AT&T's chairman and CEO Randall Stephenson will get to keep his job at least another year, the company announced Monday as part of a major announcement around the company's corporate governance.
The telecom giant, which is in the midst of a massive transformation into a media and entertainment powerhouse, is responding to a challenge from an activist hedge fund, Elliot Management. The plan calls for Stephenson to stay on in his role through 2020. Once he retires, the roles of CEO and chairman will be split. Two other directors will depart after 18 months, which will set the stage for new management at the company.
AT&T also laid out a strategic plan to increase revenue and profit over the next few years as the company works to pay down the debt associated with its massive $80 billion acquisition of Time Warner. The company said it will also consider spinning off other aspects of the business.
AT&T's announcement was in response to criticism over the company's handling of expensive acquisitions that have racked up huge amounts of debt. This includes the company's 2015 acquisition of the satellite operator DirecTV, which has consistently lost subscribers and money over the past several quarters.
Bump in wireless subscribers
AT&T disclosed the new strategic plan as part of the company's third quarter 2019 earnings results. As part of those earnings, AT&T announced it has added more high-value wireless subscribers than analysts had expected in the third quarter of 2019. This is good news for the company, which has been bundling its entertainment assets with mobile service to attract new customers.
The company added 101,000 postpaid subscribers, or customers who pay their bill at the end of the month, during the quarter. Analysts expected the company to lose 172,000 subscribers, according to Reuters.
But the growth in subscribers came at a cost. The company's revenue in the third quarter fell to $44.59 billion from $45.74 billion, a year earlier.
The news comes as AT&T prepares for its launch of its new streaming service HBO Max. The company is expected to lay out details about the service on Tuesday. At its WarnerMedia investor day. The service, which will launch in 2020, will offer a host of content that AT&T already owns through its Time Warner purchase, including Friends. The company is also developing a slew of new shows and movies for the service as well as live programming.
The new service will give AT&T another opportunity to bundle content with its mobile service. Last week, AT&T Chief Operating Officer John Stankey told Reuters that the company will be offering the service for free to 10 million of its current subscribers in the US who already pay for HBO. This includes AT&T wireless users (who can add HBO with certain unlimited plans) as well those with a traditional TV service like DirecTV.
The new service bundle will compete head-to-head with streaming services from its wireless rivals. For instance Verizon announced last week it's offering its unlimited data plan customers 12 months of the new Disney Plus streaming service for free. After the promotion ends, Verizon will charge $6.99 for Disney Plus. T-Mobile is already offering Netflix with its wireless service. And Sprint offers Hulu on some of its plans. Meanwhile, Apple is including a year of its upcoming TV Plus streaming service with the purchase of a iPhone.
Price will be a big factor for AT&T's streaming service, too. There is currently no price for HBO Max, which AT&T hopes will reach 80 million subscribers by 2025, with 50 million in the US. But some experts speculate that the company will charge at least $14.99 per month, which is the current cost of HBO.