Originally filed Friday, September 14, 2018 by RODNEY HO/rho@ajc.com on his AJC Radio & TV Talk blog
In an effort to compete with behemoth Netflix, Stephenson said he wants to shift original programming money from Turner Broadcasting networks TNT and TBS to New York-based HBO.
“A lot of the content spend is in Turner, specifically TNT and TBS,” he said. “Is that really the highest and best use of capital? Or is it more appropriate and best use to put it toward HBO?”
The two well-established cable networks generated a lot of money for Time Warner, which was recently merged into AT&T. Last year, TNT brought in an estimated $3.4 billion, and TBS about $2.1 billion, according to research firm S&P Global Market Intelligence.
But traditional TV viewership has plummeted in recent years, especially for TNT.
In August, 2018 during primetime, TBS averaged about 1 million viewers, 7th place among basic cable networks, down from 1.4 million in August, 2015 (-29%), good for fifth place at the time.
TNT averaged 687,000, good for 17th place, in August, down from 1.6 million the same month three years ago. That’s a whopping 56 percent drop.
Other comparable basic cable networks lost audience but not to that degree. For instance, HGTV fell from 1.52 million to 1.36 million (-11%) and USA Network dropped from 1.55 million to 1.33 million (-14%)during the same time period.
Coincidentally or not, Atlanta-based TBS/TNT chief Steve Koonin - who lifted both networks to new heights and now run the Atlanta Hawks - left in 2014. Kevin Reilly, who previously worked at NBC FX, and Fox, has presided over the two networks since then. While some of his gambles on TBS have borne fruit such as Samantha Bee's weekly news satire show and Tracy Morgan's "The Last O.G.," he has had much less luck over at TNT.
The hugely popular shows that Koonin worked on such as “Major Crimes” and “Rizzoli & Isles” are gone at TNT. They lacked social media buzz and their audiences were deemed too old.
Reilly’s replacements such as “Good Behavior,” “Animal Kingdom” and the super pricey “The Alienist” are far edgier and draw younger audiences, but only “Claws” has received much social media and critical raves in a very crowded scripted landscape.
According to a profile earlier this year in Variety, Reilly is emphasizing more on-demand options as fewer people watch TV live, rendering overnight ratings less impactful. He is also pushing ancillary revenue sources such as merchandising and live events.
“Turner had massive profits, and the business was doing just fine,” Reilly told Variety. “The idea of disrupting ourselves was saying, ‘Do we think three, four, five years from now this is going to be the same business?’ Absolutely not. So we’d better start aggressively going into the face of it. If what you’re doing today isn’t vital, you’re certainly not going to have a seat at the table in determining what’s going to happen tomorrow.”
In Stephenson's eyes, HBO is a far more valuable asset than TNT or TBS given its stellar reputation, array of hot programming and 134 million worldwide subscribers.
According to the Wall Street Journal article, HBO spends about $3.7 billion in original programming a year compared to a whopping $11 billion to $12 billion on Netflix. But across all of WarnerMedia, which includes the Warner Bros. film studio and CNN, he said they spend about that much in total.
Stephenson wants TNT and TBS to start airing HBO reruns to help drive traffic to HBO.
While most of the creative and executive forces are in Los Angeles and New York, Atlanta still has major operations for TNT and TBS. If fewer dollars go to those networks, a retrenchment in employment at Turner in Atlanta is a likely result.
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