The Department of Justice will not relent in its opposition to AT&T’s acquisition of Time Warner, but AT&T CEO Randall Stephenson said the merger is a done deal. He said that despite the distraction, AT&T will remain focused on integrating the two operations.
That will include not messing too much with Time Warner’s culture or with HBO. It’s too early to tell what to do with Hulu, he indicated.
Stephenson appeared on CNBC’s Squawk Box this morning, and the DOJ appeal was top of mind for everyone. Asked about it, he said, “We think the likelihood of this thing being reversed and overturned is really remote … so we’re about executing our plan. The merger is closed. We own Time Warner … it’s been renamed Warner Media. John Stankey is executing. We have acquired Appnexus, which is an ad tech platform, to begin implementing the advertising. We’ve got a business plan around this. So we’re off and running. Nothing’s going to change that.”
There was a recent report that John Stankey, the AT&T executive given responsibility for Warner Media, had addressed the employees of HBO and said he wanted HBO to compete with Netflix more directly, which might require a fairly extensive set of changes in terms of the way HBO operates.
Asked by CNBC reporters if he was worried about the culture clash between AT&T and Warner Media, Stephenson responded, “No. I’m conscious of it. And we’re being very, very careful and mindful of that. The way we’ve organized the business, it will be run separately, very independently."
“It’s important that we preserve the culture,” Stephenson continued. “John Stankey has spent a lot of time the first couple of weeks making sure that he’s touching the employees, touching the talent. Making sure that they understand that they will be left to do what they do best, but that we do have some synergies to go after in this thing, particularly the advertising synergies. And there are some cost synergies at the corporate level. Those will be—those won’t affect the creative side of the business. But we feel really good about our ability to execute on this.”
Asked specifically about his plans for HBO, Stephenson said, “Anything you do, you’re going to do very cautiously, recognizing just how successful it’s been. There’s been a lot reported about John Stankey’s comments of 'we want to drive more and more engagement.' At the end of the day, that’s what this is all about, engaging the consumer. Because the more engagement you have, the more opportunity you have to create value. And so engagement—when people hear that they say that means they’re going to be pumping more content into HBO. Maybe. But we’re looking at a lot of different avenues for driving engagement.”
He said other digital products are doing well. DirecTV Now is growing “like crazy,” adding 300,000 subscribers a quarter. He also said there’s been “really good” uptake of the new WatchTV skinny bundle.
AT&T also owns 10% of Hulu. Asked about either selling the stake, or increasing it, Stephenson said, “it’s too early to say … Plus, we don’t know who’s going to be owning Hulu when it’s all said and done. It’s too early to say on Hulu.”
As for the DOJ appeal, CNBC reporters tried to goad Stephenson into acknowledging that it was politically motivated. Candidate Donald Trump attacked the AT&T-Time Warner deal, and as president has been consistently hostile to the media. Stephenson steadfastly refused to speculate on why the department persists, despite having literally all of its arguments waved away.
But Federal opposition may have other ramifications. A CNBC reporter speculated that the DOJ action might serve to hinder attempts by Comcast to buy Fox.
“Probably can’t help it,” Stephenson allowed. Though later in the interview he was a bit more defiant.
“…Looking at media acquisitions and deals, I don’t think I would be looking at them today any differently than I did yesterday,” he said. “I think this is a process that will play itself out. But I think there is such a slim chance of this thing being altered in some way that it wouldn’t affect my thinking much at all.”
Stephenson’s comments were taken from a transcript of the broadcast provided by AT&T.