John Stankey knows there are big challenges ahead dealing with culture clashes after AT&T completes its $85.4 billion acquisition of Time Warner.
LOS ANGELES — On a sunny Saturday earlier this summer, AT&T Senior Executive Vice President John Stankey came face to face with Hollywood’s lingering perception of the phone company.
“When I started, if I would have ended up in an AT&T commercial — it would have been the kiss of death,” actress Kate Hudson said, drawing howls of laughter from the crowd gathered in a Warner Bros. theater outside Los Angeles for an AT&T-sponsored panel discussion on changes in media.
Stankey chortled, but Hudson’s candid remark underscored serious challenges he could encounter after AT&T completes its $85.4 billion acquisition of media company Time Warner. Stankey has been tapped to run the Time Warner businesses, which include some of the most storied brands in entertainment — the Warner Bros. movie and TV studio and such prominent networks as HBO, CNN, TBS, TNT, Cartoon Network and Turner Classic Movies.
A green light from the government is expected this month, according to people close to the process who were not authorized to discuss it.
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Buying Time Warner would transform the Dallas phone company into the largest and, perhaps, most powerful entertainment company in the world. But the success of the merger will hinge on Stankey’s skills in stitching together two starkly different enterprises at a time of upheaval in media.
AT&T lays fiber lines, builds cellphone networks and manages satellite TV and complex software systems that compress and send data so that millions of customers can make calls, receive messages, listen to music and watch video on their phones.
Time Warner, by contrast, prides itself on creating best-in-class movies and TV shows. Over the years, its Warner Bros. studio has churned out such cultural touchstones as “Casablanca,” the “Harry Potter” franchise, “Wonder Woman” and “The Big Bang Theory.” Premium channel HBO blazed the trail with big-budget original series, including “The Sopranos” and “Game of Thrones.” And then there is CNN, the pioneering 24-hour news network, which is now watched around the world.
Executives say the Time Warner businesses should benefit from AT&T’s connections to more than 100 million mobile-phone customers. AT&T also hopes that owning the content produced by HBO, Warner Bros., TNT and CNN will give it an edge. Already nearly 70 percent of the data consumed on smartphones is spent listening to music and watching videos and other entertainment.
AT&T will be able to push Time Warner programming to its mobile customers and reap revenue from advertisers who want their messages displayed in that content.
Much is at stake for AT&T. Its stock is down more than 10 percent this year as investors fret over a slowdown in the telecom market and as discounted prices cut into corporate profits. Meanwhile, AT&T’s television unit, DirecTV — which Stankey managed until early August — has struggled to keep subscribers paying for its premium service because of the rise of online streaming and smaller pay-TV bundles.
If history is a guide, a clash of cultures is inevitable, experts say.
“AT&T is very good at finding efficiencies. They have engineering prowess, advanced technology and they deliver bandwidth to millions of customers,” said John Boudreau, research director at the Center for Effective Organizations at the USC Marshall School of Business. “AT&T management could go after what they see as cost inefficiencies, but at Time Warner, the slack in the system could be what allows the creativity.”
People who know Stankey describe him as a straightforward, no-nonsense manager who is not driven by his ego.
Stankey, 54, was raised in Los Angeles. His father was an insurance underwriter and his mom stayed home to care for their three kids. Stankey attended Loyola Marymount University in the early 1980s, finishing with a degree in finance. He earned spending money by stringing tennis rackets at a sporting-goods store. Later, he worked as a buyer for the store, purchasing tennis rackets and skis.
“After I graduated … I thought that I was going to be a ski bum and play tennis,” Stankey said. “About five months later, I figured I needed a real job.”
He went to work in 1985 for the phone company, Pacific Bell, and never left. He earned his MBA from UCLA in 1991, and went on to tackle increasingly complex assignments on a determined march up the management ranks. He served as chief information officer, chief technology officer and, beginning in 2012, AT&T’s chief of strategy.
After AT&T acquired DirecTV two years ago, the corporate brass flew in from Dallas to DirecTV’s headquarters in El Segundo, California. AT&T Chairman and CEO Randall Stephenson welcomed the staff into the fold, then introduced them to their new boss — the stern-looking, 6-foot-5-inch Stankey — by saying that they should not feel intimidated because “he’s really a nice guy.”