AT&T in talks to solve Elliott Management's activist campaign

AT&T recently delayed the release of quarterly revenue, originally scheduled for next week, and gave the two sides more time to come to an agreement. The Dallas company is now expected to discuss the latest results on Oct. 28, a day before it will unveil its HBO Max streaming service at an event in Burbank, California.

Should AT&T and Elliott come to justice then, it would be a relatively quick turnaround compared to the traditional activist campaign. It shows that AT&T, which has recruited bankers at Centerview Partners and Goldman Sachs Group Inc. for help, is eager to avoid a drawn-out public fight and to continue to tackle business challenges.

Elliott has compiled a list of director candidates that AT&T believes can be considered, according to one of the people. Should the talks be sour, some may be considered board members of a proxy Elliott may attend AT & T's annual meeting next year, this person said. Elliott, one of the most productive and aggressive activists, led before proxy matches at

Hess Corp

and

Arconic Inc.

Shares of AT&T, which have a market value of around $ 275 billion, have done little in the last two decades despite a series of major acquisitions by the CEO

Randall Stephenson

and his predecessor. The stock has declined this year and is currently trading close to $ 38.

Elliott revealed last month that it had amassed an approximately 1[ads1]% stake in AT&T. In a letter, it challenged AT & T's management, criticized the shift to the media business and asked the company to review devices that may not fit the long-term strategy, including DirecTV's satellite division and Mexican wireless operations.

Mr. Stephenson said the company already followed some of the ideas promoted by Elliott and defended the company's media strategy, including the acquisition of DirecTV and Time Warner. He also defended the recent promotion of John Stankey, an AT&T veteran, to the No. 2 role in the company, which made him Stephenson's heir apparent.

Mr. Stephenson, who has run AT&T for a dozen years, has privately discussed stepping down as CEO as soon as next year, people familiar with the matter have said. The promotion of Mr. Stankey spurred Elliott to publicize with his campaign, The Wall Street Journal has reported.

AT&T has said it was open to some of Elliott's proposals, such as buying back shares and selling non-short-term assets, but has responded more coolly to others, such as giving the hedge fund an opinion in management agreements.

After this month's agreement to sell the Puerto Rico business, AT&T signaled that it would resume stock repurchases in the fourth quarter. The company has spent the lion's share of the free cash flow over the past year on dividends and on clearing debt that has accumulated from acquisitions. Net debt exceeded $ 160 billion earlier this year.

DirecTV, which AT&T bought in 2015 for $ 49 billion, has lost subscribers as consumers cancel their television service. AT&T closed its second quarter with 23 million US pay-TV customers. Analysts expect the company to report more than one million video cancellations as it unveils the latest quarterly results.

AT & T's HBO Max Streaming Service will compete with Netflix Inc. and other offerings in the works of

Walt Disney Co.

,

Comcast Corp

and

Apple Inc.

The service, which will include HBO shows plus Warner Bros. content such as Cartoon Network shows and "Friends", is not expected to be released until next year.

Write to Corrie Driebusch at corrie.driebusch@wsj.com, Drew FitzGerald at andrew.fitzgerald@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com