AT&T’s CEO Joins Disney's in Stepping Aside Mid-Makeover

(Bloomberg Opinion) -- First Walt Disney Co.’s Bob Iger, and now AT&T Inc.’s Randall Stephenson. As two of the world’s most powerful entertainment and communications companies confront the streaming wars and the Covid-19 pandemic — bracing for what may be a new normal brought on by both — they’ll have to venture into the unknown under new leadership. 

Stephenson, who took a prosaic phone brand and morphed it into a hulking media and internet conglomerate with an eye toward a data-intense, video-centric future, is retiring after 13 years as CEO. He’ll be replaced on July 1 by John Stankey, another longtime AT&T executive who has served as Stephenson’s right-hand man, leading a series of gutsy acquisition efforts, including the DirecTV satellite business and Time Warner, an iconic Hollywood institution.

AT&T’s announcement on Friday comes just two months after Iger, who served as Disney’s CEO for nearly 15 years, decided to retire, handing the reins to Bob Chapek, the head of its theme parks division. Both Stephenson and Iger are staying on as executive chairmen through the rest of the year. (Read more about Iger’s move here: “Disney’s Next $180 Billion Won’t Come Easy.”)

Neither retirement is a surprise, though they were both a tad sooner than expected. There’s no telling what the lasting effects of this public-health-turned-economic crisis will be on either company. Stephenson, who celebrated his 60th birthday on Wednesday, was expected to remain CEO through 2020, at least according to an agreement AT&T struck with an activist investor in October. The shareholder, Elliott Management Corp., had pushed AT&T to hit the pause button on its dealmaking and focus on streamlining the company toward a higher stock price. That was before the coronavirus wiped out more than $60 billion of shareholder value.

Elliott said Friday that it supports Stankey as the next CEO, adding that it was involved in the “robust” search process, which included external candidates. How active Stephenson will remain in management decisions as executive chairman is unknown, though Iger has reportedly reasserted his control at Disney as the company — with its theme parks, cruise ships, film and advertising businesses all taking a hit — manages its way through the pandemic.

For investors and employees, it may take a little adjusting to get acclimated with Stankey, 57, who most recently served as chief operating officer and has also been running the WarnerMedia division since that deal closed. Stephenson, an affable Oklahoma native who still has a bit of that country lilt, often breaks into passionate mini-speeches marveling at the wonders of the digital future. With a deep, basso voice, Stankey often comes across as comparatively all-business during earnings calls and interviews, and only in the last year or so has his profile been raised with investors and media. But Stankey expressed to me during an interview last fall that he wants people to know he’s transparent and direct and that his heart’s in the right place.

“I want to do what’s right by the company and shareholders, and I’m not going to be working an agenda other than that,” Stankey said at the time. “I think most people would say I’m pretty easy to read, and I will wholeheartedly engage in a robust debate.”

That’s good because there is a giant debate going on around AT&T right now. The question: Do a couple of phone guys occupied with the build-out of a 5G network also have what it takes to win the streaming wars? And can they do it while tackling a mountain of debt and satisfying a dividend-hungry investor base? HBO Max launches May 27, just a few weeks after Stankey will hand off the WarnerMedia CEO title to Jason Kilar (formerly of Hulu), and a few weeks before Stankey steps into Stephenson’s shoes. Their goal is that interest in HBO Max content will promote subscriber loyalty among AT&T’s more lucrative wireless customers. But HBO Max is also a late entrant taking a chance on a higher subscription price than Netflix, Disney+, Comcast Corp.’s Peacock, Apple TV+ and Quibi. 

Both Stephenson and Stankey — along with Chief Financial Officer John Stephens — gave an eye-opening look during Wednesday’s earnings call at the various ways in which the national lockdown has already affected AT&T, its customers and its employees and how it’s trying to thoughtfully get through it. Aside from paying down debt and staying committed to the dividend, their top priorities are: 5G, broadband fiber and the success of HBO Max. Stephenson’s vision is now Stankey’s to deliver. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.

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