AT&T CEO Defends His Strategy, Successor After Activist Attack -- 3rd Update
September 17 2019 - 10:57AM
Dow Jones News
By Drew FitzGerald
AT&T Inc. Chief Executive Randall Stephenson defended his
strategy and likely successor in his first public remarks since an
activist hedge fund challenged the company to change direction.
Speaking at a Goldman Sachs conference in New York, the telecom
boss said newly named chief operating officer John Stankey was the
right pick to make the Dallas company's telecommunications, media
and advertising businesses work together more effectively. The
chairman and CEO said his board considered a short list of
potential candidates who could turn around divisions with old
business models, succeed in telecom and manage a media
division.
"As we thought about who's going to run this play for the next
couple of years, it was a very short list and John Stankey quickly
rose to the top, " Mr. Stephenson said on Tuesday.
The AT&T CEO's response came a week after hedge fund Elliott
Management Corp. revealed a small stake in the telecom giant and
called on the company to consider shedding several of the
businesses it took on during a five-year acquisition spree. The
activist investor saved special criticism for AT&T's purchase
and integration of satellite provider DirecTV, which has been
losing subscribers. It also questioned whether the recent $80
billion-plus acquisition of Time Warner made strategic sense.
"From our view it's a mixed bag," Mr. Stephenson said. "There
are some things in the letter that we look at and say, 'makes a lot
of sense,' " while it's unclear how other suggestions make sense
for the company, he added.
Mr. Stephenson said executives were initially wary of discussing
repurchasing stock, for instance, as the company focused on using
extra cash to pay down debt from its acquisitions. AT&T's
finance chief last week said the company is on track to meet its
debt repayment target, making share buybacks a viable option.
"Now that we're seeing that, I think the Elliott recommendation
actually makes sense," Mr. Stephenson said Tuesday.
Elliott had studied the company for months but was spurred to
action by Mr. Stankey's promotion, according to people familiar
with the matter. AT&T earlier this month said Mr. Stankey would
take the No. 2 job under Mr. Stephenson while keeping his title as
CEO of the Time Warner business, a collection of film and TV assets
since renamed WarnerMedia.
Mr. Stephenson, who has been CEO for a dozen years, didn't
address his timeline for handing over the top job at the company,
though he said Mr. Stankey has enough experience in both media and
telecom to do the job well. Mr. Stephenson has privately discussed
retiring as soon as next year, according to people familiar with
the matter.
"The board hasn't informed me I'm retiring yet," Mr. Stephenson
said, adding that Mr. Stankey is "in pretty good position" to take
the top job if he does well in the new post.
The AT&T boss also praised his lieutenant's work planning
for the upcoming HBO Max streaming video service, which will
compete with Netflix Inc. and other new streaming entrants.
Inside the company, some executives have been confused by the
shifting video strategy. Initially, AT&T touted a three-tiered
streaming service, but Mr. Stankey switched gears earlier this year
and decided to launch a single service.
"This is going to be different," Mr. Stephenson said. "This is
not Netflix. This is not Disney. This is not Hulu."
On Tuesday, AT&T said it has struck a deal for streaming
rights to reruns of the hit comedy "The Big Bang Theory," which
ended a 12-year run on CBS last spring. Terms of the agreement
weren't disclosed. A person familiar with the matter said the
five-year deal was worth more than $600 million. It renews an
existing agreement with WarnerMedia's TBS cable channel.
AT&T has said it will start a beta or test version of HBO
Max in late October with plans for a bigger rollout next year. It
hasn't announced a price, though it is expected to cost close to
the $15 a month charged for traditional HBO, according to people
familiar with the project.
The service will feature HBO shows and films, as well as content
from WarnerMedia, which owns the Warner Bros. studio and cable
channels like Cartoon Network and CNN. HBO Max has also acquired
streaming rights to the show "Friends" starting in 2020.
--Joe Flint contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
September 17, 2019 10:42 ET (14:42 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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