AT&T CEO Stephenson: 'I Don't Want To Go There' If Time Warner Deal Fails


The telecom industry will be placing their bets on premium content over the next five years, and AT&T is aiming to succeed in its legal battle with the Department of Justice over its proposed $85 billion Time Warner deal, according to the carrier's CEO Randall Stephenson.

When asked what AT&T's Plan B would be should the acquisition be blocked, Stephenson said; "I don’t even want to go there … Right now, we are focused on winning this thing." His comments were made during an onstage interview with CNBC at the Code Conference in Rancho Palos Verdes, Calif. on Wednesday.

Stephenson said that content assets are going to continue to be very relevant over the next five years. Many service providers are looking at "vertical integration," all the way from the production, distribution and monetization of media, in an effort to add more value to their connectivity offerings.

[Related: AT&T Focused On Next-Gen Networking, 5G As Carrier Stands 'Ready To Close' Time Warner Deal ]

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For channel partners, vertical integration could mean more to offer their end customers, said Rickie Richey, CEO of Fairhope, Ala.-based Altaworx, an AT&T Platinum Partner Exchange reseller.

AT&T has partners today selling its satellite TV offering, DirectTV, but those partners aren't Partner Exchange resellers. Reseller partners don't have an easy way of selling or including TV as part of a bundled offering to their clients today, Richey said.

"At some point, resellers are going to want to sell TV, and as AT&T invests more in the [content] space, the more it will become a product that we'll have access to," he said. "If you spend a ton of money on Time Warner, you're going to need people out there selling it."

The proposed tie-up between the third and fourth largest wireless providers in the U.S., T-Mobile and Sprint, as well as Comcast's proposed deal for Sky Plc , the U.K.'s largest pay-TV broadcaster, are two other examples of how every service provider offering connectivity today is headed down the content path, Stephenson said.

"It's all following the same pattern," he said. "[Providers] are recognizing it's going to require an amazing amount of bandwidth to pump all this content and media to mobile devices."

Stephenson didn't take a position on whether or not he believed the $26 billion Sprint/T-Mobile deal would ultimately be approved, but he acknowledged that the market has changed compared to 2011 when AT&T attempted to acquire T-Mobile for $39 billion, but was blocked by the DOJ.

"I think they have a tough hill to climb," he said. "It’s a classic horizontal merger … but it will probably get a different review than what our deal with T-Mobile received. Power to them if they get it done."

The lawsuit brought by the DOJ to block AT&T's current deal didn't come as a surprise to the carrier. Stephenson told the audience during the Code Conference that AT&T was close to having a deal completed with the DOJ when talks came to a "grinding halt" when Makan Delrahim, the assistant attorney general for the Antitrust Division, was confirmed by the senate in September 2017.

AT&T was prepared to start litigation, he said: "When you go into a transaction like this, you hope you never have to litigate it but you step into it knowing you might have to, so you prepare."

AT&T's CFO, John Stephens, on Wednesday also provided a company update to investors at the Cowen Technology, Media and Telecom Conference. Stephens said that the carrier expects a ruling to come down on June 12 in the government's antitrust trial over its deal currently on the table for media giant Time Warner. AT&T stands ready to close the transaction if it receives a favorable ruling, Stephens said.