WarnerMedia’s layoffs of 600 people today were the latest sign that the entertainment industry is coming to grips with its new reality: The golden rivers of money from cable TV are drying up. With the only growth business for most of the companies coming from streaming, which isn’t a profit maker yet, the companies have no alternative than to cut costs.
Warner isn’t the first to make cuts: NBCUniversal began laying off about 10% of its staff last week, although those reductions were more tied to the impact of the pandemic. Disney’s purchase of Fox’s entertainment assets also led to big layoffs last year. But what is particularly noteworthy about the Warner shakeup is how it signals the gradual devolution of traditional entertainment companies back to their original status as standalone film studios a century ago.
As the company announced late Friday, all of the entertainment programming production at WarnerMedia—for cable channels like HBO as well as TBS and new streaming service HBO Max—is being put under Warner Bros. chief Ann Sarnoff. Warner jettisoned two other senior entertainment executives, Bob Greenblatt and Kevin Reilly, who oversaw cable and streaming production.
It’s a far cry from the Time Warner of the past, where the studio, ad-supported cable channels and HBO were run as very separate businesses. But in those days, the money from cable could support such a structure. That’s not the case today. Warner won’t be the last to make this shift.—Martin Peers