Maybe AT&T Isn't Ready For Its Close-Up

It’s amassed a huge media business, but an entertainment brain drain worries a big investor

- Gerry Smith, with Anders Melin

Not long ago, an AT&T Inc. executive named Brad Bentley had a novel idea for HBO. Over the years the premium TV network had explored just about every edgy storytelling topic, whether it was the suburban mob bosses of The Sopranos or the incestuous and dragon-riding public servants of Game of Thrones. But Bentley, according to a person familiar with the matter, told network executives in a meeting that the moment had finally come for HBO to expose its millions of subscribers to the one thing that had remained taboo during its 46-year history: commercials.

The suggestion didn’t go over well. HBO executives were stunned at the idea of larding down the network’s prestigious programming with ads, no matter how much money it could generate, and pushed back forcefully. “We will never carry ads on HBO,” a company spokesman said.

Bentley, who didn’t respond to a request for comment, left AT&T earlier this year. Yet it’s the string of longtime Time Warner entertainment executives who’ve departed since AT&T acquired the media company for $109 billion last year that has some investors concerned—especially as the deal transformed AT&T into the most-indebted nonfinancial company in the world.

Among those are the heads of Time Warner’s three divisions. In September activist investor Elliott Management Corp. called the high rate of leadership turnover “alarming” and a “particularly troubling pattern” given AT&T’s lack of experience in Time Warner’s business, which now represents almost 20% of its revenue. “This lack of continuity in leadership presents a real concern for investors and should be a key focus for the board,” Elliott wrote in a letter to AT&T’s board.