CNBC Transcript: AT&T CEO Randall Stephenson Speaks with CNBC's Julia Boorstin Today

The following is the unofficial transcript of a CNBC interview with AT&T CEO Randall Stephenson and CNBC's Julia Boorstin on CNBC's "Squawk Box" (M-F 6AM - 9AM) today, Friday, July 13th. Watch video of the full interview on CNBC.com here!

JOE KERNEN: THE JUSTICE DEPARTMENT TAKING ANOTHER SHOT AT OPPOSING THE AT&T TIME WARNER MERGER. AND JULIA BOORSTIN JOINS US NOW FROM SUN VALLEY, IDAHO, WITH A SPECIAL GUEST. HELLO, JULIA. ONCE AGAIN, GOOD MORNING.

JULIA BOORSTIN: GOOD MORNING AGAIN TO YOU, JOE. WE'RE JOINED NOW BY RANDALL STEPHENSON, THE CEO OF AT&T. THANK YOU SO MUCH FOR JOINING US THIS MORNING.

RANDALL STEPHENSON: OF COURSE. GOOD TO SEE YOU.

BOORSTIN: SO YOU HAD THIS BIG NEWS BREAK YESTERDAY. WHAT DO YOU HAVE TO SAY TO DOJ CHIEF MAKAN DELRAHIM?

STEPHENSON: WELL I DON'T HAVE ANYTHING TO SAY TO HIM. THAT'LL BE SAID IN COURT FILINGS AND PLEADINGS WITH THE APPEALS COURT. SO --

BOORSTIN: SO DO YOU KNOW ON WHAT GROUNDS THIS APPEAL IS BEING FILED?

STEPHENSON: YEAH, WE'VE BEEN QUESTIONING ON WHAT GROUNDS MANY THINGS HAVE BEEN FILED OVER THE LAST SIX, SEVEN MONTHS. AS YOU RECALL COMING INTO THE -- THE ORIGINAL LAWSUIT, PEOPLE WERE SAYING, "WHAT IS THE BASIS OF THE LAWSUIT?" AND THE COMPLAINT WAS FILED AND EVERYBODY READ IT AND KIND OF HAD A HARD TIME DISCERNING REALLY WHAT WAS THE BASIS OF THE COMPLAINT. 25 MILLION PAGES OF DOCUMENTS ARE COLLECTED. WE GO THROUGH DEPOSITIONS. WE GO THROUGH AN ENTIRE TRIAL. AND AT THE END OF THE TRIAL WE GET A VERY I THOUGHT THOUGHTFUL, VERY THOROUGH, VERY FACT-BASED ORDER. AND, YOU KNOW, IT BASICALLY SAID THAT THIS IS PRO-COMPETITIVE. SO NOW WE GO TO APPEAL, AND AT SOME POINT ONE HAS TO QUESTION IS THE TRANSACTION ACTUALLY PRO-COMPETITIVE. SO IT'LL BE INTERESTING. WE DON'T KNOW EXACTLY WHAT THE GOVERNMENT'S BASIS WILL BE FOR THE APPEAL.

BOORSTIN: SO WHAT DO YOU THINK THE INTENTIONS ARE OF THIS APPEAL THOUGH? I MEAN, IS THIS GOING TO BE AN EXPENSIVE, COSTLY PROCESS FOR YOU?

STEPHENSON: IT'S BEEN AN EXPENSIVE COSTLY PROCESS ALREADY. THE CLOCK ON LEGAL FEES HAS BEEN RUNNING AND IT'S BEEN RUNNING ON BOTH SIDES. THE TAXPAYER'S LEGAL COSTS HAVE BEEN RUNNING AND OUR LEGAL COSTS HAVE BEEN RUNNING AS WELL. WO WE'LL HAVE TO CONTINUE THE CLOCK RUNNING WITH THE LAWYERS. SO YEAH, IT WILL BE A COSTLY PROCESS. BUT LOOK, AT THE END OF THE DAY, IT DOESN'T REALLY MATTER THAT MUCH TO US. IT DOESN'T CHANGE ANYTHING I'M GOING TO DO TODAY OTHER THAN WE'LL TALK ABOUT THIS RATHER THAN THE MERITS OF THE DEAL AND WHAT WE'RE DOING AS A BUSINESS. BUT THE TRANSACTION IS CLOSED. AND WE'RE EXECUTING ON THE TRANSACTION.

BOORSTIN: SO IS THIS APPEAL POLITICAL?

STEPHENSON: OH, I HAVE NO IDEA. I DON'T EVEN WANT TO GET INTO THAT. THAT'S A QUESTION THAT'S BEEN ASKED FROM DAY ONE OF THIS TRANSACTION. BUT, AS TO WHETHER THERE ARE OTHER MOTIVATIONS BEHIND IT OTHER THAN JUST PURE ANTI-TRUST LAW, I'LL LEAVE THAT TO OTHERS TO SPECULATE AND COMMENT ABOUT.

BOORSTIN: JOE, YOU WANT TO JUMP IN HERE?

KERNEN: YEAH, I JUST WORRY ABOUT THE TIMELINE, RANDALL. WAS IT A TOTAL SURPRISE TO YOU? DID YOU HAVE WIND OF THIS - CAN YOU -- IN THE LAST COUPLE OF WEEKS? OR EVEN FROM WHEN YOU INITIALLY GOT THE RULING FROM JUDGE LEON, WERE YOU EXPECTING THIS TO HAPPEN OR JUST -- YOU HAD NO IDEA OR DIDN'T EVEN THINK ABOUT IT?

STEPHENSON: NO, I HAD CONTEMPLATED AN APPEAL FROM THE VERY BEGINNING. THE GOVERNMENT, THE ANTI-TRUST DIVISION, OBVIOUSLY SEEMS VERY INTENT ON PURSUING THIS PARTICULAR TRANSACTION AND SO WE ACTUALLY TOLD OUR BOARD AFTER WE RECEIVED JUDGE LEON'S OPINION THAT IT WAS A TERRIFIC OPINION. WE THOUGHT IT WAS A VERY THOUGHTFUL AND THOROUGH OPINION. WE THOUGHT IT WOULD STAND UP WELL UP IN AN APPELLATE PROCESS. BUT WE TOLD THE BOARD YOU SHOULD ANTICIPATE AN APPEAL. SO WE WERE EXPECTING AN APPEAL. THEY WERE GETTING TO THE POINT IN TIME WHERE THEY NEEDED TO FILE IT IF THEY WERE GOING TO GET IT DONE IN THE 60-DAY TIME HORIZON. SO IT WAS JUST A MATTER OF WHEN. BUT NO, WE WEREN'T SURPRISED THAT THEY APPEALED.

BOORSTIN: SEE, THAT MAKES ME THINK THAT MAYBE IN THE BACK OF YOUR MIND YOU DON'T WANT TO COMMENT ON THE POLITICAL SIDE OF THINGS BUT GIVEN THE THOROUGHNESS AND THE LOGIC IN JUDGE LEON'S DECISION, THE MOTIVATION OF THE DOJ OR THE GOVERNMENT IN THIS CASE, IT'S HARD FOR ME TO IMAGINE THAT THEY'RE LOOKING AT THE MERITS OF THEIR CASE RATHER THAN ALMOST I SAID EARLIER THAT THEY'RE JUST SORE LOSERS OR SOMETHING. OR IT'S POLITICAL OR SOMETHING. SO I DON'T KNOW HOW YOU - I KNOW IT WON'T HELP YOU TO DECIDE IT'S POLITICAL, IT DOESN'T CHANGE THINGS FOR YOU. BUT I'M TRYING TO FIGURE OUT WHAT ELSE IT COULD BE?

STEPHENSON: AS I WAS TELLING JULIA EARLIER THAT THE RUMORS AND THE SUGGESTIONS AROUND SUN VALLEY RIGHT NOW, IT'S ALL VERY INTERESTING. PEOPLE ARE SPECULATING WHAT'S REALLY GOING ON. YOU KNOW, WE'LL WAIT AND SEE WHAT'S IN THE APPEAL. THERE WILL BE, I'M SURE, A LEGAL-BASED REASON IN THE APPEAL. WE'RE ANXIOUS TO READ IT AND SEE WHAT IT ENTAILS. BUT AT THIS STAGE, YOU KNOW, I DON'T HAVE ANY COMMENT ON WHAT ELSE IS BEHIND THIS. WE'LL JUST LOOK AT THIS ON THE LEGAL MERITS, AS WILL THE APPELLATE COURT.

BOORSTIN: WELL, SPECIFICALLY PEOPLE ARE SPECULATING THAT THAT THIS COULD DAMAGE COMCAST'S ABILITY OR HURT COMCAST FROM A REGULATORY PERSPECTIVE TO MAKE ANOTHER BID FOR FOX.

STEPHENSON: PROBABLY CAN'T HELP IT.

BOORSTIN: WELL HOW -- SO WHAT DO YOU THINK IN TERMS OF THAT? IS THIS INTENDED TO SEND THAT MESSAGE TO COMCAST?

STEPHENSON: WELL, AGAIN, I'M NOT GOING TO GET INTO WHAT THE DEPARTMENTS INTENT IS BEHIND THAT IN THIS IS. I'LL LEAVE THAT TO OTHERS TO SPECULATE. BUT OBVIOUSLY IT DOES AFFECT, YOU KNOW, THAT PROCESS. YOU'RE IN A SITUATION WHERE TWO ENTITIES ARE BIDDING FOR AN ASSET. AND THIS KIND OF ACTION CAN OBVIOUSLY INFLUENCE THE OUTCOME OF THOSE ACTIONS, BUT WHO KNOWS WHETHER THAT'S BEHIND US.

BOORSTIN: ANALYST CRAIG MOFFETT WHO'S WRITTEN QUITE A BIT ABOUT THIS SUGGESTED THE APPEAL COULD FOCUS ON CHALLENGING JUDGE LEON'S PREMISE THAT A PROGRAMMER WOULD NOT TAKE INTO ACCOUNT THE ECONOMICS OF THEIR DISTRIBUTOR PARENT. TURNER WOULD NOT TAKE INTO ACCOUNT THE ECONOMICS OF AT&T WHEN NEGOTIATING. IF THIS BECOMES THE FOCAL POINT OF THIS APPEAL, HOW DO YOU ADDRESS THOSE CONCERNS?

STEPHENSON: I DON'T KNOW. CRAIG MOFFETT'S HAD A LOT TO SAY ABOUT THIS TRANSLATION. NOT MUCH OF IT HAS BEEN RIGHT SO FAR. SO I DON'T KNOW THAT I'LL COMMENT ON CRAIG'S POINTS, BUT LOOK, THE MERITS OF THE CASE HAVE BEEN TRIED. 25 MILLION PAGES OF DOCUMENTS, TESTIMONY, AND A TRIAL -- AN EXTENSIVE TRIAL, AN EXTENSIVE ORDER. SO AT THE END OF THE DAY, WE FEEL LIKE THE LAW IS ON OUR SIDE. WE FEEL GOOD ABOUT WHERE WE ARE, AND WE THEY THINK THE APPELLATE COURT WILL LOOK ON THE MERITS OF THE LAW.

BOORSTIN: MELISSA?

MELISSA LEE: RANDALL, PERHAPS AT&T IS BEING MADE THE POSTER CHILD OR BEING MADE SOME SORT OF AN EXAMPLE FOR THE JUSTICE DEPARTMENT TO SEND A SIGNAL THAT THEY'RE NOT GOING TO JUST STEP ASIDE AND LET VERTICAL MERGERS GO THROUGH WILLY-NILLY?

STEPHENSON: YEAH, I DIDN'T HEAR ALL OF THE QUESTION, MELISSA. BUT I HEARD YOU TALK ABOUT VERTICAL MERGER AND --

LEE: YEAH. DO YOU THINK THAT STEPPING IN RIGHT NOW AND CHALLENGING JUDGE LEON'S DECISION IS SORT OF TO SEND A MESSAGE OUT TO THE MARKETS FROM THE JUSTICE DEPARTMENT THAT VERTICAL MERGERS JUST AREN'T GOING TO GET THE GREEN LIGHT AT THIS POINT? IS AT&T BEING MADE AN EXAMPLE?

STEPHENSON: IT'S AN INTERESTING QUESTION. IT'S ONE THAT YOU KNOW WE OBVIOUSLY HAVE THOUGHT ABOUT A LOT. JUDGE LEON'S OPINION, AGAIN, A VERY GOOD OPINION, BUT PROBABLY IT WAS SO FACT SPECIFIC TO OUR CASE THAT IT PROBABLY DOESN'T CARRY A LOT OF PRECEDENT AS YOU THINK ABOUT GOING FORWARD. AS THIS GOES TO AN APPELLATE COURT, THIS CIRCUIT APPELLATE COURT WHO'S VERY WELL VERSED IN THESE ISSUES. IF THE APPELLATE COURT UPHOLDS JUDGE LEON AND THERE'S A LOT OF PEOPLE, A LOT OF LAWYERS - AND I'M NOT A LAWYER, I JUST REPEAT WHAT THEY TELL ME -- A LOT OF LEGAL MINDS THINK THIS COULD BE A PRECEDENT SETTING, AND SO THIS COULD GO A DIRECTION THAT COULD ACTUALLY HELP ESTABLISH LAW AROUND VERTICAL MERGERS. WE THOUGHT THAT LAW HAD BEEN ESTABLISHED. 50 YEARS OF PRECEDENT. WE STEPPED INTO THIS TRANSACTION WITH TIME WARNER THINKING THE LAW HAD -- WAS ESTABLISHED. THE GOVERNMENT CHALLENGED IT SO IT KIND OF THREW THAT UP IN THE AIR. BUT THIS REALLY COULD END UP SOLIDIFYING WHAT THE LAW IS AROUND VERTICAL MERGERS.

BOORSTIN: WHEN WE STARTED THIS WEEK - I'M SORRY. GO AHEAD, JOE.

STEPHENSON: NO. I JUST - YOU KNOW WE TALKED ABOUT WHAT THE UNCERTAINTY OF COMCAST AND FOR THEIR DEAL. WHAT ABOUT THE UNCERTAINTY FOR AT&T, RANDALL? I'M TRYING TO FIGURE OUT HOW THAT WOULD PLAY OUT WHEN AN ANALYST IS ALREADY DOWNGRADED THE STOCK, BASED ON THE OVERHANG - JUST NOT KNOWING WHAT'S GOING TO HAPPEN AND HOW LONG IT'S GOING TO TAKE. IT'S ALREADY WARNER MEDIA. JOHN STANKEY HAS BEEN MEETING WITH THE BOYS. YOU ALREADY HAD LAUNCHED THE NEW WATCH TV, PAID TV SERVICE. DO YOU SEE ANYTHING CONCRETE OR TANGIBLE THAT WILL BE AFFECTED OR DELAYED BY KNOWING THAT THIS IS IN THE WORKS? IS THAT -- I MEAN, IS THE ANALYST RIGHT -- THERE WOULD BE AN OVERHANG?

STEPHENSON: NO. NO. THIS CHANGES NOTHING. AS I MENTIONED EARLIER, THIS CHANGES NOTHING I'M DOING TODAY EXCEPT TALKING ABOUT THIS ISSUE ON CAMERA. THIS CHANGES NOTHING WE'LL BE DOING OVER THE NEXT 30 DAYS OR THE NEXT 12 MONTHS. WE'RE ABOUT EXECUTING OUR PLAN, JOE. WE THINK THE LIKELIHOOD OF THIS THING BEING REVERSED AND OVERTURNED IS REALLY REMOTE. IT'S A VERY NARROW PATH THAT WOULD HAVE TO BE TRAVELED TO GET THIS THING REVERSED IN ANY WAY. SO WE'RE ABOUT EXECUTING OUR PLAN. THE MERGER IS CLOSED. WE OWN TIME WARNER. AS YOU SAID, IT'S BEEN RENAMED WARNER MEDIA. JOHN STANKEY IS EXECUTING. WE HAVE ACQUIRED APPNEXUS, WHICH IS AN AD TECH PLATFORM, TO BEGIN IMPLEMENTING THE ADVERTISING. WE'VE GOT A BUSINESS PLAN AROUND THIS. SO WE'RE OFF AND RUNNING. NOTHING'S GOING TO CHANGE THAT. SO I DON'T SEE ANY IMPACT FROM THIS.

LEE: IT MAY NOT CHANGE WHAT YOU DO, RANDALL, BUT IT MAY CHANGE THE PERCEPTION OF INVESTORS TOWARDS YOUR STOCK. WE ARE SHOWING RIGHT NOW THE STOCK TREMD OF AT&T SINCE THE DOJ FIRST ANNOUNCED THE LAWSUIT. THE STOCK IS DOWN 8%. THE POINT THAT THIS RAYMOND JAMES ANALYST MADE IN THE DOWNGRADE OF YOUR STOCK THIS MORNING IS THAT THIS IS GOING TO BE YET ANOTHER OVERHANG FOR AN UNKNOWN PERIOD OF TIME IN WHICH THE STOCK WILL LIKELY TRADE LOWER OR AT LEAST TRADE SIDEWAYS. WHAT ARE YOU TELLING INVESTORS IN TERMS OF THE TIMING OF THIS AND IF THERE IS AT SOME POINT A PAIN POINT - AT WHICH YOU SAY, "YOU KNOW WHAT, WE'RE NOT SURE ANYMORE."?

STEPHENSON: WHAT I TELL INVESTORS IS WHAT I JUST SAID TO YOU. IT DOESN'T CHANGE ANYTHING IN TERMS OF WHAT WE'RE DOING. AND I THINK THE MERIT OF THE TRANSACTION HAS BEEN PLAYED OUT IN TERMS OF WHAT YOU'RE SEEING WITH VALUATIONS OF OTHER MEDIA ASSETS. WE FEEL REALLY GOOD ABOUT THE ASSETS THAT WE GOT, THE GREAT BRANDS THAT WE GOT. IN TERMS OF OVERHANG OF THE STOCK AND UNCERTAINTY, THERE'S NOT MUCH WE CAN DO ABOUT THAT EXCEPT ADDRESS IT IN THE COURT. SO WE'LL WORK IT AS EXPEDITIOUSLY AS WE CAN BUT IT'S IN THE HANDS OF THE COURT NOW.

JOE KERNEN: ALL RIGHT.

BOORSTIN: MIKE, DO YOU WANT TO JUMP IN THERE? OTHERWISE I GOT MORE QUESTIONS HERE.

MIKE SANTOLI: YEAH, RANDALL, I GUESS I WOULD JUST ADD ONTO THAT. YOU SAID YOU'RE GOING TO EXECUTE THE PLAN, BUT IS -- DO YOU THINK THERE'LL BE ANY SENSITIVITY WHILE THIS APPEAL IS ONGOING TOWARD ROLLING OUT ANY PRODUCTS, MAKING ANY INITIATIVES THAT MIGHT GIVE THE APPEARANCE OF, PERHAPS, BUNDLING PRODUCTS IN SOME WAYS THAT MIGHT PROVOKE THE CRITICISM THAT, IN FACT, THIS IS ANTI-COMPETITIVE AS A MERGER?

STEPHENSON: NO, MIKE, ZERO. WE MADE SOME COMMITMENTS TO THE DEPARTMENT OF JUSTICE AFTER THE JUDGE LEON'S ORDER IN TERMS OF HOW WE WOULD OPERATE AND RUN TIME WARNER. SPECIFICALLY TURNER. THE TURNER NETWORKS. THAT WE WOULD HOLD THEM SEPARATELY, WE WOULD RUN THEM INDEPENDENT, AND WE WOULD HAVE FIREWALLS BETWEEN THEM AND DIRECTV. GUESS WHAT? THOSE ARE THE KIND OF THINGS WE HAVE TO DO ANYWAY. I MEAN, WHEN YOU HAVE CONTENT PLAYERS WHO ARE BOTH SUPPLIERS AND CUSTOMERS, YOU JUST HAVE AN OBLIGATION TO TREAT THEM THAT WAY ANYWAY. SO THIS CHANGES NOTHING ABOUT HOW WE OPERATE THE BUSINESS. IT CHANGES NOTHING ABOUT PRODUCTS WE WILL LAUNCH. IT CHANGES NOTHING ABOUT OTHER M&A WE NEED TO DO LIKE APPNEXUS. SO AGAIN, I'LL JUST SAY IT, WE'RE OFF AND EXECUTING.

BOORSTIN: I WANT TO HEAR MORE ABOUT HOW THE INTEGRATION IS GOING SO FAR. BUT FIRST I HAVE TO ASK YOU ABOUT YOUR CONVERSATIONS DOWN AT THE SUN VALLEY LODGE WITH ALL THE OTHER MEDIA CEOs. WHEN WE STARTED THIS WEEK AT SUN VALLEY, MEDIA CEOs WERE TELLING ME THAT IT'S OPEN SEASON FOR M&A, AND THEY WERE ENTHUASTIC AND THRILLED ABOUT THE HIGH VALUATIONS THAT WERE GOING TO COME NOW IT SEEMED THAT ANYONE COULD GO FORWARD AND MOVE A DEAL ON THE HEELS OF JUDGE LEON'S RULING. WHAT'S YOUR ADVICE TO CEOs DOWN THERE RIGHT NOW ABOUT HOW THEY SHOULD BE THINKING ABOUT THEIR POTENTIAL FOR DEALS?

STEPHENSON: IF IT WERE A CEO LOOKING AT MEDIA ACQUISITIONS AND DEALS, I DON'T THINK I WOULD BE LOOKING AT THEM TODAY ANY DIFFERENTLY THAN I DID YESTERDAY. I THINK THIS IS A PROCESS THAT WILL PLAY ITSELF OUT. BUT I THINK THERE IS SUCH A SLIM CHANCE OF THIS THING BEING ALTERED IN SOME WAY THAT IT WOULDN'T AFFECT MY THINKING MUCH AT ALL. JUDGE LEON'S ORDER WAS SO FACT SPECIFIC AND IF I WITH FOR A CEO, I'D HAVE LOOKED AT THE AT&T AND TIME WARNER CASE, I'D LOOKED AT JUDGE LEONS ORDER AND I'D HAVE SAID HIS ORDER WAS VERY SPECIFIC TO THAT DEAL. AND SO I WOULD HAVE ALREADY SET THAT DEAL ASIDE AS I WERE EVALUATING M&A. AND SO I DON'T THINK THAT THIS CHANGES ANYTHING.

BOORSTIN: JOE.

KERNEN: NO, I -- YOU KNOW, I WAS WATCHING BEFORE - YESTERDAY, IN THE NEWS I WAS GOING TO SEE WHETHER RANDALL WAS DRESSING DIFFERENTLY. LIKE THE HOLLYWOOD GETUP OR SOMETHING. WHE THER HE'D HAD SOME AFFECTED SORT OF -- YOU HAVEN'T CHANGED BUT NOW I'M WONDERING BECAUSE OF THIS RULING, YOU'RE NEVER GOT ANOTHER CHANGE, RIGHT, RANDALL?

BOORSTIN: I'M TOO OLD TO CHANGE, JOE. I'M TOO OLD AND TOO TIRED TO CHANGE. I'M JUST GONNA STAY THE WAY I AM.

KERNEN: THIS IS GOING TO MAKE YOU EVEN MORE TIRED. I KNOW. BUT - I DON'T THE RULING WAS - I'VE SAID IT BEFORE -- THE RULING JUST SEEMED SO SPECIFIC THAT WHEN YOU'RE CHALLENGING SOMETHING, YOU DON'T CHALLENGE IT ANEW. YOU HAVE TO GO BACK AND LOOK AT WHAT THE ORIGINAL COURT - AN APPEALS COURT LOOKS AT THE ORIGINAL FINDING TO SEE IF THERE WAS AN ERROR IN THE ORIGINAL COURT RULING. IS THAT THE WAY IT WORKS OR CAN IT START ANEW?

BOORSTIN: YEAH, THEY'LL LOOK AT ISSUES OF LAW, NOT ISSUES OF FACT. GENERALLY - AND AGAIN, I'M NOT A LAWYER SO I'M GIVING LEGAL ADVICE HERE. BUT WHAT AN APPELLATE COURT WILL LOOK AT, THEY'LL SAY THE JUDGE GETS THE BENEFIT OF THE DOUBT ON THE FACTS, ON THE FACTUAL ISSUES. ON MATTERS OF THE LAW, THEY'LL LOOK AT PROCEEDINGS. DID HE DO ANYTHING THAT WAS COUNTER TO LAW? AND SO OBVIOUSLY YOU MIGHT WELL IMAGINE WE HAD A LOT OF APPELLATE LAWYERS INVOLVED IN THIS AND AT EVERY MINUTE OF THE COURT PROCEEDING. AND WE FEEL REALLY GOOD. JUDGE LEON RAN A TIGHT PROCESS, A VERY TIGHT COURTROOM. AND SO WE FEEL PRETTY GOOD ABOUT THE RULING WE GOT.

LEE: WHAT DO YOU TELL INVESTORS IN TERMS OF CLARITY ON THIS? DO YOU THINK THAT WE WILL KNOW, INVESTORS WILL KNOW WHAT THE RESULTS OF THE APPEAL IS IN SIX MONTHS, IN TEN MONTHS, IN A YEAR? AND YOU'RE WILLING TO TAKE THIS ALL THE WAY TO THE SUPREME COURT?

STEPHENSON: IT'S HARD TO SAY, MELISSA. IT WILL PROBABLY BE, YOU KNOW, FIVE OR SIX MONTHS. BUT IN TERMS OF THE UNCERTAINTY, AGAIN, THIS IS -- IF YOU'RE AN INVESTOR, YOU'RE WEIGHING PROBABILITIES. THE PROBABILITY OF THIS THING CHANGING IS, WE THINK IS VERY, VERY LOW.

BOORSTIN: TELL US HOW THE INTEGRATION IS GOING SO FAR. JOE MADE JOKES ABOUT YOU NOT TRANSFORMING INTO A HOLLYWOOD TYPE, BUT THERE ARE QUESTIONS ABOUT WHETHER THERE'S A CULTURE CLASH BETWEEN THE AT&T CULTURE AND WARNER MEDIA. ARE YOU CONCERNED ABOUT THAT?

STEPHENSON: AM I CONCERNED ABOUT IT? NO. I'M CONSCIOUS OF IT. AND WE'RE BEING VERY, VERY CAREFUL AND MINDFUL OF THAT. THE WAY WE'VE ORGANIZED THE BUSINESS, IT WILL BE RUN FOR SEPARATELY, VERY INDEPENDENTLY. IT'S IMPORTANT THAT WE PRESERVE THE CULTURE. I MEAN, THE CULTURE OF A MEDIA COMPANY IS ALL ABOUT CREATIVITY AND IT'S A COMPANY THAT EVERY SINGLE NIGHT ALL YOUR ASSETS DRIVE HOME. SO THAT'S ONE WE HAVE TO BE MINDFUL OF. SO JOHN STANKEY HAS SPENT A LOT OF TIME THE FIRST COUPLE OF WEEKS MAKING SURE THAT HE'S TOUCHING THE EMPLOYEES, TOUCHING THE TALENT. MAKING SURE THAT THEY UNDERSTAND THAT THEY WILL BE LEFT TO DO WHAT THEY DO BEST, BUT THAT WE DO HAVE SOME SYNERGIES TO GO AFTER IN THIS THING, PARTICULARLY THE ADVERTISING SYNERGIES. AND THERE ARE SOME COST SYNERGIES AT THE CORPORATE LEVEL. THOSE WILL BE -- THOSE WON'T AFFECT THE CREATIVE SIDE OF THE BUSINESS. BUT WE FEEL REALLY GOOD ABOUT OUR ABILITY TO EXECUTE ON THIS.

BOORSTIN: AND WHAT ABOUT HBO? THERE'S BEEN A LOT OF FOCUS AND SPECULATION ON HOW MUCH YOU'RE GOING TO BE CHANGING IT, AND THE POTENTIAL RISKS TO THE VALUE THE BRAND IF YOU CHANGE IT TOO MUCH. WHAT'S YOUR PLAN THERE?

STEPHENSON: WELL THERE'S -- IT'S AN AMAZING FRANCHISE, IT'S AN AMAZING BRAND. AND SO ANYTHING YOU DO, YOU'RE GOING TO DO VERY CAUTIOUSLY, RECOGNIZING JUST HOW SUCCESSFUL IT'S BEEN. THERE'S BEEN A LOT REPORTED ABOUT JOHN STANKEY'S COMMENTS OF WE WANT TO DRIVE MORE AND MORE ENGAGEMENT. AT THE END OF THE DAY THAT'S WHAT THIS IS ALL ABOUT, ENGAGING THE CONSUMER. BECAUSE THE MORE ENGAGEMENT YOU HAVE, THE MORE OPPORTUNITY YOU HAVE TO CREATE VALUE. AND SO ENGAGEMENT WHEN PEOPLE HEAR THAT THEY SAY THAT MEANS THEY'RE GOING TO BE PUMPING MORE CONTENT INTO HBO, MAYBE. BUT WE'RE LOOKING AT A LOT OF DIFFERENT AVENUES FOR DRIVING ENGAGEMENT. WE HAVE A LOT OF DIGITAL PROPERTIES. OUR DIRECTV NOW PRODUCT, IT'S AN OVER THE TOP PRODUCT IT'S GROWING LIKE CRAZY. IT'S DOING 300,000 SUBSCRIBERS ADDED EVERY SINGLE QUARTER. WE JUST NOW ADDED WATCHTV, WHICH YOU HEARD JOE TALK ABOUT, OUR $20 PRODUCT. WE'RE SEEING SOME REALLY GOOD UPTAKE ON THAT RIGHT NOW IN THE MARKETPLACE. WE HAVE A NUMBER OF DIGITAL PROPERTIES, WE NOW OWN CNN.COM - THE MOST WATCHED NEWS WEBSITE IN THE WORLD. AND SO WE'RE EXCITED ABOUT THAT. SO HOW DO YOU DRIVE ENGAGEMENT ACROSS ALL THESE PLATFORMS AND PUT THAT WITH 170 MILLION CUSTOMER RELATIONSHIPS?

BOORSTIN: YOU ALSO OWN 10% OF HULU. WOULD YOU WANT TO SELL THAT OR ARE YOU INTERESTED IN BUYING MORE HULU?

STEPHENSON: IT'S TOO EARLY TO SAY. WE'VE GOT A LOT OF QUESTIONS LIKE THAT TO ADDRESS, TO ANSWER. AND PLUS, WE DON'T KNOW WHO'S GOING TO BE OWNING Hulu WHEN IT'S ALL SAID AND DONE. SO - WHO WILL BE THE PARTIES TO THAT. SO IT'S TOO EARLY TO SAY ON HULU.

BOORSTIN: WELL, RANDALL STEPHENSON, CEO OF AT&T, THANK YOU SO MUCH FOR JOINING US THIS MORNING.

STEPHENSON: THANK YOU. GOOD TO BE HERE.

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