AT&T chief at the reins for another big deal
Stephenson goes from Oklahoma to Hollywood red carpet with Time Warner deal
When Randall Stephenson took over as chief executive of AT&T in 2007, his predecessor gave him some advice.
“You are not here as a keeper of these assets,” Ed Whitacre told him, according to his memoir, American Turnaround. “There’s a lot to be done yet — so make sure you keep going, and keep growing.”
He took the words to heart.
Under Mr Stephenson's stewardship, AT&T has continued to engage in the perpetual dealmaking that became a hallmark of Mr Whitacre’s tenure, during which it went from a regional player to one of the world’s largest telecoms groups.
AT&T on the weekend announced its biggest deal to date, the $85.4bn purchase of Time Warner, the owner of HBO, CNN and Warner Brothers.
But not all of Mr Stephenson’s deals have been successful.
In 2011, the Department of Justice blocked the company’s bid to acquire rival network T-Mobile US for $49bn, arguing it would hurt competition in the wireless industry.
He also toyed with the idea of buyingVodafone, the London-listed mobile network, before deciding that the regulatory regime in Europe was prohibitively onerous.
Mr Stephenson’s ability to navigate the corridors of Washington had clearly improved by last year, when the company’s $49bn acquisition of DirecTV, the satellite group, was approved even as other large deals were blocked, such as the putative takeover of Time Warner Cable by Comcast.
The purchase of DirecTV took the company full square into the media business, catapulting it to become the world’s largest provider of pay-TV.
But DirecTV, like AT&T, is fundamentally a “dumb pipes” business — providing infrastructure for others to transmit their content, rather than making TV shows and movies itself.
With the planned acquisition of Time Warner, Mr Stephenson faces his biggest challenge so far, both in terms of convincing regulators to give a green light, but also in trying to marry the cultures of a telecoms group and a content producer.
The glitzy world of red carpets and star-studded parties is perhaps a strange fit for Mr Stephenson, a 56-year-old native of Oklahoma whose father worked in the cattle business.
“My favourite story about my father is they were contemplating bringing a lottery to Oklahoma,” he told an audience of journalists at a charity dinner last year. “Somebody asked my father what he’d do if he won a million dollars, and he said he’d put it in the cattle business until it was gone too.”
The world of movies and TV shows could not be further away from cow farming, but a person briefed on Mr Stephenson’s strategy says the Time Warner deal is not borne out of a hankering for razzmatazz.
An accountant by profession, Mr Stephenson has spent almost his career in the telecoms industry, and he would have preferred to grow the company’s core wireless and wireline assets instead, the person said.
But a string of unfavourable regulatory decisions has steadily convinced him to diversify.
Not only did the Obama administration block the T-Mobile US deal, it also reclassified the internet as a public utility, effectively stopping companies such as AT&T from boosting profits by selling “fast lanes” to content companies.
Such an environment has made Mr Stephenson more cautious about increasing the record amount that AT&T invests in its network, and more reticent when it comes to dealmaking in the telecoms sector.
Hence his decision to branch out, by buying DirecTV, but also by investing heavily in wireless telecoms in Mexico, where AT&T has bought roughly $4.5bn of assets and committed to spending a further $3bn to bring them up to scratch.
If regulators approve the Time Warner transaction, it would be the second time that Mr Stephenson has snapped up an asset once coveted by Rupert Murdoch.
Mr Murdoch’s entreaties to Time Warner were rebuffed last year, while he was also wrongfooted when trying to buy DirecTV in 2001.
Ironically, Mr Stephenson turned to Peter Chernin, an erstwhile Murdoch lieutenant, to help broker the deal with Time Warner. The pair had become close since 2014, when AT&T and the Chernin Group formed Otter, a joint venture focused on digital media.
“He is one of the most brilliant content people in the world,” Mr Stephenson said of Mr Chernin at the dinner last year.
