AT&T CEO Randall Stephenson: “We Have No Sacred Cows” in Our Portfolio

JB Augustine |

Oct 29, 2019

Reports and rumors that WarnerMedia parent company AT&T might sell DC Comics once they review their assets were bolstered this week by the company itself.

On its third-quarter conference call with investors, transcribed by Seeking Alpha, they went over a new three-year vision. During that call, CEO and Chairman of AT&T, Randall Stephenson, stated every business is subject to individual assessment and there are “no sacred cows” amongst corporate holdings:

“We’re committed to an objective, diligent and disciplined process. We’ll analyze the merits of each of our businesses individually and as a part of the whole. But let me be clear, we have no sacred cows.”

Settling for Less Than DirecTV

DirecTV was a major focus due to the service’s large contribution to the loss of 1.4 million pay-TV subscribers. Along with the purchase of Time Warner, its acquisition saddled AT&T with $170 billion in debt they are determined to pay off.

Stephenson called DirecTV “the source of a lot of public speculation” but hinted it will stay in the portfolio for a few more years:

“We’re always open to making portfolio moves, and DIRECTV has been the source of a lot of public speculation in that regard. As we’ve said, it will be an important piece of our strategy over the next 3 years.”

Cutting Fat

AT&T is trying to trim the fat to appease activist hedge fund Elliott Management. Elliot is a key investor – to a tune of over $3 billion – in AT&T and its enterprises. The firm even recommended initiatives adopted as part of the three-year effort.

Changes will be made to the AT&T board of directors and there will be a pause on new acquisitions. Stephenson will be replaced as CEO although he gets to stay in the job through 2020.

Last quarter already saw one change in power. Warner Bros. Pictures named Ann Sarnoff as CEO. Elsewhere, Robert Greenblatt – a former chairman at NBC – was made Chairman of WarnerMedia.

Common Sense Divesting

This is all part of a process that’s taken shape over the last couple of years. Moves are being made to monetize “non-strategic assets” and, according to Stephenson, we should expect “evaluation” of business and “divesting” of inconsequential assets to persist:

“We have routinely pruned the portfolio of assets that don’t contribute to our core strategy. In fact, when you conclude what we’ve done in 2019, we’ve monetized more than $30 billion in non-strategic assets over the last few years. You should expect continued evaluation of our businesses and more progress on divesting assets that are no longer core to our fundamental mission.”

In other words, bad news could indeed be on the horizon for DC, something insiders and creatives like Ethan Van Sciver see coming. On a live stream over a month ago, Van Sciver predicted the publisher will be a victim of such divesting (a term he and Stephenson used) to settle debts:

“I kind of feel like AT&T is going to consider divesting DC Comics. That’s what I think is going to happen. I think there is going to be a lot of pressure to do so. That’s a lot of debt.”

DC wasn’t mentioned specifically during the conference call but WarnerMedia brass has a habit of forgetting their comic-industry assets. CEO and former AT&T exec John Stankey, who may be in line for Randall Stephenson’s job, failed to recognize DC when talking up his company to Forbes last summer.

Also over the summer was the business, or lack thereof, at Hall H and San Diego Comic-Con on the part of DC. Following that, promotional material that would’ve been suitable for SDCC showed up at a licensing expo without the usual fanfare.

Unfortunately, on paper, DC fits the profile of a “no longer core” asset. Sales of new comics are down, including Batman, and the line has been cut drastically, 2019’s releases are the lowest in history.

Co-publisher Dan DiDio admits they “can do better” yet his reaction is codifying all the continuity into a series of Generations. Then they are supposed to portend the launch of a “5G” initiative that will take their universe into the future.

5G will bring new identities to old heroes, reportedly, such as a Batman of color. The ideas might be daring but they aren’t guaranteed to sell more comics. Little difference looks to be injected into the way DC does business.

It’s What Connects Us

One thing WarnerMedia higher-ups are crazy about is HBO. The premium cable channel is seeing growth. Strong content sales by way of international licensing drove operating income up into double digits this quarter despite a carriage dispute with DISH and Game of Thrones’ finale behind us.

HBO is doing so well, it became the namesake of WarnerMedia’s streaming service – HBO Max. They are throwing all their weight behind it, “bullish,” said Stephenson, about its “natural bundle” with AT&T’s system of broadband, wireless, and pay-TV “footprint.”

HBO Max brings film and TV content from across the WarnerMedia library onto one platform. Like Netflix, Amazon Prime, Disney+, and Apple TV+, original programming – some of it based on DC properties – is in development. And DC Universe Originals will drop on HBO Max as well once the service launches in 2020.

AT&T expects to rack up 50 million HBO Max subscribers within the first five years. John Stankey’s estimate in July was even higher at 70 million.

If HBO Max is good for the bottom line or DC remains to be seen. Maybe we’ll find out in three years.

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