Column: The killing of FilmStruck shows that AT&T’s defense of its Time Warner takeover was a lie

Shed a tear for Coleman Breland. As recently as April 26, the president of WarnerMedia’s Turner Classic Movies was filmed at a Hollywood gala talking up Turner’s FilmStruck service, which was bringing classic and independent films to home streaming boxes for a monthly fee.

“One of the reasons we have FilmStruck,� Breland gushed, “is helping a new generation, a younger generation, fall in love with films…. If you love film, you’ll love FilmStruck.�

On Oct. 26, however, Turner’s new owner, AT&T Inc., made Breland’s words moot by announcing that FilmStruck would be shut down at the end of this month. It had lived for barely two years, attracting a subscriber base of 100,000 cinephiles. That wasn’t enough to make FilmStruck profitable, Turner executives say. And under AT&T, which closed its takeover of Time Warner in June, mass subscribership and profits are the ballgame.

Speaking as a soon-to-be-orphaned FilmStruck subscriber, I take this development personally. FilmStruck was a beacon cutting through the miasma of indistinguishable video streaming services such as Netflix, Amazon’s Prime Video and Hulu. Its demise is a blow for film fans who valued FilmStruck as one of a handful of services that allowed them to access classic films and introduce them to their friends and fellow fans.

The service’s demise is another indication that the big Hollywood studios are struggling to know how to keep their vast archives in circulation (or don’t care). “We’re in mourning, since it feels like a huge step back for classic film availability online,� says Nora Fiore, who writes about old movies at her website the Nitrate Diva. The rival cinephile streaming service Fandor even posted a eulogy on its website, calling the shutdown “abrupt, shocking, and sad.� (Fandor is offering bereft FilmStruck subscribers a one-year half-price promotional subscription for $24.99.)

But you should take this personally, even if you’ve never heard of FilmStruck. AT&T’s shutdown of FilmStruck and other niche streaming services — last month AT&T also closed down the 3-year-old digital comedy service Super Deluxe and the Korean-language streaming service DramaFever — reminds us why consolidation in telecommunications and entertainment is a threat to the public interest. They also show how AT&T’s original justifications for the $85.4-billion merger were lies.

When AT&T announced the merger in October 2016, the company said that bringing together its telecommunications network with Time Warner’s HBO, Warner Bros., Turner television networks, and CNN would be a boon for consumers.

AT&T pledged that the merged company would offer consumers “the world’s best premium content with the networks to deliver it to every screen, however customers want it.� It promised to provide “unmatched choice, quality, value and experiences that will define the future of media and communications.� Its products would be “smarter and more personalized.�

Critics of the deal — informed by the bitter experience of similar promises made for earlier mega-mergers — didn’t buy this for a second. “I don’t see anything about this merger that would lower costs for consumers or increase choices for consumers,� Todd O’Boyle, director of the Media and Democracy Project at Common Cause, told me then.

Would anyone claim that shutting down niche services such as FilmStruck, Super Deluxe and DramaFever reflects delivering content “however customers want it�? Or “unmatched choice�? Or “more personalized� service?

AT&T also is playing hardball with competitors such as the satellite-based Dish Network, which competes with its DirecTV. As my colleague Meg James reported Thursday, HBO was just pulled off Dish in the first such blackout ever. Both parties blame the other for their contract stalemate, but the only thing that’s changed recently is that AT&T now owns HBO and has an incentive to deny a competing satellite service access to its content if it can. So you be the judge.

WarnerMedia executives say they decided to shutter FilmStruck before AT&T officially took over ownership of Time Warner, their parent. Whether that’s a plausible claim, it’s certainly incomplete. If the decision was made before AT&T took over, were the executioners trying to anticipate what the new owners would want? Were they clued in to AT&T’s expectations before the merger became official?

If the shutdown really was under consideration for months as Warner claims, why did its executives talk up FilmStruck’s shining future when they knew that future was in doubt? And why wouldn’t AT&T say, “Hold off, folks. Let us get our arms around our new toy before we take any irrevocable steps�?

AT&T’s defense of the Time Warner merger evolved over time. The rationale changed from serving the consumer better to saving AT&T’s life. In a legal brief filed in May with the federal judge overseeing the government’s lawsuit challenging the deal, AT&T and Time Warner claimed that competition was condemning them both to the sickness unto death.

Time Warner “lacks the technical infrastructure to provide direct-to-consumer products [that is, video streaming] at any meaningful scale,� it said. Netflix and Amazon were “bleeding away [Time Warner’s] viewers.� Meanwhile, the rise of Netflix and Hulu and of cable/content conglomerates such as Comcast made it so much harder for AT&T to stay afloat. (Never mind that users of those streaming services must have internet connections, which AT&T sells.)

The credulous judge, Richard Leon of the District of Columbia, swallowed these claims whole and approved the merger in June. Leon should be feeling rooked right about now, since one of his core findings was that AT&T would not “restrict distributors’ use of HBO as a promotional tool� (tell that to Dish, your honor). He specifically cited FilmStruck as an example of how Time Warner was trying to innovate in the direct-to-consumer space.

Under the AT&T credo, niche operations such as FilmStruck simply don’t count even if they might build bigger audiences over time. “We need hours a day� of users watching HBO material, John Stankey, the AT&T corporate man who has been appointed CEO of WarnerMedia, told his new underlings in July. “It’s not hours a week, and it’s not hours a month.… Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions.� That sounds as if AT&T’s strategy is not to serve consumers better, but fatten its bottom line at their expense.

FilmStruck was a lovely service. It offered classic films from more than 20 studios, authoritatively curated by the Turner Classic Movies team. Its goal was to expose subscribers to stars, directors and genres they may not have thought about for years, or didn’t know at all.

In these final days, users still can choose from collections of films by directors Ernst Lubitsch or John Huston; or starring James Mason or Melvyn Douglas (the latter accompanied by a charming reminiscence by his granddaughter, actress Illeana Douglas). To tie in with the release of the newest version of “A Star Is Born,� Filmstruck offered for comparison the first three versions of the story, from 1937, 1954 and 1976. Try finding those together anywhere else.

Until the hammer fell, FilmStruck seemed to be on the upswing. In February, it announced that Warner Bros. classics such as “Casablanca� and “Citizen Kane� would join its streaming library as part of a restructuring that included shutting down the Warner Archive streaming service and transferring subscribers to FilmStruck. The service also was the main online source for films in the Criterion Collection of classic films.

That means the shutdown cuts loose not only film fans but Criterion, which said the day of the announcement that it would be “trying to find ways we can bring our library and original content back to the digital space as soon as possible.�

AT&T says it plans to restore access to all its orphaned content as part of a WarnerMedia mega-site to be launched in the fourth quarter of next year. That leaves open the question of why FilmStruck and the other services had to be extinguished now. Were they an unconscionable drain on corporate resources? Unlikely: The merging companies reported combined total profit of more than $35 billion on revenues of nearly $192 billion for 2017.

Everyone who relies on ever-larger conglomerates for communication and entertainment should shudder at what AT&T is doing. Its Warner site will almost certainly look just like Netflix, Amazon Prime Video, Disney’s planned streaming service, and all the others — a premasticated gruel of the most familiar and popular films and crowd-pleasing original productions with the occasional curiosities dropped in like raisins. If you want classics via video streaming, you may be able to get them — but only by paying for the whole service, classics and crapola together.

Other fan services still exist, including Kanopy, a source for classics and independent films largely accessible via public library memberships. But these services may well become swamped by the entertainment bigfoots.

As cultural critic Joanna Scutts aptly observed on Slate.com, the likelihood is that streaming inventories will shrink, a disaster given the cost and diminishing availability of classics on DVD. “Titles that are not available to stream,� she wrote, “will be harder to assign in classes, will cease to bubble up into the cultural awareness, and will eventually cease to matter.� Thank you, AT&T.

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