AT&T CEO John Donovan Retiring Oct. 1

John Donovan, CEO of AT&T’s communications segment, which includes wireless and troubled DirecTV and DirecTV Now, has announced he is retiring on Oct. 1.

AT&T has not named a successor, although media reports suggest Lori Lee, CEO of AT&T’s Latin America operations and global marketing officer, could assume Donovan’s position and become the telecom’s most senior female executive.

The 58-year-old Donovan, who has been with AT&T since 2008, helped spearhead the telecom’s $48.5 billion acquisition of satellite TV operator DirecTV in 2014.

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With that service now projected to lose about 2 million subscribers annually to alternative distribution services such as SVOD and online TV, AT&T is struggling to reshape a traditional pay-TV distribution business in the rapidly changing over-the-top video ecosystem.

And simply launching online platform DirecTV Now hasn’t been the answer. The service continues to lose subscribers who signed up for the initial loss-leading $34.99 monthly fee. That fee has been upgraded to $39.99.

Last month AT&T said it was changing the service’s name to AT&T Now. Subsidiary WarnerMedia is launching HBO Max early next year, while continuing to operate HBO Now in its current form in the interim.

Indeed, consumer choice for accessing home entertainment continues to evolve — driven in large part by the actions of Netflix, Amazon Prime Video and Disney-owned Hulu.

Craig Moffett, an analyst for research firm MoffettNathanson, lauded Donovan’s telecommunications contributions to AT&T, while tempering praise with market realities in the overall home entertainment market.

“It’s the entertainment businesses that are the problem,” Moffett told The Wall Street Journal.

AT&T Eyes Retail Stores for Movie, TV Show Marketing

With more 2,200 standalone retail stores nationwide, AT&T has significant access points to consumers at the street level.

With the acquisition of Time Warner and creation of WarnerMedia, AT&T wants to use its retail presence as a marketing tool for Warner Bros. movies, HBO and Turner programming, John Donovan, CEO of AT&T Communications, told an investor group.

Speaking June 5 at the at the Credit Suisse Communications Broker Conference Call in New York, Donovan said the average AT&T customer visits branded stores three times a year, spending upwards of 30 minutes per visit typically focused on wireless issues.

“That retail presence … becomes a great [marketing] outlet for us to do things,” Donovan said.

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Specifically, AT&T stores gave away movie tickets to Warner Bros.’ Fantastic Beasts: The Crimes of Grindelwald, sequel to 2016’s Fantastic Beasts and Where to Find Them, and episodic insights to the final season of HBO’s “Game of Thrones.”

Donovan said he was impressed employees at AT&T stores were familiar enough with “Thrones” to share viewing information about the series.

“That drives traffic for us, provides more exposure to the media business, and you start to see these symbiotic relationships,” he said. “They’re getting very familiar with our whole portfolio, and then it just gets to be easier. It doesn’t look like you’re trying to sell or force-fit something.”

While CEO Randall Stephenson’s suggestion that AT&T stores market Warner DVDs might be wishful thinking, Donovan wants to up in-store marketing promotions to increase foot traffic and expand brand awareness.

“Content is a natural draw into the stores,” he said.

Indeed, with much of Christopher Nolan’s The Dark Knight filmed in Chicago, the AT&T Michigan Ave. store has long featured props to Warner superheroes.

Last year, the store featured the Batmobile, which Donovan said contributed to 70,000 “door swings,” up from 40,000 average door swings.

“Do you know what that’s worth to us?” he asked rhetorically. “We’re learning as a company what are these new currencies that you have and how to manage them and execute them. We’re very enthused about what WarnerMedia is going to do for the wireless business, for the TV business and so on.”

 

 

AT&T Launching Additional OTT Video, Online TV Services

AT&T May 15 announced a trio of video upgrades designed to attract consumers across the economic spectrum and, perhaps, influence a federal judge.

Speaking at the JP Morgan Technology, Media and Communications conference in Boston, CEO Randall Stephenson said 2018 priorities remain closing the acquisition of Time Warner, which includes Warner Bros., Turner and HBO, building out its Gigabit network; bowing new streaming video platform with targeted advertising; enhancing profitability of its Mexican wireless operations; and reducing its cost structure.

Federal Judge Richard Leon is expected to rule on the merger June 12.

In video, AT&T launched new capabilities and options for DirecTV Now, including a new user interface. Subscribers can add a third simultaneous stream for an additional $5 per month and will get a beta version of cloud DVR functionality with 20 hours of free storage. This summer, AT&T plans to roll out an option to purchase 100 hours of storage for $10 per month.

Following the close of the Time Warner deal, the company plans to introduce WatchTV, an online TV service without local programming or sports-only channels. WatchTV will be priced at $15 per month,but will be offered for no additional charge for some of AT&T’s unlimited wireless subscribers.

The company also plans to launch a broadband-based premium SVOD service aimed at competing with traditional linear TV products for in-home use, John Donovan, CEO of AT&T Communications, told a separate investor group.

The product will be app-based with a small device that connects to customers’ TVs and home broadband. The ($80-$90 monthly) service will offer the content available on traditional linear TV with a great user experience and lower price points.

With a lower capital intensity and acquisition cost, there is an opportunity to achieve a higher return on investment and comparable margins to traditional satellite video, according to Donovan.

“We won’t roll a [service] truck. The CPE [customer premises equipment, or network, set-top box, etc.] will be cheaper and have lower operating costs,” Donovan told the MoffettNathanson Media & Communications Summit in New York.

The company expects to launch the service by the end of the year.