AT&T CEO Randall Stephenson defended the company’s strategy to build a new media company that combines content production with digital distribution.
Hedge fund operator Elliott Management last week said it had acquired $3 billion worth of AT&T stock and criticized the company’s strategy, management and suggested it would be better off selling assets including DirecTV and Time Warner.
Speaking Tuesday at the Goldman Sachs Communicopia conference, Stephenson called Elliott’s suggestions a “mixed bag.”
"There are some things in the letter that we look at say we need to push further and talk about it . . There are some other areas you look at it and it’s not as clear in terms of how that would make sense for us,” he said.
“These are smart guys and they’ve put a lot of ideas on paper,” he said. “We’re going to evaluate it and talk to them and see what makes sense for all our shareholders," he added.
Stephenson reiterated that AT&T’s strategy was based on the growing amount of consumption of premium content and the demand for more bandwidth to watch that content.
“We think those two beliefs are unassailable,” he said.
He said not long ago, it might not have made sense to vertically integrate content creation and traditional forms of distribution. In the new world in which content consumption is driven by digital platforms, “we think it makes all the sense in the world. . . In fact, we think it company that can put together premium media content creation and production with networks would have a significant strategic advantage.”
Stephenson said that AT&T’s consumer relationship will help it drive uptake of the new service HBO Max. He pointed to the subscribers numbers for HBO, which grew in the second quarter despite being dropped by Dish.
Stephenson also addressed AT&T advertising business. The company has been investing in mechanizing its ad sales process in order to use data from AT&T to increase the value of the ad inventory it has with DirecTV.
He noted hiring former GroupM exec Brian Lesser to run its Xandr ad unit and the acquisition of AppNexus.
“When we did the Time Warner deal, it came with a rather large inventory of advertising by virtue of the Turner networks,” he said.
“We will be going to the upfronts next spring with one face, Xander, representing all the Turner inventor. we're pretty excited about what the possibility is here for advertising,” he said.