Another AT&T Priority: Pay Off $171 Billion in Debt

ONE TIME USE_AT&T John Stephens - Getty - H 2019
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CFO John Stephens addresses problems at DirecTV and says a priority is wringing some savings out of WarnerMedia now that the merger is official.

One priority of AT&T is to pay down its debt, which has grown to $171 billion — or $40 billion net of cash — since acquiring Time Warner and renaming the asset, and one way it will do that is to "get the merger savings out of WarnerMedia," the telecom company's CFO said Tuesday. 

Speaking at the Deutsche Bank Media Internet & Telecom Conference, John Stephens also raved about the potential of HBO on upcoming streaming services.

"When you get into our direct-to-consumer business and our offerings around HBO, you'll see us do a whole host things across the enterprise," he said. "I would expect HBO to be a really, really important piece ... whether it's in every offer or virtually all the offers."

The exec was vague about how much exclusive content will end up on WarnerMedia's streamers that are due by year's end and how much content will continue at competing platforms.

"We're in a position where we believe that getting our content out there more times and on more platforms can be really beneficial to us," Stephens said. "We just think about it as an individual decision, but we don't always jump to one answer or another."

AT&T's DirecTV asset lost 403,000 linear subscribers in the fourth quarter and 267,000 at its DirecTV Now skinny bundle streamer, but Stephens said the company is hard at work boosting profitability, including testing self-installations: "So no more truck rolls ... that will be the next step in taking costs out."

All the hard work of raising the price of DirecTV Now and reining in deep discounts at the traditional satellite service was done in the fourth quarter, so average revenue per user will climb significantly, he said.

AT&T recently reorganized WarnerMedia, with former NBC Entertainment chairman Robert Greenblatt becoming chairman of the entertainment assets, including HBO and the upcoming streaming initiatives. Jeff Zucker is still chief of CNN while adding sports; Kevin Tsujihara still heads Warner Bros. while adding adults and children to his portfolio; and Kevin Reilly is president TBS, TNT and chief creative officer Turner and direct-to-consumer.

"The alignment is really to take advantage of all these great assets," Stephens said Tuesday. "All of this is geared toward making the assets that are there more productive, more useful across the enterprise."