AT&T to reorganize divisions after buyout of Time Warner

AT&T Inc. is planning major organizational changes after the $85.4 billion acquisition of Time Warner Inc., including a redefined role for Chief Executive Officer Randall Stephenson, as the telecommunications giant morphs into a media company.

Stephenson will oversee two CEOs who will independently manage the company’s telecommunications and media businesses, according to people familiar with the matter. Stephenson, 57, will still be the top executive of the company, focused on charting the company’s new course as a media powerhouse, the people said.

Stephenson will remain chairman and CEO of AT&T, the company said in a statement, denying an earlier report by Bloomberg that he would relinquish the CEO title.

John Stankey, who now leads DirecTV and other entertainment businesses, will lead the media division,

including Time Warner, said the people, who asked not to be identified discussing private information. DirecTV will become part of a unit that includes AT&T’s traditional phone businesses, to be run by John Donovan, the people said.

The reorganization, one of the largest at AT&T since “Ma Bell” was broken apart by the U.S. government into seven regional “Baby Bells” 33 years ago, mimics the structure of other successful mergers of disparate businesses, including Comcast Corp.’s acquisition of NBCUniversal. By naming two executives who can run their businesses at arm’s length, AT&T could also address regulators’ concerns that the company’s TV and broadband networks would favor content produced by Time Warner’s HBO or Warner Bros.

Stephenson and Time Warner CEO Jeff Bewkes are still working on plans for implementing the merger, said an AT&T spokesman. Decisions about organizational structure and leadership haven’t yet been finalized, the spokesman said. Bewkes has said he will stay on in some capacity for at least a

year after the merger is complete.

Barring any objections from antitrust regulators or intervention by President Donald Trump, who has publicly stated opposition to the deal and has an ongoing quarrel with Time Warner’s CNN, AT&T says it expects the deal to close by year end.

The separation of AT&T’s new divisions will be both geographical and cultural. The plan calls for AT&T to consolidate more of its service operations, like wireless, in its Dallas headquarters, where Donovan will be located. Glenn Lurie, who heads the wireless business, will be among the executives relocating to Dallas from Atlanta.

Donovan, who joined AT&T in the 2008 from Internet-security firm VeriSign Inc., gained stature at the phone company by converting its complex, hardware-based network architecture to a system that could be controlled using software and servers. This allowed cumbersome manual functions like increasing network capacity to be more automated and instantaneous, saving time as well as equipment and labor costs.

Stankey, who has led nearly every major unit at AT&T in his three-decade career, will run the media division from

his California office. The business, comprised mostly of Time Warner, will stay intact with operations in New York and Los Angeles.

While Stankey is a loyal lifer at the phone company, AT&T sees the split structure as a way to protect Time Warner’s Hollywood culture, where creativity is prized, from the more bureaucratic traditions of the Dallas office.

In its approach to Time Warner’s integration, AT&T is trying to mimic Berkshire Hathaway Inc.’s management style, said one person familiar with the plan. Warren Buffett, Berkshire’s chairman and CEO, is known for giving acquired companies a great deal of autonomy rather than try to standardize them.

The transfer of DirecTV, the satellite-TV provider acquired in 2015, to the telecom business is one of the most significant changes in the restructuring. By moving the division — the largest pay-TV service in the U.S. — out of Stankey’s purview, AT&T aims to address questions about whether it can provide competitors fair access to Time Warner’s exclusive shows, from CNN breaking news to basketball games on TNT to Game of Thrones on HBO.