AT&T’s merger fumble still leaves CEO with some wins

Even with company’s Cohen dealings, it got at least some of what it wanted

AT&T made an embarrassing lobbying gaffe by hiring President Donald Trump’s personal attorney for help with its $85 billion (Dh312 billion) takeover of Time Warner.

The proposed deal still got slapped with a Justice Department lawsuit, and AT&T Chief Executive Officer Randall Stephenson seemingly got little in return for the roughly $600,000 paid to the firm of lawyer Michael Cohen. He admitted as much in a memo to employees last week, calling the move a giant misstep.

“There is no other way to say it — AT&T hiring Michael Cohen as a political consultant was a big mistake,” he said. To punctuate the mea culpa, AT&T parted ways with Bob Quinn, its chief lobbyist.

For the largest US phone company — with $160 billion in global sales and a nearly $17 million lobbying organisation — the move seemed amateurish. And it renewed memories of another high-profile Washington flub. AT&T botched an attempt to buy T-Mobile USA in 2011 and had to pay the biggest break-up fee in US corporate history.

But Stephenson, 58, still has more wins than losses. He’s been one of the most aggressive acquirers in the country, completing 33 takeovers in his 11-year run as CEO. That includes the acquisition of DirecTV for $48.5 billion in 2015.

AT&T’s evolution

Stephenson transformed AT&T from a collection of regional phone companies into a wireless giant, which then became the biggest provider of pay-TV service in the country. His one major setback — TMobile — cost him personally $2 million in compensation in 2011 when the deal failed.

Even with AT&T’s Cohen dealings, the company got at least some of what it wanted.

In addition to asking for help on the Time Warner deal, AT&T sought guidance on net neutrality and tax reform — two issues where it ultimately prevailed.

“I don’t see this impacting Stephenson’s continued M&A desires or abilities,” said Kevin Roe, an analyst with Roe Equity Research LLC.

Stephenson’s path to the CEO job began in Oklahoma, where he joined Southwestern Bell in 1982. It was his first job out of college, and he landed it with help from his brother, who still works as an AT&T lineman.

Since taking the helm in 2007, Stephenson hasn’t been shy about wading into polarising issues.

Among his leading causes: a call for less restrictive laws on phone network operators, including the removal of Obama-era net neutrality guidelines.

AT&T has been knocked for ham-fisted lobbying efforts before. It had a tradition of sending holiday cupcakes to friends and colleagues in Washington, including regulators at the Federal Communications Commission. The distribution list was obtained by a public-policy group in 2011 and the flap became known as “Cupcakegate.”

The Dallas-based company often had an adversarial stance with the Obama administration, which took a hard line on many deals.

Trump ran as more of a pro-business candidate — and Stephenson became one of his biggest corporate champions.