AT&T has named longtime executive John Stankey as its next chief executive, following through on a succession plan the company outlined last year.
Stankey, 57, will take over on July 1 from Randall Stephenson, 60, who steered the telecom giant through 13 turbulent years. Now it will be up to the new CEO to wring a profit and reduce the debt from Stephenson’s big spending spree: the $67 billion 2015 purchase of DirecTV and the $109 billion paid for Time Warner in 2018.
While activist investors and some Wall Street analysts may have wanted AT&T’s board to break with Stephenson’s expensive expansion strategy, the Stankey selection marks an endorsement of the big acquisitions. The new CEO was Stephenson’s point man on integrating both purchases and regularly made the rounds in the press defending the deals.
“We bought Time Warner because we wanted to offer consumers not just great connectivity, but also something else. That’s our play,” Stankey explained to Barron’s earlier this year. “Our play is a great network, adding value with entertainment.”
The transition was rough on the ranks of Time Warner’s senior leadership. Time Warner CEO Jeff Bewkes planned all along to retire after selling his company, but AT&T subsequently lost other key executives like HBO boss Richard Plepler, who’s making shows for Apple now, and Turner leaders David Levy and John Martin. AT&T also lost Warner Bros. studio head Kevin Tsujihara to a sex scandal last year.
Stankey has said that significant changes were needed at the old Time Warner to break down barriers and stimulate greater cooperation between its different units, such as HBO and Warner Bros. “The creative side of this business is still 100% intact,” he told CNBC in October.
Stankey’s rise to the top of one of America’s largest companies came from humble beginnings.
The youngest of three kids, he grew up in Los Angeles with his father, an insurance underwriter, and a stay-at-home mom. Working after school at a sporting goods store, Stankey was also an avid Boy Scout and attained the rank of Eagle Scout. He got an undergraduate degree in finance at Loyola Marymount University, graduating in 1985, and immediately went to work for phone carrier Pacific Bell. He added an MBA from the University of California at Los Angeles a few years later and kept on moving up the ranks even as the Baby Bells consolidated.
After running major parts of SBC Southwestern Bell, Stankey became chief information officer for the carrier when it merged with the original AT&T in 2005. In 2008, he moved up to chief technology officer and then chief strategy officer in 2012, becoming Stephenson’s top adviser on mergers and acquisitions.
Once he and Stephenson completed the DirecTV acquisition in 2015, Stankey was put in charge of the new unit, which was merged with AT&T’s smaller existing cable TV operations to form the company’s entertainment group. Under Stankey’s leadership, the satellite and cable TV business shed customers at a rate that alarmed Wall Street, shrinking from 26 million in July 2015 to under 23 million by the end of 2018 (and under 19 million at the end of the first quarter of 2020).
In 2018, when the Time Warner merger closed, he shifted to the role of CEO of that unit, which was renamed WarnerMedia. In addition to the loss of top executives, the media unit under Stankey also struggled to decide on a strategy for competing in the streaming video market against Netflix, Amazon, and others.
An early streaming service called DirecTV Now floundered after a price hike and was then renamed AT&T TV Now. That service was pushed aside at the end of last year with the launch of AT&T TV.
HBO’s streaming efforts, which more closely resemble Netflix, have largely continued as before the AT&T acquisition, but it soon plans to introduce a new service called HBO Max that will rely more on WarnerMedia’s library of popular, older TV shows. At $15 a month, it will cost slightly more than Netflix and double the price of Disney’s Disney+ service.
Still, Stankey predicts 50 million customers for the new HBO Max service within five years, attracting viewers with content from across all of the company’s divisions.
“Twice the content for the same price? I’ve had much more difficult marketing propositions to sell in the market than that,” he told CNBC last fall. “It’s an incredible value.”
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