Warner Bros. CEO defends hybrid film release model, says studio is in talks with top talent

  • Last week, Warner Bros. announced that its 2021 film slate would have simultaneous releases in theaters and on HBO Max.
  • Warner Bros. did not consult the actors, agents or directors of the 17 films that make up that slate, and it didn't make distribution deals with cinemas.
  • Ann Sarnoff, the chairman and CEO of Warner Bros., is defending the company's decision.

Last week AT&T's Warner Bros. announced that all of its films scheduled to launch in 2021 will be released on HBO Max at the same time they are available in theaters. On Tuesday, Ann Sarnoff, the chairman and CEO of Warner Bros. Entertainment, defended that decision.

"We've been trying to figure out the best way forward for the last eight months, since we first went into lockdown," Sarnoff told CNBC's Julia Boorstin on "Squawk Alley." "We have many movies which are ready to go, and they've been sitting on shelves. So we thought this was the most creative and win-win situation to bring them not only to theaters but simultaneously for 31 days on HBO Max."

Like many film studios, Warner Bros. has been forced to postpone blockbuster features due to the coronavirus pandemic. Now, it's looking for a way to have theatrical releases but also bolster its HBO Max streaming service.

However, the company's decision has not been well-received by many filmmakers or movie theater chains. Warner Bros. did not consult the actors, agents or directors of the 17 films that make up its 2021 movie slate, and it didn't make distribution deals with cinemas, which have traditionally been against simultaneous theater and streaming releases.

In fact, a number of media reports suggest that filmmakers and cinema owners were only told about the announcement less than two hours before it was made public.

Additionally, The New York Times reported that "Wonder Woman 1984" star Gal Gadot and director Patty Jenkins were each compensated with a $10 million check when Warner Bros. decided to send that film to HBO Max when it hits theaters on Christmas. This was seen as a slight to other talent who had worked with the company.

"It's a unilateral decision that the studio took," Christopher Nolan, a notable filmmaker and frequent Warner Bros. collaborator, told the Associated Press on Monday. "They didn't even tell the people involved. You have these great filmmakers who worked with passion and diligence for years on projects that are intended to be feature films with fantastic movie stars. And they've all now been told that they're a loss-leader for a fledgling streaming service."

Nolan famously pressured Warner Bros. to release his film "Tenet" on the big screen instead of making it available for purchase on premium video on demand. Since August, "Tenet" has garnered $57.6 million in domestic ticket sales and $302.1 million from international markets.

"We're working through the system with our talent, with their agents," Sarnoff said. "I think the more they see the visibility of how they will be paid, we're finding that people are understanding the economics. And this is unprecedented, so anything new is always a little bit difficult to work through for the first time."

Sarnoff did not detail any specifics about any financial deals with any parties but said that filmmakers and talent "get to share in some additional economics from HBO Max."

"We are in the process of having many conversations with the talent, the agents and the exhibitors to try to work through how this can work and be good for all of them," she said.

For now, this strategy of releasing films in theaters and on HBO Max on the same day appears to apply only to 2021. Sarnoff called it a "makeshift solution" but said the company would need to see how 2022 shapes up before making any decisions about future distribution models.

WarnerMedia CEO Jason Kilar made similar comments in an interview with CNBC last week.

"Everyone should take a breather," Kilar said. "Let's let the next six, eight, 10 months play out. And then let's check back in."

Earlier Tuesday, AT&T CEO John Stankey said the streaming service has been adding subscribers even before the new content arrives on the service. HBO Max has about 12.6 million subscribers, up from 8.6 million activated accounts at the end of the third quarter, he said.

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