T AT&T Inc

By Joe Flint 

John Stankey, the chief operating officer of AT&T Inc., predicts the criticism the company is facing over its media strategy will fade away once it launches a new streaming-video product next year.

In an interview with The Wall Street Journal, Mr. Stankey defended the company's strategy and said AT&T doesn't plan to sell its struggling satellite TV unit, DirecTV. Activist investor Elliott Management Corp. has criticized AT&T for shifting its plans in streaming video and for executive turnover, among other complaints.

Below are additional, edited excerpts of the interview, in which Mr. Stankey touches on the rollout strategy for HBO Max, the new streaming service, and how he is handling the scrutiny of his new job.

WSJ: Will HBO Max be at a disadvantage because it is priced higher than rival streaming services such as Netflix, Disney+ and Apple TV+?

Mr. Stankey: There's a reason why HBO and WarnerMedia took a record-setting number of Emmys. I believe if you can put something out there of higher quality and higher consistency, more emotional connection and better curation, [it] should warrant a slightly higher price. And I don't want to shy away from that in the market. So I don't know that there's a right price or a wrong price. It's up to the customer to decide whether the price is fair.

WSJ: Why did you switch from planning a three-tiered streaming service to the current plan of a single offering?

Mr. Stankey: Our intent was always if there was going to be a lead offer in the market, it was going to be a very full-featured, robust offer that incorporated the maximum amount of content we'd bring to the market....Through discussions with the leadership, as we've gone through refinements...the simple decision is, "Let's be clear, we're going to be in the market [with] one price, one product," and that is where we're going.

WSJ: Will people who subscribe to HBO on regular TV be able to sign up for HBO Max easily without cutting the cord?

Mr. Stankey: We very much anticipate and want this to be a distributor-friendly product and we're out talking with our distributors right now. We think it's good for you, as the customer, to have as little friction as possible to get to it. We think it's good for the distributors because if you, as a customer of their product, spend more time on a product or service that they're billing and bundling to you, then that'll be good for your relationship with your base pay-TV package.

WSJ: Will HBO Max carry all the movies HBO does, or will there be contractual difficulties that prevent that?

Mr. Stankey: I think what you're going to see in this offering...is an industry-leading high-quality theatrical offering. It's going to be really a distinguishing characteristic of this product. As you go and do consumer studies [and look at what they want], they feel a bit overwhelmed right now by the volume of scripted [programming] and the significant investment of time that engaging in a new piece of content takes.

WSJ: Who will replace you as WarnerMedia CEO now that you're taking on the chief operating role at AT&T?

Mr. Stankey: I'm not looking to find my successor right at the moment. I think my priorities right now moving into this job are to get the advertising business, the communications company and the media business working as closely and in as coordinated a fashion as possible....There may come a time down the road where it makes sense.

WSJ: Are you surprised at the level of management turnover at WarnerMedia after AT&T acquired it?

Mr. Stankey: Sometimes you want the person to stay, but they look at it and say, "This isn't my cup of tea. The deal has changed, so to speak." Or, "My sandbox has changed." Or, "I'm not as motivated if I don't get to control as many things." And so there's multiple reasons to leave. Sometimes it's because the company doesn't see a match, and sometimes it's because the individual doesn't see a match. Could there have been a different outcome if individuals maybe looked at things and said, "Yes, I'm totally bought into this direction where the business is going"? Sure.

WSJ: What are you most looking forward to as you navigate these challenges?

Mr. Stankey: When we put [HBO Max] out there and customers start to buy it, that's going to be a really proud day for me. It's going to be a really proud day for this organization. I think a lot of noise goes away when that happens because at the end of the day, most people want to come into work and feel like they're doing something that's meaningful and there's nothing better than having somebody else use your product and say, "I love it. That's great. I want to buy it. I told my friends to get it."

Write to Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

September 25, 2019 13:12 ET (17:12 GMT)

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