AT&T concedes to activist investor with 3-year plan, pledge that it won’t make major acquisitions

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AT&T’s leaders sought to move beyond a dispute with Elliott Management Monday by putting forward a 3-year plan that includes many of the activist investor’s recommendations.

Among them, AT&T pledged to sell off billions of dollars of non-essential businesses and promised to not make any major acquisitions in the next several years. The Dallas-based company also said CEO Randall Stephenson would stay in his role through at least 2020. And when he retires, AT&T said it will separate the CEO and chairman roles — another concession to the activist investor.

Wall Street responded positively to AT&T’s 3-year plan. Its stock price rose by nearly 5% to $38.61 Monday morning.

AT&T delivered third quarter earnings that beat analyst’s profit estimates, but fell short of revenue forecasts. It was its first earnings call since the New York-based hedge fund’s September letter criticizing AT&T’s business strategy and its acquisitions of DirecTV and Time Warner. AT&T postponed the earnings call by a week, and some reports attributed the delay to discussions with Elliott to try to resolve the conflict.

Elliott has a $3.2 billion — or 1% — ownership stake in AT&T.

As TV viewing habits change, AT&T continued to post big losses in pay TV customers — dropping nearly 1.4 million subscribers in the three-month period. Competitors Verizon and Charter Communications, parent company of Spectrum, saw much smaller pay TV declines in the quarter of 67,000 and 75,000, respectively.

AT&T will unveil a cornerstone of its entertainment strategy Tuesday. It will show off HBO Max, a new streaming service at an analyst event at Warner Bros. Studios. HBO Max will have a deep library of content from HBO and WarnerMedia. It will compete with other subscription-based services, such as Netflix and Disney’s forthcoming service, Disney+. HBO Max will be available to the public next year.

AT&T reported a profit of $3.7 billion, or 50 cents a share, in the third quarter, down from $4.72 billion, or 65 cents a share from a year ago. Its revenue for the quarter was $44.6 billion, down 2.5% from a year ago.