBO’s hit show Succession. For decades, these men hustled against one another, trying to build empires to match their egos and shape the movies, television and news we all watch and read. Then they realized the machine they had handsomely profited from — the traditional TV box — was under threat of extinction. This spurred a series of megadeals that would redraw the contours of Hollywood. 

A decade ago, Jeff Bewkes, then CEO of Time Warner, compared the threat of Netflix to that of the Albanian army taking over the world. But even as Time Warner churned out $6 billion-plus operating profits every year, a revolution loomed. Netflix let people watch beloved shows like The Office whenever they wanted without the commercials.

As Netflix’s star rose, Bewkes considered building or acquiring an in-house streaming platform, but feared investors wouldn’t tolerate the years of thinner profits it would require. Meanwhile, his new competitors had a godlike presence on the stock market. Netflix was bleeding money, but its share price kept magically floating higher. 

“Back in 2015, we were looking at all this and realized there [was] a giant structural problem that we [couldn’t] solve inside the company,” says Bewkes, who retired from the company after the AT&T merger closed. After rebuffing a takeover by Rupert Murdoch, he went shopping for tech acquirers to help Time Warner survive. Facebook and Google had no interest, while Apple’s Tim Cook engaged in talks but didn’t pull the trigger. Then, in the summer of 2016, AT&T came knocking.

John Stankey, a tall, imposing figure, oversaw AT&T’s foray into media. This was supposed to entail the purchase of one big marquee company; he returned to its Dallas headquarters realizing that he had actually bought three ever-so-different fiefdoms, two years of antitrust lawsuits, Donald Trump tirades against CNN and an almighty New York power struggle. 

[AT&T] has no problem throwing everything in the air and letting it all fall down and working out how to correct it later.

A Warner Media executive

Stankey hails from service-minded, well-to-do California; he is one of three generations of the family to become an Eagle Scout, the highest honor in the Boy Scouts movement. He can hold his own at karaoke, usually belting out Johnny Cash’s “Folsom Prison Blues.” Tell-it-straight pragmatism (some call it gruffness) has defined his 35-year career at AT&T. One senior Warner colleague described Stankey’s “incredible technical mind.” When an executive managed to set off the hotel sprinkler system at a 2018 away day, it was Stankey who rushed to the alarm room to try to fix it.

Stankey’s concession to Hollywood was donning checked country club jackets. In every other way, he was a gale of disruption. 

He mapped a path for the company around three main insights: Flat-footed old media had failed to adapt fast enough; movies and television shows would in future be “wrapped with software” and streamed straight to consumers; and, out of that upheaval, just a handful of aggregator platforms would be left standing.

“[AT&T] has no problem throwing everything in the air and letting it all fall down and working out how to correct it later,” says the Warner executive. “Stankey compares it to open-field running [in football]. You start by running zigzag.” 

Blocking Staley’s path was Richard Plepler, a man often credited as the visionary behind the “golden age of television” and the CEO of HBO at the time. Plepler is one of an increasingly rare breed of Hollywood showmen, known for legendary parties and a weather-defying tan. A self-described “political junkie,” he had told confidants that AT&T’s missteps with HBO were reminiscent of the George W. Bush administration’s Iraq War. The lesson: “Don’t invade.” 

Plepler would tell staff that HBO was a gallery, and that he was inviting the greatest artists of his time to paint on its canvas. “It was completely pretentious, but we really believed it,” says one of Plepler’s top deputies. “Richard made the Plepler legend,” says another former HBO colleague. “By the time he was done, he was HBO. People even thought he was behind The Sopranos.” 

Strains in the relationship came to a head at an HBO town hall where Plepler and Stankey shared a stage. According to people told of the encounter, Plepler said: “I know this place as well as my family. They need to hear three things: that you and I get along; that you’ll invest in HBO; and that its culture will be left alone.” But tension between the two men onstage was palpable, as Stankey told Plepler that HBO’s profits were “not enough.” The result, recalls one witness, was that Stankey “just blew it up.”

Since his exit last year, Plepler has been relatively subdued, based at his Upper East Side brownstone plotting his next act with Apple. But his shadow will loom over HBO for years to come. In a move equal parts savvy and chutzpah, Plepler doubled HBO’s scripted programming budget before the AT&T deal closed, betting his new overlords would pay up. Shows he greenlighted years ago, such as ChernobylEuphoria and Watchmen, are still airing, while talent still thank him at awards galas — even ones where Stankey, not Plepler, is the one clapping in the audience. 

But it is Stankey’s plain-spoken personality that has curried favor with Elliott Management, the fearsome activist hedge fund that set its sights on AT&T with a $3.2 billion stake last September. Top brass at Elliott were initially skeptical of Stankey. But the coronavirus crisis has changed that. “He’s not the visionary leader who will steward the next 10 years of megadeals,” says one person close to the situation. “But he is the person who is going to cut costs and run this thing efficiently.”


Yet in appointing Kilar, a dot-com wunderkind, as his successor, Stankey has shown his ambition. In a sea of big personalities, Kilar comes across as exceedingly normal. He’s often lumped in with the Silicon Valley crowd, but he’s “not the type to wear jeans in front of 1,000 people,” says John Sweeney, his former professor at the University of North Carolina. Kilar is creative, but not awkward. Confident, but makes dad jokes. It’s hard to imagine him in the glory days of HBO premieres, or at the sterile Dallas offices of AT&T, laying phone cables. Instead, he was trained in the frugal factory of Amazon. 

Kilar grew up in working-class Pittsburgh, a city best known for its steel industry and football team. The 10-year-old’s Disneyland holiday, his first trip outside Pennsylvania, crammed into a Chevy Beauville, was the start of a lifelong Disney obsession. Walt’s portrait hung on his wall. 

Kilar’s career breaks have an almost cinematic quality. To snag an early job at Disney, he drew a cartoon strip inspired by Honey, I Shrunk the Kids, in which he leaped out of an envelope onto CEO Michael Eisner’s desk. “Thankfully, this envelope contains more than just a letter — it contains me!” he wrote. Somehow, it worked. 

[Kilar] is a man of the people, but he is pretty imperial too.

Tom Fuelling, Hulu’s former CFO

Then, at Harvard Business School, where he headed after Disney, he gave an airport lift to a book retailer named Jeff Bezos and, in 1997, got a job for his troubles. Kilar left Amazon for Hulu after 10 years having “fully imbibed Bezos’ principles and mannerisms,” according to Brad Stone in The Everything Store

Kilar has said little about his plans for Warner. But, looking back on his time at Amazon and Hulu, there are patterns to his method: a fixation on corporate culture; an expansive view of what can be bundled together on a website (enabled by smart, stylish design); and a relish for picking fights. In some ways, he embodies the hurricane that has hit Hollywood. 

Hulu was founded by big media groups seeking to create an antidote to YouTube. Kilar took it on in 2007 and, like his mentor Bezos, tried to capture its culture in a single manifesto. The 1,000 words of “What Defines Hulu” can read like a parody from HBO’s Silicon Valley.

In the document, Kilar declared that “nothing less than brain-spray awesome quality will do” (he sometimes promised to shave his head when targets were met). His heroes are detail-obsessed insomniacs who “sweat every pixel,” or frugal types who hold up monitors with snack boxes. The tropes are all there: “Our Ping-Pong table is important to us, as are … taco-eating contests, and Airzookas.” But to Kilar the creed was deadly serious. Every word was deliberate; he quizzed new recruits on its tenets himself.

“Jason has a great instinct for how to get a culture right,” says Andy Forssell, a Harvard classmate who also worked at Hulu and now oversees part of the HBO Max launch. “That can sound soft. But he is very specific about it.” Tom Fuelling, Hulu’s chief financial officer for six years, fondly recalls: “[Kilar] is a man of the people, but he is pretty imperial too.”

Kilar enjoys a scale game. During a pitch to Bezos, it was Kilar who laid out the strategy for Amazon’s move into home video — an early shift from bookstore to everything store. Throughout his career, Kilar has talked of striving for the rich but clean experience of Disneyland. WarnerMedia executives say he is already talking about new direct-to-consumer projects. 

This sits well with Stankey’s hopes of HBO Max becoming a broad-content platform for all the family, and all families, drawing money from subscriptions and ads. Some HBO old-timers will be harder to convince. But Kilar enjoys taking on naysayers; he is perhaps best known for his tech-epiphany memo from 2011, squarely aimed at old-media part owners of Hulu who were thwarting its potential. “A number of you reading this might be thinking that we’d have to be crazy to think that our small team can actually reinvent television,” he wrote. “We are crazy.”


The pandemic’s disruption to Hollywood, like the virus itself, happened slowly and then all at once. Actress Rosie Perez was supposed to fly to New Rochelle, New York, to shoot a thriller series for HBO Max called The Flight Attendant

But the New York suburb became an early COVID-19 hot spot, and a few crew members tested positive for the virus, leading to a mad dash to get everyone home as quickly as possible, according to Sarah Aubrey, HBO Max’s head of original content. 

Soon enough, dozens more productions needed to be halted, and by mid-March, Aubrey spent an entire day calling each of her showrunners to tell them to shut down their shoots, indefinitely. “One by one,” she pauses, speaking by video from her Los Angeles home. “It was an intense day.” 

Shortly after the lockdown took effect, Bob Greenblatt held a phone call with Aubrey and other top execs. He had an obvious question: Could they still launch HBO Max and feel good about it? The moment of hesitation lasted less than a day. The answer was yes, and in the past few months executives from New York to Dallas, Seattle to Los Angeles, have scrambled to pull off a years-in-the-making launch even as the economy froze around them.

Some producers were lucky. Legendary, a reality show in which voguing drag-queen teams compete, had just finished shooting its final episode the night before the hiatus. For other programs, such as HBO’s Succession, which was in preproduction, the timing of new episodes is up in the air. Its upcoming third season is “mind-bogglingly good,” teases Greenblatt, but he has no idea when audiences will be able to watch it. 

The issue of how much to charge — which had beleaguered Bewkes a full decade ago, and Stankey’s team six months back — has become particularly acute. With 15 percent of Americans now unemployed, how many will sign up to pay another $15 a month to watch TV?

Last year, Stankey and Discovery’s Zaslav discussed combining their programming into a single streaming service for about $8 a month (excluding HBO). But when Disney revealed it would offer up its massive trove of Star Wars, Pixar, Marvel and Disney classics for only $7 a month, they scrapped the plan. Instead, Stankey combined HBO with the rest of WarnerMedia’s programming. But that put a floor on the price for HBO Max, due to the network’s valuable contracts with cable distributors.

HBO viewers do not just watch HBO. They also watch The Bachelor.

Sarah Aubrey, head of original content, HBO Max

The other risk in marrying the two is diluting the HBO brand, a fear that has echoed through the halls of the network. Aubrey, who has produced shows such as Friday Night Lights and The Leftovers, rejects this notion. “Everyone talks about HBO viewers like they’re rich librarians,” she jokes. “HBO viewers do not just watch HBO. They also watch The Bachelor.”

Aubrey has spent the past year sifting through pitches for shows that can help HBO Max grow into a mass-market product. Searching for a younger and more female audience, Aubrey commissioned fare that includes a flower-arranging reality competition titled Full Bloom, a Gossip Girl reprise, a fresh Looney Tunes cartoon series, a “late-night” talk show hosted by Sesame Street’s Elmo, comedies by Issa Rae and Mindy Kaling and a Ridley Scott sci-fi series. 

These will sit alongside the company’s vast catalog including South ParkThe West WingThe Lord of the Rings and DC Comics franchises, and HBO’s Game of Thrones.

AT&T had reportedly planned to pay the cast of Friends $15 million for a reunion, but Ross and Rachel are now in quarantine. Greenblatt is holding out for a real-life reunion (“Having the six friends on a Webex call would just be disappointing,” he says). There’s no telling when that can happen. 

Still, top Warner executives are confident of knockout material for the launch, even preparing extra servers to cope with higher demand from a housebound audience. There are backup plans for mostly complete shows to be released at a slower pace to free up time to finish production. But there will come a point where the content machine is running on fumes. 

“Any time a show stops there is this panic of, like, are we ever coming back?” says Aubrey. “Around the six-week mark, everyone’s adrenaline of sprinting toward this wore off. And the psychological reaction took over: We are going to be stuck inside this moment for a long time.”

During the initial shock in March, “we didn’t realize how serious it was, or how long it would go on for,” Greenblatt says. Without sounding particularly confident, he questions whether production can start up again in September, or later in the year, or at the beginning of next year, and what it would mean for the company. 

Some things are certain, though. On his appointment in early April, Kilar said his main role at the May 27 launch would be to serve “pizza and beverages” for the team. But there will be no champagne popped in the boardroom, no late-night food runs. Seen from inside, it will be one of the strangest moonshot launches Hollywood has ever had. 

In their first virtual joint town hall for staff earlier this month, Stankey and Kilar were all smiles. Kilar made a pitch about embracing the future, the gift of the internet and the importance of having the confidence to learn from what works, and what doesn’t.

Reflecting on a frenetic 15 months, Aubrey pauses as she considers the wrenching changes that have hit the entertainment business, a world staffed by “fragile butterflies mixed with circus people.”  “We’re all kind of nuts. Because you have to be, to make something up out of your brain and say this deserves to be seen by millions of people,” she says, a mixture of exhaustion, relief and joy evident even through the screen. “We’ve all spent our careers functioning inside an ecosystem that around the edges has changed a little bit over the years, but not actually a lot. And now change is upon us. And it’s coming.”

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By Alex Barker and Anna Nicolaou

OZY partners with the U.K.'s Financial Times to bring you premium analysis and features. © The Financial Times Limited 2020.

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