As upfront week presentations wrap, Adweek’s postmortem chats with every ad sales chief continue. We’ve already spoken with NBCUniversal’s Mark Marshall, Fox’s Marianne Gambelli, TelevisaUnivision’s Donna Speciale and Disney’s Rita Ferro. Next up is Warner Bros. Discovery’s Jon Steinlauf.
In its first full year as a merged company, Warner Bros. Discovery is about to unveil Max, the combined Discovery+ and HBO Max streaming service. And though streaming played a big role in the company’s Wednesday morning presentation at The Theater at Madison Square Garden, it also leaned heavily on unscripted, news and sports content, with only executives appearing on stage due to the ongoing Writers Guild of America strike.
Steinlauf talked about the strike-prompted shift away from onstage talent (and why CEO David Zaslav was also MIA), the company’s Max streaming strategy and why—following a 2022 upfront where “we probably did not perform at the level of expectation” given that the WarnerMedia and Discovery merger closed just weeks ahead of talks—the company is in a much stronger position heading into this year’s negotiations.
(This interview has been edited for length and clarity.)
Adweek: You made it through upfront week. Looking back, what are you most proud of from this year?
Steinlauf: I think what we were able to accomplish was a very seamless run-through for all of the content. My part of it, and my direct report Shereen Russell’s [evp, ad sales and inclusive content partnerships] part of it at the very top, was designed to talk about the issues that are important to advertisers as we enter the upfront window. Shereen handled the diversity, equity, inclusion opportunities in our company. That was something that we had never done before. We had never dedicated a section during the upfront to diversity. That’s a statement to the marketplace that we want to be a leader in that area, and there is a growing demand for sponsorships of content that is either created by, viewed by or has a cast or theme around diversity, equity and inclusion. If there were one network right off the top of my head that stands out in that area more so than anything else in the industry will be TLC, in terms of presenting underrepresented groups in a positive light on many, many series on the network. I give Howard Lee a lot of credit. He’s been the brains behind TLC for a long time. Then, of course, OWN is another part of the story, as is the NBA, as is CNN. And we have U.S. Hispanic networks here too. What I was trying to do in the first 12 or 13 minutes, I was talking a lot about currency, advanced advertising and streaming. And not just streaming from an ad perspective.
Max is almost here—how much of a role do you expect it to play across WBD’s conversations, and what did you want marketers to take away?
What’s happening with Netflix, Disney+ and HBO Max is you have three properties that are trying to work their way into the ad-lite business. And to get into the ad-lite business, you have to have subscribers. The deal at $9.99 that we’re going to put on the table for consumers is pretty compelling. It’s going to have just about everything we do as a company. It’s going to have not just lite advertising but very targeted advertising. You’re getting ads that are more targeted to the individual household than viewer. I was trying to say to the audience, “Put your consumer hats on, and think about what this product is at $9.99,” and into the future, direct-to-consumer and streaming will grow and share against traditional. We just wanted to have one product out there that we felt we would bring the entire portfolio together. There’s not a lot of transparency about streaming services and viewership and subscriber bases. It’s been a difficult area for the advertisers to really navigate. We wanted them to know that the $9.99 product was going to be the focus of a lot of our upfront conversations, and then we see it scaling in the next year or two. We see that over time the that consumers will come to AVOD because they’ll see the benefits of AVOD. It’s a challenge when you’re trying to take a brand like HBO into streaming with an AVOD layer. Because as soon as you say AVOD, ad-supported or even ad-lite, the first thing people think about, “Is it going to be like linear? Is it going to have lots and lots of ads and lots of interruptions and billboards and promos?” And it’s not what people would perceive ad-supported television networks to look like.
Warner Bros. Discovery announced ahead of time that it would only be executives on stage—how much of your presentation was impacted by the strike?
We had to go to video for Guy Fieri. The featured videos were replacing what would have been live on stage talent appearances. You saw Anderson Cooper. We would have had a live presentation from news talent. A couple of people said to me afterwards was Chris Licht [CEO of CNN] talking to Anderson Cooper in real time, “Was that a zoom or was that prerecorded?” That’s what you want to have happen. I told Chris this morning that’s exactly what we wanted. We wanted people to think that they were talking to each other live while they weren’t. But then you’re getting the impact. The closest you could get to what would have happened had there not been a strike is Anderson Cooper would have been up there with Chris. And you saw we did with the Inside the NBA team. It also was plausibly live to have Charles and Shaq and Ernie and Kenny doing what they did as a halftime show. That was one of the creative ideas is put the four of them together, record them a couple of days ago, have them do what they would have done on stage and make it a halftime show because they’re known as the halftime show. There would have been more Max talent. You saw two-plus minutes of And Just Like That. Maybe there could have been some live presence from that series. I can’t really say exactly what it would have been, but if you look at the video segments that we presented, some replaced what would have been live appearances.
That’s exactly what we wanted. We wanted people to think that they were talking to each other live while they weren’t.
Jon Steinlauf, on making the prerecorded upfront videos from talent seem like livestreams
You did have talent appear in prerecorded segments. Was there a thought of shifting fully to virtual?
Never, absolutely not. Now that the dust is settled on these three days, people are talking about, “What did this week mean to the future of the upfront presentation week?” I’ve been working in this industry a long time, and I remember when I first started, there was ABC, CBS, NBC; that’s all we had. But each one took a day, and each one took a hotel space, and there were 400-500 people. That’s all they needed to talk to at that time. This industry was a lot smaller. This is a tradition that goes back to as early as 1970. Now, flash forward to 2023. We just finished our first week ever where we were impacted heavily by the strike. The shows are not what they used to be, but that’s what makes this week important is it’s a celebration of not just the traditional television network business but also the streaming services that are important to advertisers. That’s why Netflix wanted to jump in and do whatever they could do. Clients keep coming in, and in the last three days, Warner Bros. Discovery has had 100 client meetings. I would compare this to CES. I would compare this to Cannes. I would compare this to the Super Bowl as a point on the calendar where the ad community and the television and streaming community converge. We had an incredible amount of people there yesterday. This strike, the picketers and lack of talent did not keep people home. We can make a compelling show just with our seven or eight top executives staying within their lanes. Having Casey Bloys here yesterday, in my opinion, he’s probably the most successful creative executive in the television industry today. He’s never been in an upfront presentation before. He’s never presented on stage to advertisers. The reason why he was here is because Max is becoming a more important part of our company to ad sales.
Would you do it differently and consider having any sports or news talent on stage? I’m also curious about the decision to not have David Zaslav on stage. What was the thinking there?
David made the decision. I don’t think it was strike-related. I don’t think he chose not to go up on stage because of the strike. I think he chose not to go up on stage because he has done it for a long time. And he’s been CEO of Discovery since 2007. I think he wanted to cede that role to other executives in the company, as have a lot of his peers. When you think about CEOs of these companies, it’s really Brian Roberts; it’s Bob Iger; it’s David Zaslav. He looks at what the role is of the people that he considers to be his peers to him. If they’re letting their executives get the exposure, we had Bruce Campbell [CRO] on stage. You have to pick and choose who are the best executives that you want the audience to become more familiar with as time goes by. There were some articles about we could have used David on stage because he’s a celebrity CEO to compensate for the lack of star power up on that stage. But he was there. He’s not trying to say the ad business is not as important to us as it as it used to be.
And then the other part of the question?
If we go back next year, I would say the talent strategy is up for discussion. We just came out of a couple of meetings this morning where we’re trying to postmortem to say what works, what didn’t work out, the same kind of questions you’re asking. We’ll review it, but I don’t think this becomes the norm. I don’t think we just say let’s go without talent now that we did one without talent, and we got pretty good press about it, and we got good attendance. Is that the end of talent at the upfront presentation? I would say no.
This time last year, the merger had only just been completed before upfronts. Now, you had a full year to prepare. What were the major differences between the two years?
The biggest thing is we understand each other’s business. The way mergers work in our industry is there could be no communication between Warner[Media] ad sales and Discovery ad sales while the regulatory process was unfolding. It closed on April 11, so not only did we have to get ready for MSG in 2022—we had a limited amount of time to get ready for that—but we also had very limited amount of time to start sitting down and strategizing about, “What do you do with GroupM? What are you doing with OMG? What do you do with Publicis?” The bottom line is we did not have enough time last year to be able to put the right strategy together knowing what the histories were with each of these companies, and we did the best we could. We had some successes. We had some failures. We probably did not perform at the level of expectation. It was an earlier market last year, I don’t know when it’s going to move this year, but the market moved on the earlier side. We also had that working against us, and we had so much work to do to combine forces and to combine portfolios. This time around, we’ve been together for 13 months. We now work in the same building in almost every city. I’m sitting here right now in Hudson Yards. We have about 400 New York-based salespeople all together—same thing in LA, same thing in Chicago, same thing in Detroit, same thing in Atlanta. We’ve structured our teams in a way where we have people working—what we call quads. There’s a team that’s working on a set of networks, another set of networks, another set of networks and a lot of our standalone dedicated digital team. They know each other, work together, strategize together and come to the front together with full knowledge of everything happening at each agency’s portfolio.
You touched on this a little, but what can you tell us about early negotiations so far?
All I’ll say so far is the demand is positive for us in sports. I see a shift to sports. I’m seeing that the ratings are staying pretty firm in the sports world, and there’s a lot of immediate reach. We’re seeing the advertisers saying our sports budgets are going up, or we’re putting more brands into sports, or we’re putting more brands that are dual to even female-skewed in terms of its targeting into sports. I think that will be the genre of our business that’s going to be most successful in this upfront will be sports, and I think the side-by-side with sports will be streaming. Overall demand may not be up all in when you count everything, but with CNN, we’re heading into an election year, so we know that brings sponsors in different ways for coverage of the election cycle. The advertisers are paying attention to CNN, knowing that the ratings are about to take off as they always do in election cycles.
Will we see WBD back at the upfront next year?
Will we present in the upfront next year? Yes.