Technology 4 min read

Watch out Westworld: HBO Isn't Profitable Enough for AT&T

HBO is one of the most popular networks on U.S TV right now. But what will its new orders think of its current business model? | Image by Casimiro PT | Shutterstock

HBO is one of the most popular networks on U.S TV right now. But what will its new orders think of its current business model? | Image by Casimiro PT | Shutterstock

Your favorite HBO shows may end up on the chopping block in the next year. Newly minted parent company AT&T says that the media mogul isn't "profitable enough" and that they have to "compete with mobile". Is this just revenge for all the times John Oliver made Sick Burns™ on AT&T?

Media conglomerate AT&T recently gained control of HBO. What does this mean for the network and its shows?

When AT&T successfully claimed Time Warner recently, they also acquired HBO.

You might know the network for such cult successes like Westworld, Last Week Tonight, and a small little fantasy series known as Game of Thrones.

But HBO’s new parent company, AT&T, thinks the media company isn’t profitable enough.

“Not Sustainable” – AT&T About HBO’s Model

John Oliver and company released this segment in September 2017 with Oliver inserting this caveat:

“Our own parent company Time Warner is currently trying to merge with AT&T which makes this story a little dangerous for us to do. But, you know, that is presuming that AT&T executives manage to get their sh***y service working long enough to see it.”  

“AT&T: it’s the top telecom company around….alphabetically and nothing else.”

While some might contest that AT&T’s motivations are purely vindictive, everything the company representatives put forth suggests that they are just worried about profits.

We need hours a day…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.”

That was John Stankey, CEO of the WarnerMedia division, in audio captured by The New York Times. He believes that HBO needs to compete with mobile, though he doesn’t elaborate much on what specific competition HBO has on mobile devices.

Stankey went on to say: “As I step back and think about what’s unique about the brand and where it needs to go, there’s got to be a little more depth to it, there’s got to be more frequent engagement…

Does he see the same network the rest of us see on TVs, tablets, and mobile devices?

image of Games of Thrones figures for article Watch out Westworld: HBO Isn't Profitable Enough for AT&T
Games of Thrones figures | George R.R. Martin and HBO via Amazon

Game of Thrones Doesn’t Print Money, but Merch Does

It is true that Game of Thrones stands out as one of the most expensive television shows to date. Its last season had 10 episodes with a $10-million USD budget in contrast to the more standard $2.2-million USD per episode budget most tv shows have.

But think of all the associated merchandise shows like Game of Thrones bring.

You’ve got the Funko pops, the t-shirts, the costumes, the show-inspired beer and alcohol; there’s a host of ancillary profits that go beyond the tv show or HBO Go subscriptions.

Beyond that, HBO is profitable outside of all of these revenues. They set aside $2-billion USD for their TV shows, still making around $6-billion USD in profits. But Stankey says that that is no longer enough in the era of Netflix.

Stankey warned that HBO employee jobs are “safe”, but they will probably have to “work harder” than in the past. He also confided that AT&T plans to invest in HBO’s direction shift, though he did not disclose how much.

Longstanding showrunner and HBO’s chief executive Richard Plepler warned Stankey: “You’re now in the entertainment business, John. There are no secrets.

We will have to wait and see how the new parent company affect the overall show roster, as well as cult hits like Game of Thrones, Westworld, and even John Oliver and friends. But it’s safe to say that there are changes ahead for HBO and its shows.

Would HBO be in better hands if a company like Disney had acquired it instead?

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Juliet Childers

Content Specialist and EDGY OG with a (mostly) healthy obsession with video games. She covers Industry buzz including VR/AR, content marketing, cybersecurity, AI, and many more.

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