AT&T CEO Isn’t Worried About DOJ Appeal, Details Big Advertising Plans for Turner

Randall Stephenson also called Netflix the 'Walmart' of subscription video

“If we can pull this off, this is a very sizable opportunity,” said Randall Stephenson on AT&T's addressable advertising plans. Getty Images
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The Justice Department continues to try and derail AT&T’s recent merger with Time Warner, but AT&T chairman and CEO Randall Stephenson isn’t worried about the DOJ’s appeal of the verdict in its antitrust suit.

In July, one month after a federal judge approved AT&T’s merger with Time Warner—ruling that the Justice Department’s antitrust suit had failed to make its case against the merger—the DOJ appealed the verdict.

“The teams are spending zero effort thinking about this appeal,” Stephenson said this morning at the Goldman Sachs 27th Communacopia Conference in New York. “It is having no impact on how we work through integration and execute on our plans.”

AT&T completed its $85 billion purchase of Time Warner (the brands and business of which are now known as WarnerMedia) two days after the ruling. Stephenson said he expects the appeal proceedings to “wind up” by January or February.

Stephenson also talked about his company’s big addressable advertising plans for Turner, and what’s in store for HBO.

The exec is “optimistic and bullish” about addressable advertising, which he called “one of the more exciting areas of putting the companies together.” Prior to the merger, AT&T had a smaller version of its plans with AdWorks, its home-grown ad-tech operation using AT&T’s mobile and viewership data, through which it sold the two-minutes of ad inventory per hour it had on its DirecTV and U-Verse platforms.

And while cable subscribers are declining 2 percent to 4 percent year over year, AT&T’s advertising business is growing 16 percent year over year.

Right now, “we’re not very good at this,” admitted Stephenson. “We don’t have any sophisticated technology to do this.” But that is changing with Turner’s advertising inventory, which he said is three times the amount that it had with DirecTV, and as the company works to build out its programmatic platform.

“If we can pull this off, this is a very sizable opportunity,” said Stephenson. “Does it cannibalize Turner advertising revenue? I hope it does … at much higher yields than Turner is getting.”

AT&T doesn’t have its programmatic technology ready to go yet, but Turner’s ad sales team is already putting AT&T’s data to use. “Over the next 12 to 18 months, we want to funnel the Turner advertising inventory through the programmatic platform,” Stephenson said.

The company’s addressable television plans were also discussed in Adweek’s cover story last week on AT&T and Verizon.

“The ability to scale addressable TV inventory really is going to be dependent on us continuing to find ways to bring a stronger and scaled data set to the market and also working with—and not working against—other [multichannel video programming distributors (MVPDs)] to make sure we can actually aggregate this large-scale inventory pool for marketers to buy into,” Kirk McDonald, AT&T’s CMO of advertising, told Adweek.

HBO: ‘Don’t mess with the brand’

Stephenson also talked about his company’s plans for HBO, after reports this summer that AT&T was looking to make the network bigger and broader, like Netflix.

“Netflix is the Walmart of subscription video; HBO is the Tiffany of subscription video,” said Stephenson, adding that John Stankey, CEO of AT&T’s media businesses, is “spot on” with his plans to increase the investment in HBO’s content to create a more “robust” cycle of content throughout the year and the week.

“This is not trying to get to Netflix level of content investment on HBO itself, but really just filling out the schedule,” said Stephenson, who called HBO CEO Richard Plepler “a master” at identifying programming.

Stephenson, whose mantra for HBO is “don’t mess with the brand,” said he’ll be building out a new direct-to-consumer model around WarnerMedia content, and will announce more plans about that in the fourth quarter.

@jasonlynch Jason Lynch is TV Editor at Adweek, overseeing trends, technology, personalities and programming across broadcast, cable and streaming video.