By Joe Flint 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 8, 2020).

WarnerMedia's new boss ousted the leadership of HBO Max, the streaming service that launched less than three months ago, as part of a broader overhaul that aims to simplify how the entertainment giant makes and distributes content.

Chief Executive Jason Kilar said on Friday that he is removing WarnerMedia Entertainment Chairman Robert Greenblatt, who oversaw HBO and HBO Max as well as several other cable channels, and Kevin Reilly, who was the unit's head of content. All of the WarnerMedia production operations are now being rolled into one unit.

The reorganization puts a single person, Warner Bros. Chair and Chief Executive Ann Sarnoff, in charge of all content that will be distributed on the company's many platforms, from HBO and HBO Max to its cable channels including TNT and TBS. The changes will also mean layoffs, Mr. Kilar said.

The moves come just months into Mr. Kilar's tenure and rocked Hollywood on a sleepy Friday afternoon. The decision reflects the entertainment industry's push to slim itself down in a challenging economy and uncertainty over the effects that the coronavirus pandemic is having on television and movie production.

"I realize this is a lot to take in," Mr. Kilar said in a memo to staff. "And none of us should expect the above changes to be easy. That said, we are successfully navigating a pandemic together and I know that, however challenging the above changes may be, we will also successfully navigate them as well."

Earlier this week, Comcast Corp.'s NBCUniversal shuffled executive ranks as part of a similar reorganization, and commenced a round of significant layoffs.

The departure of two high-profile executives who were tasked with guiding the much-ballyhooed launch of HBO Max is certain to raise questions about how that platform is faring and whether it would meet the lofty goals AT&T has for it.

Priced at $14.99, HBO Max is more expensive than its rivals including Netflix Inc., Walt Disney Co.'s Disney+ and NBCUniversal's new Peacock service. While the service has a very large offering of original programming and classic movies and television shows, the higher price tag and consumer confusion over the differences between it and HBO may be making it a hard sell.

About 4.1 million people had activated the new service by the end of June, AT&T disclosed when it released its earnings last month.

In an interview, Mr. Kilar said that he was very pleased with the platform's start. He also said the decision to remove Messrs. Greenblatt and Reilly shouldn't be seen as an indictment of their performance at the helm of HBO Max.

"I'm incredibly proud of the job that they've done. A hard decision had to be made," Mr. Kilar said. Ultimately he decided Ms. Sarnoff was in the best position to take the helm of creative operations at HBO, HBO Max and the TNT, TBS and TruTV entertainment networks.

Mr. Reilly and Mr. Greenblatt declined to comment on their departures.

The promotion of Ms. Sarnoff isn't a complete surprise. Although she only joined WarnerMedia about a year ago, she is held in high regard by AT&T Chief Executive John Stankey, who previously headed WarnerMedia, and Mr. Kilar, according to company insiders.

Also working in Ms. Sarnoff's favor as she adds to her portfolio is her diverse background. She isn't the prototypical Hollywood insider reluctant to make changes. Before joining Warner Bros. she had several senior positions in media and sports including the BBC, Viacom Inc. and the Women's National Basketball Association. She also had a stint as an executive at Wall Street Journal parent Dow Jones & Co.

Among other moves announced Friday, Andy Forssell, currently the general manager of HBO Max, will oversee the business operations of the unit as well as marketing and consumer engagement. Both he and Ms. Sarnoff will report to Mr. Kilar.

Also elevated in the reorganization is Casey Bloys, who currently oversees original programming for HBO. Mr. Bloys will report to Ms. Sarnoff and be directly responsible for original content of HBO Max and the entertainment cable networks, essentially assuming the role previously held by Mr. Reilly.

Mr. Kilar said Mr. Bloys, as a veteran programmer for HBO, was ideal to take a more hands-on role at the other entities. "Casey is the real deal, " Mr. Kilar said, adding that the moves being made are very much about putting Mr. Bloys "front and center."

The moves by Mr. Kilar upend the structure for HBO Max that his predecessor Mr. Stankey had set up before ascending to chief executive of AT&T last month.

Mr. Kilar said the decision was made to consolidate the content production units of WarnerMedia to make the company more streamlined. He said he wasn't taking apart anything Mr. Stankey had put in place, but instead following the same path to better focus the company.

When Mr. Stankey first came to power over WarnerMedia, he broke down the fiefdoms that existed between Warner Bros., HBO and the Turner networks group. That move also led to some high-profile departures including Richard Plepler, who had overseen HBO until last year and was well-regarded for his programming and marketing acumen.

Mr. Stankey also created a WarnerMedia Entertainment unit that housed the company's various entertainment platforms including HBO and the Turner networks.

Mr. Kilar, who had previously helmed the Hulu streaming platform, felt an even narrower focus inside WarnerMedia was needed and to do that, the content operations had to be further consolidated. He is also under pressure to contain costs: HBO Max has spent heavily on programming and will need to continue to do so as it tries to establish itself.

As was the case with the NBCUniversal reorganization, there will be significant staff reductions at WarnerMedia, a process that is set to begin next week, a person familiar with the matter said.

Mr. Kilar confirmed that the layoffs will begin next week but declined to elaborate.

At Warner Bros. alone, the staff reductions are expected to be more than 500 employees, the person said.

The breaking down of the HBO Max unit will lead to cuts as well, Mr. Kilar said. The layoffs at WarnerMedia aren't expected to hit the CNN news channel in any significant way, another person familiar with the matter said.

Since AT&T gained control of the Warner assets in 2018, the company had indicated it might eliminate original programming from its basic cable networks including TNT and TBS to focus all its efforts on HBO and HBO Max.

Mr. Kilar said that while linear television channels like TNT and TBS have suffered from cord-cutting and consumer shifts to on-demand platforms, they are still valuable and original content will remain part of their formula for the foreseeable future.

"We will be the last ones to turn the light off," Mr. Kilar said.

.

Write to Joe Flint at joe.flint@wsj.com

 

(END) Dow Jones Newswires

August 08, 2020 02:47 ET (06:47 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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