Following AT&T's takeover of Time Warner, company executives are looking to expand HBO in the age of streaming, according to a New York Times report.
Now that AT&T has acquired HBO , it's reportedly contemplating possible changes to the media property.
AT&T executive John Stankey, who following the company's $85 billion takeover of Time Warner last month became chief executive of Warner Media, spoke about these changes in a June 19 town hall meeting at HBO's Manhattan headquarters among 150 employees, The New York Times reported Sunday.
"It's going to be a tough year," Stankey said, according to a recording, which The New York Times obtained. "It's going to be a lot of work to alter and change direction a little bit."
At&T executives reportedly said they'd take a "hands-off approach" to HBO, but their comments suggested they wouldn't be uninvolved.
Stankey reportedly said that in the future, HBO would significantly boost its subscriber base and the hours people spend consuming shows. To do that, it would need to create more content and transition HBO from an operation focused on its Sunday night lineup into something bigger and broader, the Times reported.
Stankey said viewers need to spend "hours a day" watching HBO programs, according to the report. "It's not hours a week, and it's not hours a month. We need hours a day. You are competing with devices that sit in people's hands that capture their attention every 15 minutes."
He reportedly added that he wants 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."
A Warner Media representative who attended the meeting said Stankey discussed boosting engagement across the entire company, not just at HBO, and that Stankey and HBO CEO Richard Plepler were on the same page about how the media property should proceed.
AT&T didn't immediately respond to a request for comment.
Plepler, who hosted the talk, asked Stankey how much money AT&T would invest. Stankey reportedly said simply, "I do believe there needs to be stepped-up investment," later adding, "We've got to make money at the end of the day, right?"
"We do that," Plepler reportedly responded.
"Yes, you do," Stankey reportedly said. "Just not enough."
HBO has made a steady profit; for the past three years, it's put more than $2 billion a year toward programming, while making a profit of almost $6 billion. But it'll have to increase its spending if it wants to compete with the likes of Netflix, which reportedly plans to spend $8 billion this year. Stankey never said the word "Netflix" at the meeting, according to The Times, but suggested HBO had to "become more like a streaming giant to thrive in the new media landscape."
"You've earned the dynamic amongst your customer base that when you put a new piece of content out there, people will try it, just because they trust you're going to be putting something in front of them that they might like," Stankey reportedly said. "We now need to figure out how to expand the aperture of it without losing the quality."
AT&T has been pushing into the streaming space, launching a $15-a-month sports-free television-streaming service last month called AT&T Watch TV. The service is centered on Time Warner's Turner collection of channels and doesn't include HBO.
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