Breakingviews: AT&T shows boring CEO transitions are needed

AT&T is getting a new boss. The U.S. telecom firm is elevating John Stankey to replace long-time Chief Executive Randall Stephenson. The transition has been in the works since Elliott Management came calling last year. But the pandemic has upended the world. Boring CEO transitions are what is now needed.

There has been a lot of drama surrounding Stephenson’s replacement. Last September, Paul Singer’s hedge fund took a $3 billion position and brandished a list of changes including potential asset sales like DirecTV, a plea to stop doing acquisitions and need for better corporate governance. Elliott didn’t specifically mention management changes, but the doubt was in the air. Shortly before Elliott launched its campaign, Stankey was promoted to president and chief operating officer.

Stephenson had come under fire for expensive, massive, and distracting deals for both DirecTV and Time Warner. The shopping spree kicked off after AT&T’s failed attempted takeover of rival T-Mobile US. It then swallowed DirecTV and Time Warner, splashing out $175 billion in total and taking on a ton of debt. DirecTV is bleeding subscribers. Last quarter AT&T lost some 1 million video subscribers. And owning the HBO parent has exposed AT&T to a brutal media downturn.

That, plus the fact that Stephenson went well outside AT&T’s business of being a traditional utility, might normally be enough for a transformative change at the top. But Covid-19 scrambled expectations. And after AT&T conducted a five-month CEO search, Stankey was well placed. The company took the decent step of pledging to split the roles of chairman and CEO.

Stephenson, who has been at the helm since 2007, is staying on as chairman until January 2021 to help ease the transition while the board searches for an independent head. But Stankey, 57, who has been with AT&T since 1985, is the one tasked with navigating AT&T’s sprawling patchwork of businesses. Mobile phones are now its saving grace in this lockdown as people are apt to keep connected. But the media sector has its own set of complications.

Stankey comes with baggage – he oversaw DirecTV for example, but he also has knowledge of all the divisions and an understating of how AT&T works. Unlike an executive new to the company, he can hit the ground running. Such experience is a top asset for the job.

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