Revisiting WarnerMedia's Jason Kilar after The Information: Fiduciary or Visionary?

No easy answers; And, My Read on HBO Max vs. Roku & Amazon is confirmed (!)

Jason Kilar - Fiduciary or Visionary?

The Information reported on new WarnerMedia CEO Jason Kilar's first month on the job, how he was making decisions for HBO Max, and the types of decisions he was making. In Monday's AM Briefing I fleshed out a framework for understanding executive decision-making I like to use: whether they are fiduciary or visionary executives. I wrote:

In my fiduciary vs. visionary executive framework, a fiduciary executive has a fiduciary duty to the Board and shareholders to execute a part or the whole of the CEO and Board's strategy. That means, their decision-making is constrained by some combination of senior management, the Board and/or shareholders. Whereas, the visionary executive is less constrained because that executive executes a strategy built for their vision of where the marketplace is headed....

[T]he core element to my fiduciary vs. visionary executive framework is the perceived additional agility of decision-making a visionary executive has over a fiduciary. Executives navigating the fast-changing dynamics of the streaming marketplace need to be nimble. Visionaries arguably have more control over decision-making for the business than fiduciaries because the business is executing against their vision, and not their responsibilities to third parties whose sign-off they require on decision-making and therefore they are more agile.

The framework emerged from a core lesson from my time at pre-merger Viacom:

...a core lesson of my time at Viacom is how fragile digital businesses run by fiduciary executives can be. A business run by visionaries like Netflix has followed a clear, linear trajectory, both evolving with and driving the evolution of the Internet towards video streaming.

New WarnerMedia CEO Jason Kilar is a proven visionary (founded Hulu, Vessel) who now finds himself in a role where he is a fiduciary for AT&T to manage WarnerMedia and grow HBO Max. As Jessica Toonkel at The Information reported:

Hired by the company’s new owner, AT&T, Kilar wants to turn WarnerMedia into a company that prioritizes consumers instead of one that sees its main customers as cable companies and advertisers, according to several employees who have spoken to him. In doing so, Kilar, 49 years old, is drawing on his roots both at Amazon in the early 2000s when he ran its books and video sales, and later as the founding CEO of early video-streaming service Hulu, now part of Disney.

But his vision represents a wrenching change for WarnerMedia, implying a retreat from its decades-old focus on putting its channels on cable services and making TV shows for other TV networks. Those businesses still account for the bulk of WarnerMedia’s revenue and profits, although the cable business in particular is in decline. A growing number of people are cutting the cord, opting for cheaper streaming services.

The article suggests that Kilar is a fiduciary who is either being asked to be a visionary, or is assuming the mantle of a visionary when AT&T's expectation is that he be more of a fiduciary in executing their vision of the business. This disconnect has existed since Kilar's hire was announced. As I it is unclear how success is defined for him. In April I asked, "Jason Kilar gets the streaming marketplace, but does AT&T?". I concluded then:

...is Jason Kilar being set up for success? Explicitly, the answer is no: how Kilar defines both the target customer and the market opportunity very differently from how Stankey defines both the target customer and the market opportunity.

Implicitly, the answer seems a bit more nuanced. Meaning, it could be argued that 200MM and growing base of customers worldwide will pay for HBO Max, and AT&T reducing churn and grow out its user base are not mutually exclusive outcomes. In North America, alone, AT&T 4G LTE technology reaches 430MM people, and its 5G rollout already reaches 200MM people in the U.S.

Does HBO Max convert some of those 200MM people, all of whom are likely to be streaming video, into AT&T customers? Perhaps. Will HBO Max convert some of those 200MM worldwide who are paying for video into customers? Kilar seems to suggest he will need the tech to be "right", first.

So, in April, I was skeptical Kilar could succeed simply because success for HBO Max is being defined in terms of wireless growth and lower churn, neither of which require Kilar to drive growth for the service. Put another way, if Kilar grows HBO Max outside of the any growth HBO Max drives for wireless, great! But, wireless growth and churn will still matter most to AT&T.

Lessin's story presents a fiduciary trying to push his team to be more visionary while he navigates and manages "the delicate corporate politics of working inside a giant company like AT&T".

It is a fascinating challenge. My guess is the more Kilar is pushed into the bucket of fiduciary, the less likely he is to succeed only because his track record is that of a visionary, and this article portrays him very much as a fiduciary trying to be a visionary.

My Confirmed Suspicion About HBO Max Negotiations with Roku and Amazon Fire

+1. Also this is evidence for my bet that HBO Max won’t license content to a third party AVOD like Roku or IMDb TV https://t.co/u4IYkFe5ET pic.twitter.com/egCLSqBjEH

— Andrew A. Rosen (@aagave) July 1, 2020

As I wrote in my post Why we may not see HBO Max on Roku (anytime soon), which summarized a mailing in early June:

I think the third scenario I fleshed out above - Amazon and Roku are pushing Amazon-Disney+ deal terms, but AT&T won’t give up AVOD library - implies the power dynamics for Roku are not in their favor. AT&T is using this moment to leverage its enormous scale for both HBO Max SVOD and AVOD services. It is, indeed, "all in" on owning the customer relationship, but not just in SVOD. It also sees wins in AVOD.

And in The Information piece above, we see this confirmed: Jason Kilar will not permit WarnerMedia to license content to third parties. He is going so far as:

To force employees to alter their thinking, the company has discussed modifying executive compensation to discourage the licensing of content to other companies, according to people familiar with the situation. Kilar has brought up this issue in meetings, citing it as a priority, according to one executive.

The odds of us seeing HBO Max on Roku or Amazon Fire devices anytime soon seems increasingly less likely.