AT&T shareholders have had a rough week.

The stock is taking a beating after CFO John Stephens revealed the effects of price increases and a loss of about 350,000 subscribers. Lengthy blackouts of both CBS and Nexstar stations also led to less revenue leaving the stock down almost 1.5% on Friday.

The AT&T boss was speaking at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference on Wednesday, There he explained the decisions to go dark on DirecTV, U-verse and other providers according to

“We had to make some tough decisions on those retrans providers, when some of the requests for increases were just not economically sound,” Stephens said. “And we decided that we would not accept them and then we had to hold our ground.”

He added that the networks returned after “rates got to a reasonable level.”


AT&T needs to improve its customer relationship management, or CRM, if it’s going to succeed with its two-revenue model of wireless subscriptions, which includes satellite television, and advertising, Porter Bibb, a media expert at MediaTech Capital Partners, said.

“Not reimbursing subscribers for the loss of CBS content is not helpful and the re-acquisition costs will be significant,” Bibb said. “Netflix has mastered CRM and provides an appropriate model for AT&T and all others entering the streaming wars.”

Earlier this week, activist investors from the Elliott Group also took a large, $3.2 billion dollar slice of AT&T shares while submitting a letter with recommendations to maximize shareholder value. The letter slammed management and company strategies.

Stephens defended the company against Elliott’s criticism.

“Management and the board feels strongly that our current strategies are the best way to create value for our shareholders,” he said.

Bibb said the maverick investment firm should be focusing on other wireless providers, like Verizon.

“Elliott Management is dead wrong in criticizing AT&T for acquiring TimeWarner, and should focus on Verizon, which has no center or second revenue stream and consists only of dumb pipes, which will become less and less profitable as new competitors like T-Mobile/Sprint begin to take Verizon wireless subscribers,” he said.

Stephens also was quick to point out that that despite the lost subscribers, the media company is surpassing earnings goals and is expected to meet or surpass commitments.

Ticker Security Last Change %Chg
T AT&T INC. 37.91 -0.47 -1.22%
CBS CBS CORP. 43.82 0.00 0.00%
DIS WALT DISNEY COMPANY 138.02 +0.52 +0.38%
APPL n.a. n.a. n.a. n.a.

Elliott also recommended that AT&T divest in DirecTV which was bleeding prior to blackouts. The obvious buyer for the satellite TV company would be Dish, which the government would not allow to happen.

“We understand the industrial logic, but quite frankly it’s been tried and has been rejected,” he said.

More likely would be AT&T liquidating some of the regional sports networks.

“We’re continuing to look at the RSNs,” he said. “Regional sports services have garnered good value in other transactions.”

Walt Disney Co. also took some swings at AT&T this week warning subscribers of more possible blackouts with ABC and ESPN channels.


Stephens would not discuss AT&T’s HBO Max Streaming service, details of which WarnerMedia will present on Oct. 29 in Los Angeles. Instead, he spoke about Apple’s announcement this week that company’s streaming service, Apple TV+, which will be available for about $5 a month on Nov 10.

“I’ll leave others to evaluate what you heard yesterday from Apple. But for me it reinforces — boy — we’ve got really quality assets and really quality capabilities that others just don’t have — don’t have at their disposal,” Stephens said. “The first thing to remember is, we also start with something called HBO. And so, we only have a 40-year head start with a quality product that is the premium of premium. So, we feel really good about that,” Stephens said.