is in talks with Elliott Management Corp. to resolve an investor activist campaign to change the telephone and media giant, people familiar with the matter said.
The two parties have held a series of wide-ranging discussions since Elliott revealed a stake in AT&T five weeks ago and has publicly called for the company to make changes aimed at igniting its failed stock. AT&T and Elliott can reach an agreement this month, though the talks may also fall apart, people said.
The two sides are discussing a number of possible AT&T moves, including a strategic review of assets that could be sold or divested, and an effort to improve margins, some people said. AT&T may also agree to make changes to its board with input from Elliott.
AT&T recently delayed the release of its quarterly earnings, initially scheduled for next week, giving both parties more time to reach an agreement. The Dallas-based company is expected to discuss its latest results on October 28, the day before it launches its HBO Max streaming service at an event in Burbank, California.
If AT&T and Elliott agree by then, it will be a relatively quick turnaround compared to a traditional activist campaign. This will show AT&T, which has joined bankers from Centerview Partners and Goldman Sachs Group Inc. for help, unwilling to avoid a drawn-out public quarrel and tackle the challenges facing its business.
Elliott compiled a list of candidates for director, which AT&T might consider, according to one of the people. If the talks are sour, some may be considered candidates in the proxy battle board, which Elliott may hold at next year's AT&T meeting, the man said. Elliott, one of the most prolific and aggressive activists, had previously waged proxy battles against
AT&T shares, with a market value of about $ 275 billion, have done little over the last two decades, despite a series of major acquisitions by the CEO
and his predecessor. The stock rallied this year and is currently trading near $ 38.
Last month, Elliott revealed that he had accumulated approximately 1
n. Stevenson said the company is already pursuing some of Elliot's ideas and defending the company's media strategy, including its acquisitions of DirecTV and Time Warner. He also defended the recent promotion of John Stanky, a veteran of AT&T, to the number 2 role in the company, making Mr Stevenson's apparent successor.
n. Stevenson, who has been managing AT&T for over a decade, has discussed privately stepping down as CEO as early as next year, according to people familiar with the matter. Mr Stanky's promotion prompted Elliott to publish with his campaign, The Wall Street Journal reported.
AT&T stated that it was open to some of Elliott's proposals, such as buying shares and selling non-serious assets, but responded more coolly to others, such as giving a hedge fund a say in management appointments.
After agreeing to sell its operations in Puerto Rico this month, AT&T has signaled that it will resume buybacks in the fourth quarter. In the last year, the company has spent the lion's share of its free cash flow on dividends and on reducing accumulated debt from acquisitions. Its net debt exceeded $ 160 billion earlier this year.
DirecTV, which AT&T bought in 2015 for $ 49 billion, is losing subscribers as consumers cancel their television service. AT&T ended the second quarter with 23 million pay-TV customers. Analysts expect the company to report more than one million video cancellations when it unveils its latest quarterly results.
AT&T's HBO Max streaming service will compete with Netflix Inc. and other suggestions in the works by
Walt Disney Co.
The service, which will include HBO shows plus Warner Bros. content such as the Cartoon Network and Friends shows, are not expected to launch until next year.
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