CMCSA Comcast Corporation

By Drew FitzGerald 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 15, 2017).

AT&T Inc. plans to split the management of its telecom operations and its media assets after clinching a takeover of Time Warner Inc., putting veteran AT&T executive John Stankey in charge of the Time Warner business, according to people familiar with the matter.

The reorganization would create two divisions. One would contain AT&T's wireless business and its DirecTV satellite television business, the other would comprise the Time Warner assets it plans to acquire, including HBO, Warner Bros. and the Turner cable unit that houses CNN, the people said. AT&T last year said it would take control of the entertainment company in a cash-and-stock deal worth about $85 billion.

The new structure would keep AT&T Chairman and Chief Executive Randall Stephenson atop the company with two top lieutenants, in an organization that would resemble Comcast Corp. Brian Roberts, Comcast's chairman and chief executive, has two segment chiefs: one in charge of the cable business and the other heading NBCUniversal.

The Justice Department is conducting an antitrust review of the transaction, although President Donald Trump's pick for antitrust chief, White House deputy counsel Makan Delrahim, is awaiting Senate confirmation. The Senate is locked in a broader political showdown over nominations, and it isn't clear when Mr. Delrahim might be confirmed.

Justice Department staffers have interviewed executives and collected information from the companies and rivals in the industry, but the process is in something of a holding pattern until Mr. Delrahim is in place, according to a person familiar with the matter.

Mr. Trump vowed to block the deal when he was still a candidate but hasn't commented on it since taking office. The combination of two distinct businesses -- video and the networks that distribute it -- is considered unlikely to face an outright government challenge. But authorities have imposed merger conditions on similar tie-ups, including Comcast's takeover of NBCUniversal.

The administration's ongoing feud with Time Warner subsidiary CNN adds another wrinkle to the process. White House officials have tangled with several national media outlets, but Mr. Trump has saved extra ire for the cable news network.

AT&T has said it would maintain CNN's independence post-merger and has no plans to spin off the network. The company still expects to complete the transaction later this year.

AT&T spokesman Larry Solomon said the company is still developing its integration plans and hasn't completed the new organizational chart.

Mr. Stankey, a 30-year AT&T veteran, is currently head of AT&T's entertainment business, which includes DirecTV and has offices near Los Angeles. He has previously served as the company's strategy chief and held various executive roles in its traditional telecom business.

He would sit atop the existing Time Warner business, but AT&T has indicated it would like to retain some top executives at Time Warner to take advantage of their expertise, according to a person familiar with the matter. Time Warner CEO Jeffrey Bewkes has said he will stay on for an interim period to help with the transition.

Under the new structure, DirecTV would be combined with the company's telecom operations, which are run out of AT&T's Dallas headquarters and include both the wireless and landline business, the people familiar with the matter said. That segment would be run by John Donovan, another AT&T veteran who is currently chief strategy officer, one of the people said.

News of planned executive changes were earlier reported by Bloomberg News.

AT&T has hinted it will be more than just a passive owner of Time Warner's news and entertainment assets. Mr. Stephenson in May floated some ideas for the combination that included shorter, smartphone-friendly HBO videos and specially targeted advertising.

How Time Warner, as part of AT&T, might negotiate with the carrier's competitors is another potential concern. Mr. Stephenson addressed some of those fears in May by repeating his pledge to keep its most popular content available to all distributors.

"You can't think about taking 'Game of Thrones' and you're only going to make it available to AT&T customers," he said at the time. "That's crazy."

AT&T has started toying with special entertainment offers ahead of the deal's close. In April, it offered subscribers of its premium unlimited data plans free access to HBO, which normally costs $15 a month.

Aside from the Justice Department, several state attorneys general are taking the routine step of reviewing the deal's antitrust implications. The states' probe deals with how AT&T's nearly 147 million wireless customers affect its bargaining position with other media companies, among other questions, according to a person familiar with the joint effort.

Government enforcers sometimes monitor a merged company to make sure two newly combined businesses don't gain an unfair edge over rivals.

"They could be anticipating that they're going to have to face some stiff enforcement proposals and they're preparing themselves," said Gene Kimmelman, chief executive of Public Knowledge, an interest group that opposes the deal.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

(END) Dow Jones Newswires

July 15, 2017 02:47 ET (06:47 GMT)

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