AT&T investor wants changes

Activist hedge fund manager Elliott Management is making a new $3.2 billion investment in AT&T, roughly a 1% stake, and calling for changes at the company such as selling assets and paying down debt.

The situation

The move comes as AT&T readies a streaming service following its $81 billion purchase of Time Warner.

It plans to launch HBO Max in the spring of 2020 as more people cut the cord and move to streaming services. It joins an increasingly crowded field with Disney, Comcast, Apple and others readying their own streaming services.

But Elliott said AT&T has yet to come up with a “clear and strategic rationale” as to why it needs to own Time Warner. A federal appeals court cleared the deal in February.

What it means

AT&T said in a statement it will review Elliott Management’s proposals and said many of the actions proposed are things the company is already doing.

AT&T Inc. stock jumped more than 3% to $37.58 in Monday morning trading.

On Twitter, President Donald Trump called the disclosure of an activist investor “great news” for AT&T, which owns news channel CNN, long a target for Trump’s tweets. He again criticized the network’s news coverage on Twitter and also went after MSNBC, owned by Comcast.

What might be next

Elliott sent a letter to AT&T’s board saying it should look into divesting noncore assets like DirecTV and its Mexican wireless operations.

Elliott said it has identified opportunities for more than $10 billion in savings, but that its plan represents $5 billion in cost cuts.

It called on the company to stop making large acquisitions and instead repurchase stock and commit to growing its dividend. The investor also suggested separating the CEO and chairman positions at the Dallas company. Randall Stephenson has held the roles since 2007.

Elliott believes the stock can top $60 by the end of 2021.

AT&T has said the idea behind the merger with Time Warner was to help AT&T — which claims about 25 million of the 90 million U.S. households that are pay TV customers — compete better with online rivals like Netflix, YouTube and Hulu.

LYNNE SLADKY / ASSOCIATED PRESS AT&T said in a statement it will review Elliott Management’s proposals and said many of the actions proposed are things the company is already doing.