WarnerMedia’s Gerhard Zeiler Talks Restructure, HBO Max at APOS

Gerhard Zeiler, the head of international at WarnerMedia, laid out the tentative timeline for HBO Max’s global rollout and talked about the impact of COVID-19 at the APOS Virtual Series today.

Since the start of the pandemic, the company has worked hard to “stand behind the creative community,” Zeiler said, referencing the company’s $100 million fund for crews of productions that were impacted by the lockdown. Plus, “we really supported local communities all over the world. We enabled distribution partners of our channels [to offer] free viewing. Because we have news, entertainment, kids’ programs, it was a little bit for everyone in the family.”

Zeiler went on to note that the financial impact of the pandemic has been “significant” in terms of ad revenues. “But what makes me optimistic is we see a little bit of light at the end of the tunnel, a slight rebound in quarter three, more or less everywhere in the world. That’s the good news. We can only hope that the worst of the pandemic is over.”

Zeiler also discussed the production shutdowns, with HBO Max launching without the Friends reunion that was to be a key part of the platform. “Already a lot of productions have started in the Asia Pacific, in Europe. Not so much in the U.S. or Latin America. When I look at the original Asian productions, they were only minimally impacted. We’ve also had positive impacts. Look at our ratings, our subscriptions. Significant improvements of HBO Go Asia-Pacific subscriptions. This pandemic really accelerated all the trends.”

The restructuring of the company that began under John Stankey last year and continued under Jason Kilar this year comes down to a multi-pronged strategy: “We want to be a consumer-first, global company that has a direct relationship with consumers. Consumers now rule the world. They decide what is a good and fair price. They decide when and what they want to watch. The consumer is our North Star. With that in mind, with the ambition that we are a global player, that we have a strong D2C business, that we still are the best storytellers in the world, that’s our ambition, and that we are the best place for talent. One thing we have to add compared to the Time Warner era; at Time Warner we described ourselves as a media company, a company with a huge amount of great content and really beloved brands. That stays, but add a point: we have to be well versed in product and technology. When I put all these ambitions into the strategy, then the restructure that you heard from Jason Kilar at the beginning of August just makes sense. A global HBO Max organization. One content unit and not two. We have concentrated our U.S. revenues, our commercial operations, in one unit. We have news and sports in one hand in the U.S. And last, but not least, all of the international assets are coming together. Not only Turner and HBO but also Warner Bros. It’s about scale. We are speaking with one voice.”

Addressing WarnerMedia’s international ambitions, Zeiler stated, “Jason Kilar said in one interview that in ten years he wants 70 percent of our revenues to come from international, versus 30 percent today. If you want to be a global player, you have to be a strong player in the Asia Pacific. When you look at our current business in the Asia Pacific, we have a strong China business, almost all coming from Warner Bros., we have a very strong business in Japan, at Warner Bros. and our kids’ business, we have a Southeast Asia business which is the foundation of the integration of HBO and Turner, and in India, we are not at the scale we want to be. In order to get there, the workhorse for that will be HBO Max.”

The integration of the Turner and HBO businesses in Asia was based on four goals, Zeiler said. “First, we want the relationship with our existing partners to be as easy and as convenient as possible. That we have achieved. Second, we want to continue to invest in our key brands, especially HBO, also CNN. When you look into the development of the pay-TV business in Asia and you see what you see in the U.S.: more [of a shift] toward skinny bundles. We have a very good chance to be part of the skinny bundle. Third, we wanted to focus on our D2C proposition with our existing partners and new partners. And of course global partners. And last, but not least, we wanted to show in this integration that we are both local and global.”

For the company’s OTT services in Asia, local content commissions and acquisitions will be key, with Zeiler citing a range of originals that arrived on HBO Asia this year. “Much more is coming in 2021, and that’s only on the entertainment side. On the kids’ side, we are producing in the Asia Pacific and that will go on.”

On HBO Go, which is in eight countries, Zeiler said there are three ways to subscribe: via traditional pay-TV partners as a free add-on to HBO Asia, as a stand-alone subscription with pay-TV and telco partners, and via the app stores. The pandemic helped drive subscriptions, “but this is only the first step. HBO Go is the first step to HBO Max. The goal of HBO Max is we want to be in as many countries as fast as possible. Having said that, there is a launch order: 2020 in the U.S., 2021 in Latin America and we will add HBO Max as a subscription service with advertising at a cheaper price, and end of 2021 beginning of 2022 you can expect the first additional European and Asian countries. The foundations are the countries where we already have an HBO Go subscription. That’s the launch plan. It’s too early to tell you more details.”

He added, “HBO Max will be the biggest tool that we have to achieve the goal Jason Kilar set, to get in ten years 70 percent of our revenues from international.”