AT&T said it has named John Stankey chief operating officer of the parent company, while retaining his role as CEO of WarnerMedia.

The newly created role comes on the heels of the retirement of AT&T Communications CEO John Donovan. Donovan is set to retire on Oct. 1, upon which time former AT&T Communications’ Technology and Operations group president Jeff McElfresh will replace him as CEO of the unit. McElfresh will report to Stankey, as will Xandr CEO Brian Lesser.

As head of AT&T Communications, McElfresh will be in charge of a telecom, wireless, broadband and pay-TV unit (which includes it DirecTV, U-verse, AT&T TV Now and AT&T TV divisions), with about 100 million customers.

In his new role Stankey will report to AT&T chairman and CEO Randall Stephenson, putting him a step closer to the top spot in the company. 

“Now is the time to more tightly align our collection of world-class content, scaled consumer relationships, technical know-how and innovative advertising technology,” Stephenson said in a press release. “It’s the natural next step in bringing together the distinct and complimentary capabilities of AT&T Communications, WarnerMedia and Xandr to deliver for consumers the benefits of a modern media company. AT&T is alone in the industry in being able to bring together these three great businesses for the launch of innovative consumer offers, relevant advertising and new entertainment services like HBO Max.”

Stankey takes on the new role just as AT&T is readying the full launch of its streaming video service AT&T TV, scheduled for the fall. The service began a test launch in a few markets in August. 

“John is an outstanding executive who has led nearly every area of our business, helped shape our strategy and excelled at operations throughout his career. The Board and I look forward to John hitting the ground running in his new role as president and COO,” Stephenson said.

Like Stankey -- who joined AT&T in 1985 -- McElfresh is a phone company lifer, with nearly 25 years at AT&T in a variety of roles. In addition to AT&T Communications’ Technology and Operations group, he has served as CEO of AT&T’s Vrio and its DirecTV Latin America and SKY Brasil businesses; and President of AT&T Mexico.

AT&T Communications CEO John Donovan will retire as head of the phone company’s mobile, pay-TV and broadband unit on Oct. 1. AT&T said a replacement would be named “soon.”

“JD is a terrific leader and a tech visionary who helped drive AT&T’s leadership in connecting customers, from our 5G, fiber and FirstNet buildouts, to new products and platforms, to setting the global standard for software-defined networks,” said AT&T chairman and CEO Randall Stephenson in a press release. “He led the way in encouraging his team to continuously innovate and develop their skill sets for the future. We greatly appreciate his many contributions to our company’s success and his untiring dedication to serving customers and making our communities better. JD is a good friend, and I wish him and his family all the best in the years ahead.”

Donovan’s 11-year career with AT&T began in 2008 when he was named chief technology officer and was later promoted to chief strategy officer and group president of AT&T Technology and Operations. In July 2017 he was tapped to head the Communications unit, which serves more than 100 million mobile, broadband and pay-TV customers. On the pay-TV side, AT&T Communications includes its DirecTV satellite TV unit, Uverse, the DirecTV Now streaming video service and another streaming video offering -- AT&T TV -- that was launched in a few test markets earlier this month and should see a wider release in the fall. At the Credit Suisse conference in June, Donovan touted the new streaming product as a radical reshaping of the TV concept. 

“It’s been my honor to lead AT&T Communications during a period of unprecedented innovation and investment in new technology that is revolutionizing how people connect with their worlds,” Donovan said in a press release. “All that we’ve accomplished is a credit to the talented women and men of AT&T, and their passion for serving our customers. I’m looking forward to the future – spending more time with my family and watching with pride as the AT&T team continues to set the pace for the industry.”

AT&T Communications CEO John Donovan said the phone company’s as-yet unnamed streaming video service will “radically reshape” customers’ concepts of television service, but added that subscriber losses at its more traditional TV offerings will continue.

“It’s the consumer product I’m most excited about since the iPhone. It radically reshapes what your concept of television is,” Donovan said of the new streaming service at the Credit Suisse Communications Conference in New York. “We think we’re going to be really disruptive in the market on features and capability, but we need to evolve our product. And that’s the way we want to do it.” 

Donovan, who has responsibility for AT&T’s wireless, wireline and video distribution businesses (accounting for roughly 80% of overall revenue), said video losses over the past few quarters were expected as AT&T transformed its concept of the business.

AT&T lost about 544,000 customers at its DirecTV satellite TV unit and shed another 83,000 customers at its streaming DirecTV Now business in Q1, mainly as the company removed heavy discount offerings from its lineup. At the Credit Suisse conference, Donovan said the losses were a combination of the overall secular decline in the industry and “customer cleanup,” which he said will continue through most of this year.

“There are a set of customers that are going to only be in the market to buy [a fixed service] below the cost,” Donovan said. “...In the early days of a decline curve, the first thing you want to do is grab all of the customers. That’s really good logic because if you’re going to make a big technology shift, you want to do that with the customer. I think now we’re getting a lot better handle on the sub-segmentation of this and beginning to understand who gets the most value from the product.”

But he admitted that the past practice of many OTT services, including his own, of providing video service at a loss can’t be sustained for the long term.

“The fundamental issue around TV is -- using broad-brush numbers -- you have to know what the customer is willing to pay 100 bucks for,” Donovan said. “Trying to give them 100 bucks of value for $40 or $50 or $60, that’s not going to be a fit that is going to work for the customer or the organization in the long run.”

Related: WarnerMedia Reveals SVOD Platform Details 

Donovan said that almost every company in the industry is trying to figure out what model will work best as consumers shift from just wanting more stuff to wanting the stuff they want.

“The most important thing we have to do is to address broader price points that are much broader than simply saying ‘Do you want HBO or Cinemax or not,’ ‘Do you want the upgraded sports package or not,’” Donovan added. “That’s how we differentiated before. Good, better, best were just three content offers. But those didn’t stretch far enough. And so we’re going to have to build new products that stretch across a wider range.”

That would be AT&T’s latest streaming service -- slated for a Q3 beta launch -- Donovan said.

AT&T Communications said it has named former DirecTV executive Tim Gibson to the new role of vice president of video & application marketing.

Gibson, formerly VP of strategy and business development at DirecTV, will be responsible for the multi-billion dollar revenue and subscriber marketing business across AT&T video products and third party applications, including traditional content packaging, premiums, movies, sports, music and original programming.

In his previous role, Gibson helped lead the strategy behind AT&T’s entrance into digital video with DirecTV NOW and was responsible for negotiating key agreements for distribution of AT&T’s digital video services including NFL Sunday Ticket, DirecTV NOW, and Watch TV.

Gibson will be located in El Segundo, Calif. He replaces Hanny Patel who has accepted a new role as vice president of advertising services at AT&T Communications.