AT&T CEO Pushes Back at Activist Fund -- WSJ

Date : 09/18/2019 @ 8:02AM
Source : Dow Jones News
Stock : AT&T (T)
Quote : 38.47  0.66 (1.75%) @ 1:00AM
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AT&T CEO Pushes Back at Activist Fund -- WSJ

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Stephenson defends his strategy and his likely successor from Elliott's criticisms

By Drew FitzGerald 

This article is being republished as part of our daily reproduction of articles that also appeared in the U.S. print edition of The Wall Street Journal (September 18, 2019).

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 of the Elliott comments. "There are some things in the letter that we look at and say, 'makes a lot of sense.' " 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 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


(END) Dow Jones Newswires

September 18, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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