The $85bn merger of AT&T and WarnerMedia has claimed the head of the HBO chief executive, Richard Plepler, the cable executive who oversaw the creation of some of TV’s most innovative programs over three decades at the company, among them The Wire, Six Feet Under, Game of Thrones and Veep.
Plepler’s decision to step down comes as WarnerMedia, formerly Time Warner, plans to combine networks such as TNT, TBS and HBO in one division with the aim of turning the quality-conscious HBO into a competitor to the far larger pay-to-stream behemoth Netflix.
Expectation that the purchase and consolidation of HBO by its new owners would trigger significant executive departures first surfaced last July when the AT&T executive John Stankey told employees the company would not be a passive parent and HBO would need to get bigger and broader to compete.
“We need hours a day,” Stankey said, referring to the time viewers spend watching HBO programs. “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.”
HBO executives had long thought of themselves as curators, orchestrating the creation of high-quality, boutique programming, and the change of focus did not sit well with Plepler, who joined the company in 1992 and became its co-president in 2007 and was accustomed to autonomy within the Time Warner empire.
HBO turned from a pay-per-view sporting events giant into an premium channel that, through the late 90s, produced a string of dramatic hits such as Oz, Sex and the City and The Sopranos before powering into the 21st century with The Wire and Game of Thrones.
During Plepler’s tenure as CEO, HBO added 40 million subscribers, including nearly 8 million online. But over the past two years, HBO has lost some of it shine as Netflix powered into streaming content with a potent mix of high-quality and mass-audience shows.
According to BTIG analyst Richard Greenfield, HBO and Netflix had similar US subscriber bases at the end of 2013 – HBO 30 million and Netflix 33 million. “The goal is to become HBO faster than HBO can become us,” Netflix’s chief content officer Ted Sarandos told GQ at the time.
Fast forward to the end of 2018 and Netflix had over 60 million US subscribers compared to HBO in the mid-to upper-30 millions.
“Netflix did not just want to become HBO. They wanted to become HBO, FX, Showtime, Nick, Food Network, HGTV, TNT, TBS, ABC, CBS, FOX, NBC … faster than those networks could transform into Netflix,” Greenfield wrote.
Still, over the years that Plepler was at New York-based HBO and Cinemax, HBO earned 165 Emmy awards. The network also netted nine Golden Globe awards. Last year, however, HBO tied Netflix for Emmy wins, with each winning 23.
Having had the high-quality TV landscape almost to itself, Plepler’s “bespoke culture” at HBO had to compete with lavishly funded competition from Netflix, Amazon and Apple, which between them have budgeted upwards of $20bn on new series, films and documentaries.
According to reports, HBO has a budget of $2bn a year for programming acquisitions and turned in a profit of $6bn over the past three years. In contrast, Netflix plans to spend $8bn on content this year alone.
The company had also begun to see new rivals encroach on its relationships with talent in an entertainment industry environment that is beginning to resemble the studio system of the 1930s.
Over the past year, for example, the Big Little Lies star Nicole Kidman recently signed a television production deal at Amazon Studios, while her co-star Reese Witherspoon struck a partnership with Apple.
In a letter to employees on Thursday, 60-year-old Plepler said: “Hard as it is to think about leaving the company I love, and the people I love in it, it is the right time for me to do so.
“We’ve created a great and unique enterprise,” Plepler said in the memo. “And I know that you will protect its legacy and do all to enhance its future in the years to come.”
His departure also raises questions about AT&T’s intentions for Time Warner now that the Donald Trump-opposed deal has cleared two challenges from the justice department.
One early signal came when AT&T decided to shut down FilmStruck – an arthouse-focused, pay-to-stream movie archive wildly popular with film directors and movie buffs. The company also moved to shut down DramaFever, a video-on-demand service geared toward Korean dramas, and Super Deluxe, a youth-focused digital TV brand.
At a conference last year, AT&T’s CEO, Randall Stephenson, promised not to change the network’s high-quality image.
But few in the industry anticipated that the relationship between AT&T’s Texas-based management and the New York-centric HBO management team would work out.
According to the Los Angeles Times, AT&T is in advanced talks with the former NBC Entertainment chairman Bob Greenblatt to step in to Plepler’s shoes.
