Seen & Heard: Is it Splitsville for AT&T Post Time Warner Merger?

AT&T is planning to divide itself into separate telecom and media businesses if its $85 billion deal to acquire Time Warner passes regulatory muster, according to a story Friday by Bloomberg.

Citing unnamed sources, Bloomberg reported that John Stankey, who has led DirecTV and other AT&T entertainment entities, would be in charge of the newly created media division that would include Time Warner.

John Donovan would be the top executive of the telecom division, which would then include DirecTV along with the traditional phone businesses. Donovan would stay in AT&T's Dallas headquarters, which would also be comprised of more of the telco's service operations such as the wireless services that are currently located in Atlanta.

Donovan is credited with leading AT&T out of its legacy hardware-based network architecture to its Domain 2.0 network that uses SDN and NFV for more agility, less cost and increased agility.

Stankey will continue to run the media division from his California office, according to Bloomberg, while most of Time Warner Inc. (NYSE: TWX) would remain intact with operations in New York and Los Angeles.

According to a statement from AT&T Inc. (NYSE: T), Randall Stephenson "will remain chairman and chief executive officer of AT&T after we close the Time Warner deal." AT&T's statement also said that current Time Warner CEO Jeff Bewkes and Stephenson were working on the re-org plans and that "no decisions on org structure or leadership have been finalized."

The Bloomberg story speculated that splitting up AT&T into media and telecom businesses would help the Department of Justice approve the merger by showing that the media and network divisions would be operated separately. AT&T has said it expects the deal, which was first announced in October, to close later this year. (See AT&T-Time Warner's Chances Are 50-50 – MoffetNathanson.)

The Bloomberg story also cited Comcast's acquisition of NBCUniversal as a possible model for splitting up AT&T to make the merger more palatable. Comcast Corp. (Nasdaq: CMCSA, CMCSK) CEO and Chairman Brian Roberts appointed Steve Burke as CEO of NBCUniversal LLC while Neil Smit was named president and CEO of Comcast Cable.

Adding Time Warner into its portfolio would give AT&T a firm foothold into the entertainment world while offsetting losses in its wireline business. But like Comcast, AT&T would have to pledge that it wouldn't show preferential treatment for the Time Warner content on its services while also dealing in good faith with competing service providers.

— Mike Robuck, Editor, Telco Transformation