AT&T Says Time Warner Plans Are “Nearly Complete,” Talks Up DirecTV Now

AT&T is poised to “hit the ground running once we receive final approval” for its $85 billion acquisition of Time Warner — expected by year end — CFO John Stephens told analysts today.

“We have the financing set up” for the deal with a migration team’s plans for the transition “nearly complete,” he says. AT&T spent $78 million in Q2 to advance the merger, and $119 million in the first six months of 2017.

He declined to offer specifics. But he reiterated AT&T’s denial of a Bloomberg report this month that said CEO Randall Stephenson might move to Executive Chairman, leaving Entertainment Group chief John Stankey as CEO of Time Warner and related assets with Chief Strategy Officer John Donovan holding a similar title to run the phone and TV delivery business.

Stephenson “is still the the chairman and CEO of AT&T, and I expect him to be there for a long time,” the CFO says. Stephenson and Time Warner CEO Jeff Bewkes are going through the organization chart. Stories about high level changes “are very much premature,” Stephens says.

He says AT&T is looking for opportunities to bundle HBO with wireless because “customers want  it” and it’s “a very competitive environment.”

Stephens attributed AT&T’s bigger-than-expected Q2 subscriber losses at DirecTV and U-verse to a combination of cord cutting, defections to cable, and a tightening of its credit requirements which he referred to as “involuntary churn.”

AT&T “decided to take action on those customers,” he says.

Stephens cited “an overall industry trend of more customers wanting mobile and over-the-top offerings. The pace of that change seems to have picked up a bit so far this year.”

But the telco remains optimistic that it can stem the losses, and then ride what the CFO called the “pretty dramatic growth” of its DirecTV Now streaming service which has close to 500,000 customers.

“Half of our DTV Now subscribers are coming from traditional pay TV, mainly from our competitors,” he says. “And the other half had no pay TV service at all.”

The exec said he had “nothing to announce” about possible bundling opportunities for DirecTV’s NFL Sunday Ticket.



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