AT&T CEO Randall Stephenson says the activist investor group that targeted the company last week with a series of demands including potential divestitures, a change in leadership, and a freeze on merger-and-aquisition activity is a group of “smart guys” but the strategies outlined in its letter are a “mixed bag.”

While some of Elliott Management’s ideas make sense in line with AT&T’s strategy to assemble a telecom-media-entertainment powerhouse, others fall short of that goal, Stephenson said at Goldman Sachs’ Communacopia conference. “We think a company that can put together premium media, content creation, and production with networks would have a significant strategic advantage,” he said, according to a Seeking Alpha transcript.

Stephenson walked a fine line in trying to balance the outlook for its $67 billion acquisition of DirecTV in 2015, and its $85 billion Time Warner acquisition in 2018. The “old world” of media distribution via cable, satellites, and movie theaters doesn’t paint a “very rosy picture for a content creation company” today, he said. “But if you’re a content creation company and you have a direct line of sight, a direct path to a large set of consumers, then you have a unique competitive advantage. And that’s the play we’re running here.”

WarnerMedia, the new name AT&T gave the media company following the acquisition, has an “amazing set of capabilities and assets,” including “one of the largest scaled TV and film production houses, studios in the world,” and an intellectual property library that is as deep and as broad as anybody’s,” Stephenson said. AT&T is in the process of reorganizing WarnerMedia as a digital platform called HBO Max that will launch Oct. 29.

Meanwhile, he added, “AT&T is now already by order of magnitude the largest distributor of HBO in the United States,” and there’s plenty of runway for AT&T to make further inroads with its cumulative base of 170 million customers in pay-TV, broadband, and wireless service. “Standing this up and driving penetration through that distribution platform we think is a very powerful opportunity,” Stephenson said.

“We are convinced, the old saying, content is king. I am an evangelical believer in that,” he said. “But we also believe distribution matters. We’ve always been big believers of distribution and the power of it, and that’s what we’re trying to pull together.”

AT&T never envisioned keeping Time Warner as a legacy media company and as such is reorganizing the business to make a pivot to grow its audience and reach on digital platforms, Stephenson explained. “We had to reorient the business to drive towards digital,” he said. “It’s a hard play.”

In that vein, Stephenson defended the role of John Stankey, CEO of WarnerMedia, who was also recently appointed to the new position of president and COO at AT&T. “He’s done a really nice job of breaking down those silos and getting the business reoriented toward HBO Max digital distribution,” Stephenson said. “As we thought about who is going to run this play in the next couple of years, it was a very short list and John Stankey quickly rose to the top.”

The prospects for AT&T’s DirecTV business are diminishing with each passing quarter and Stephenson was careful to address those challenges in his comments while charting a path forward. “Everybody bemoans cord cutting … obviously it’s a phenomenon that is going rampant and it’s not going to change,” he said. Retransmission costs are exploding and the average multichannel cable or satellite bill continues to grow as a result, he explained.

The status quo is not sustainable, he admitted, and that’s led to some pretty dramatic changes to AT&T’s cable channel lineup, including the recent loss of CBS and Nexstar owned channels. While those outcomes were “painful” it was also the “right thing to do” in order to bring down content distribution costs, Stephenson explained. “It’s going to put more and more pressure on what I’ll call the fringe content. … So the bundles probably get skinnier as the [retransmission] rights take more and more of the money. But that’s just the reality of it. That’s probably where we’re headed.”

Stephenson also, unprompted, commented on his rumored retirement, which picked up steam after a report by The Wall Street Journal, and whether Stankey is the heir apparent for AT&T’s helm. “First of all, the board hasn’t informed me I am retiring yet,” Stephenson said, but added that “if Stankey is successful at running this play over the next … his play is in a pretty good position if he executes.”

AT&T is still evaluating the proposals made by Elliott Management and will determine what makes sense for all of its shareholders, but Stephenson said the notion of AT&T being more prescriptive with its capital allocation strategy was “pretty thoughtful.”

Share buybacks are on the horizon, he said, and the company is on target to reduce its net debt by $20 billion by the end of 2019. The company reported a high of $180 billion in debt when its acquisition of Time Warner closed and the company ended its most recent quarter with $162 billion in debt.

Mobility, which is still AT&T’s core business, is also advancing and preparing the company to execute on its digital entertainment distribution efforts, according to the AT&T CEO who reiterated the company’s goal to have “nationwide 5G by midyear next year in the really premium spectrum areas of our network.” During the last 18 months, AT&T has “surpassed the competition in terms of wireless network performance,” he said. “We’ve exceeded the competition and the gap is widening. It’s not getting closer. … [That’s] really important when you’re entering a world of distributing premium video to our consumers over wireless networks.”

Finally, during his interview at the conference, Stephenson remarked on the unpredictable outcome of T-Mobile US’ proposed acquisition of Sprint and the potential introduction of Dish Network as a viable fourth nationwide network operator. “I honestly don’t know how to predict it,” he said.

“You see something we’ve never seen before. … State [attorneys general] getting together and filing a lawsuit” to block the T-Mobile-Sprint merger,” Stephenson said. “There are areas where [the merger] might make sense but the uncertainty in terms of how it’s going to be treated by regulators makes it really hard to predict where the industry goes.” Moreover, he’s at a loss as to whether Dish will emerge as a new player in the market with a prepaid business targeting use of its fallow spectrum.