WarnerMedia, the entertainment division of AT&T, is readying to slash thousands of jobs to help reduce costs by as much as 20 percent, according to a new report Thursday.
The division, which includes cable channels HBO, CNN, Hollywood studio, Warner Bros. and streaming service HBO Max, has been hammered by the pandemic, which has delayed film and TV production and crushed the movie industry.
The restructuring, which is expected to kick off in the coming weeks, would result in thousands of layoffs across the company, according to The Wall Street Journal.
“Like the rest of the entertainment industry, we have not been immune to the significant impact of the pandemic,” a WarnerMedia rep told The Post. “That includes an acceleration in shifting consumer behavior, especially in the way content is being viewed. 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.”
The rep declined to comment on how many people WarnerMedia currently employs. When AT&T completed its acquisition of Time Warner and renamed it WarnerMedia in 2018, the company had 26,000 workers. Since then, there has been steep layoffs and attrition. AT&T employed 243,000 people at the end of June, according to company documents.
Under newly-minted Chief Executive Jason Kilar, who took over the division in May, WarnerMedia has undergone a lot of change. In August, the former Hulu boss chopped three top executives, including Bob Greenblatt, chairman of WarnerMedia Entertainment, and hinted at broader layoffs at Warner Bros.
According to The Journal, the company has already cut 500 jobs at its Warner Bros studio in August.
The cutbacks follow the company’s revelation in July that the pandemic cut into its second-quarter earnings by $830 million, including a 22.9 percent drop in revenue from WarnerMedia, thanks to fewer ads and a halt in movie ticket sales. Since then AT&T has been trying to cut costs through layoffs and sales. It is currently trying to offload its struggling satellite TV business, DirecTV, as well as ad sales unit, Xandr.
While WarnerMedia is trying to stem those losses, it is also trying to build up its costly, new streaming service HBOMax, in order to compete with the likes of Netflix, Amazon Prime Video and Hulu.
But growth has been slow. Only 4.1 million subscribers activated the $14.99 a month app roughly a month after its May launch, as consumers opt for less expensive choices from rivals. Overall, as of July, HBO Max when combined with HBO has 36 million subscribers, which lags Disney+ with over 60 million subscribers and Netflix with over 180 million subscribers.
Earlier this month, AT&T CEO John Stankey told The Journal that the company’s media bets, such as HBO Max, will take time to pay off. At the same time, he said he was reviewing all operations at AT&T.
“There’s nothing that’s sacred anywhere in the business,” Stankey said. “WarnerMedia is no exception to that.”