AT&T plans thousands of layoffs at HBO, Warner Bros., rest of WarnerMedia

[Frank Cox]

https://arstechnica.com/information-...f-warnermedia/

AT&T is planning thousands of layoffs at HBO, Warner Bros., and other parts of WarnerMedia as part of a plan to cut costs by up to 20 percent, The Wall Street Journal reported yesterday.

WarnerMedia is what used to be called Time Warner Inc. before AT&T purchased the entertainment company in 2018. Layoffs and cost cuts are nothing new at AT&T in general, including at WarnerMedia. But WarnerMedia has taken a particularly big hit since the pandemic began. AT&T laid off about 600 people from WarnerMedia in August, a prelude to the new cuts revealed yesterday. The Journal wrote:

AT&T's WarnerMedia is restructuring its workforce as it seeks to reduce costs by as much as 20 percent as the coronavirus pandemic drains income from movie tickets, cable subscriptions and television ads, according to people familiar with the matter.

The overhaul, which is expected to begin in the coming weeks, would result in thousands of layoffs across Warner Bros. studios and TV channels like HBO, TBS and TNT, the people said.

WarnerMedia had nearly 30,000 employees earlier this year. A WarnerMedia spokesperson told Ars that "we are not discussing or confirming any speculative numbers" regarding how many jobs will be cut. The job reductions are part of the restructuring that was announced in August, the spokesperson also said.

"Like the rest of the entertainment industry, we have not been immune to the significant impact of the pandemic. That includes an acceleration in shifting consumer behavior, especially in the way content is being viewed," WarnerMedia said. "We shared with our employees recently that the organization will be restructured to respond to those changes and prioritize growth opportunities, with an emphasis on direct-to-consumer. We are in the midst of that process and it will involve increased investments in priority areas and, unfortunately, reductions in others."

Shortly after buying Time Warner, AT&T said that HBO needed to ramp up production of original content despite the network's history of succeeding with a smaller, high-quality lineup of shows and movies. The HBO and Turner bosses left the company amid a reorganization in 2019.
Drops in WarnerMedia revenue and AT&T share price


AT&T will report third-quarter earnings later this month. In its Q2 2020 earnings report, AT&T said that HBO revenue was $1.6 billion, down 5.2 percent year over year. Warner Bros. revenue was $3.3 billion, down 3.9 percent. Turner revenue was $3 billion, down 12.4 percent.

Comcast's NBCUniversal division and Disney have also imposed layoffs during the pandemic.


AT&T is struggling on multiple fronts. It has lost over 7 million TV customers since mid-2018, and its ongoing attempt to sell DirecTV has so far brought in bids valued at about one-third of what AT&T paid for the satellite company in 2015. On the broadband front, AT&T stopped selling DSL to new customers and laid off thousands of network technicians instead of expanding its fiber-to-the-home network.

As the Journal noted, "AT&T shares have fallen about 28 percent this year, lagging behind rivals like Comcast and missing out on the stock market's record run."

[Leo Enticknap]

On the broadband front, AT&T stopped selling DSL to new customers and laid off thousands of network technicians instead of expanding its fiber-to-the-home network.

I'm not surprised that their cable/satellite TV business is in a tailspin: IPTV is in the process of killing off that distribution model, and the cable channels that depend on the bundle subscription model are in decline with it. I guess that this informed their decision not to invest in Internet access infrastructure in rural and lower income areas. They can't expect any cross subsidy from TV subscriptions any more, and consumers in these areas will not be able to pay what it costs to provide Internet access on a standalone basis.

My home city operates its own Internet service. There is a fiber cable for it coming into our home, as there has been for all new homes built in Loma Linda since 2007. They charge $55 a month for unlimited data at 100 MBPS (in both directions) service. When Frontier jacked up their prices earlier this year, we tried to move to the city's service, but they stopped accepting new customers when the C19 situation started. If the big private sector operators are going to follow AT&T's example and pull out of areas that they perceive to be unprofitable, I can see local government doing more of this. This is an unintended consequence of the traditional cable TV model collapsing.

[Martin McCaffery]

I can see local government doing more of this. This is an unintended consequence of the traditional cable TV model collapsing.

Of course, part of the traditional cable TV model was to lobby heavily against any locality that tried to set up a public cable/internet service. Let's see if they will still try to crush any public competition.

[Leo Enticknap]

If this news from AT&T is indicative of the way the industry is going, I'd be surprised. Until recently, the cable monsters made their biggest margins by bundling 100 or so TV channels, landline phone and Internet access into a single package. First there was the rapid growth of cellphones: as long ago as 2017, only 48% of American households had a landline. That figure must be even lower now. Then IPTV came along and eroded the market for premium cable channels, in the form of platforms and services that use a separately purchased Internet connection: Roku, Crapple TV, Amazon Slime, Hulu, Philo, you name 'em. So an increasing number of consumers just want to buy Internet service, not bundled with any content. AT&T seem to believe that they can only make money on high end fiber service when sold standalone, not plain vanilla DSL. Verizon spun off their landline business to Frontier recently, too.

So if the telcos and cable monsters are taking the view that they can't make a decent profit providing standalone wired Internet connections to homes and workplaces, then presumably they won't mind if local government steps in and does so, effectively as a utility (perhaps using the LA Department of Water and Power as a model).

[Bobby Henderson]

AT&T is literally giving up on residential Internet access service in many markets, ceding that territory to competitors big and small or even municipal based entities.

It has been at least a couple or so years since I dumped AT&T "Uverse" and the pointless land-line phone I had. I wish I had done so years earlier. AT&T was doing nothing to improve their POTS infrastructure here. When they forced me off my cheaper (and more reliable) DSL service over to "Uverse" they promised a jump from 3 megabits per second to 6 Mb/s. The bitrates never got any better than what I had with DSL, the only thing that got bigger was my monthly bill. I jumped over to the local cable Internet provider. AT&T said if I turned off my phone/Uverse line it would be off permanently. I had zero problem with that. Some local residents (in newer neighborhoods) have fiber-based service and access to far higher speeds. But I can't complain too much about 50 Mb/s speeds when I used to live with 3 Mb/s.

I'm not surprised to see HBO take at least some kind of income hit. The decision to deny Roku and Amazon users access to HBO Max was fucking stupid. Most people don't like having to change whatever device they're using to access streaming services. In my case, I'm using an old Playstation 3. It still works fine and it has an SPDIF optical output to hook up to my old home theater system. Most of the newer devices don't support optical outputs; everything has to go out over the HDMI connection.

HBO may face more worrisome issues over the long term as a consequence of executive departures last year. It takes years to develop quality TV series. AT&T's push for more content rather than better content will ultimately make an HBO subscription less desirable.

Big picture view: these job losses are just the beginning. It kind of gives me a flash-back to temping at NBC not long after GE bought the network (GE shed a lot of employees). It was eerie delivering mail to floors in the RCA (or GE) building that had been all but emptied out. If these global media companies want to put all their eggs into the TV streaming basket they won't need a lot of employees handling retail distribution channels or distribution channels to movie theaters. But the end result may be much smaller companies making much smaller amounts of money.