AT&T CEO Touts Vertical Integration, Notes Possible Successor, M&A Uncertainty

CEO Randall Stephenson defended AT&T's vertical integration strategy Tuesday at a Goldman Sachs media conference, a week after an activist investor questioned such focus (see 1909090020). Stephenson said if he had been asked five years ago whether it made sense to vertically integrate media and network assets, he would have been hard-pressed to say yes, but content creation is changing radically, and growth now is digital. Having a direct path to consumers provides a better way to offer new digital platforms such as HBO Max. Though Stephenson, 59, has no immediate plans to retire, WarnerMedia CEO John Stankey would be in a good position to be heir apparent if he executes on the company's strategy of integrating premium content and distribution, the current AT&T chief said. Stephenson doesn't plan to participate in more consolidation. He noted that given regulatory uncertainty over mergers and acquisitions, it's hard to predict outcomes. Among current deals is T-Mobile's buying Sprint, which states are challenging (see 1909170035). Stephenson noted AT&T has 170 million customer relationships in pay TV, broadband and mobile, plus it's in 55,000 retail locations: "We touch customers 3.2 billion times a year." Dish Network did a "hard drop" of HBO in Q2 after they failed to reach contract renewal (see 1902130039), but the network grew 3 percent that quarter, he said. AT&T shared the activist letter with its board, Stephenson said, and will see what makes sense for shareholders.