AT&T Weighs Sale of Digital Ad Business -- WSJ
The company looks at different options to help bolster its
debt-laden balance sheet
By Drew FitzGerald and Patience Haggin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 2, 2020).
AT&T Inc. is exploring the potential sale of its digital
advertising operations, a sign the telecommunications company is
curbing its ambitions to become a force on Madison Avenue,
according to people familiar with the matter.
AT&T acquired the biggest component of those operations,
AppNexus, for about $1.6 billion in 2018 under a plan to challenge
heavyweights such as Google owner Alphabet Inc. for a piece of the
multibillion-dollar digital ad marketplace. Executives planned to
expand the business into a leading exchange for TV ads as the
medium moved to online streaming services.
Discussions are at an early stage and may not ultimately result
in a sale, which is unlikely to fetch more than the amount AT&T
paid for AppNexus in 2018, the people said. An AT&T spokesman
declined to comment.
After bulking up with large acquisitions, the media-and-telecom
conglomerate is exploring alternatives for several of its assets to
bolster its debt-laden balance sheet, some of the people said. The
Wall Street Journal reported Friday that AT&T is discussing
selling most of its shrinking DirecTV satellite business with
AppNexus operates one of the largest online ad exchanges,
automated marketplaces that allow advertisers to buy space across
thousands of websites, targeting their desired audiences. AT&T
executives hoped to appeal to marketers by combining the unit with
TV ad space on channels such as TNT and CNN as well as its data
about wireless subscribers.
The Dallas company put a high priority on the ad operations,
which the company carved out into a separate division called Xandr
in honor of the original AT&T's progenitor, Alexander Graham
Bell. But the unit failed to yield the explosive revenue growth its
owners hoped to generate and often struggled with technical
problems familiar to tech companies that invest billions of dollars
a year in their ad exchange technology.
Xandr generated about $2 billion of revenue in 2019, up 16% from
the previous year.
The unit's business focused mostly on nonvideo display ads, and
was slow to acquire video-ad inventory. Premium streaming-TV
publishers were reluctant to sell their ad inventory in Xandr
because they regarded AT&T's streaming assets as competition,
one of the people said. AT&T launched its own HBO Max streaming
service in May.
Xandr chief Brian Lesser quit the unit earlier this year as
AT&T folded its assets into WarnerMedia. The longtime
advertising executive joined AT&T in 2017 to launch and run the
advertising unit. Interim ad-tech chief Kirk McDonald left the unit
in August for ad giant WPP PLC. WarnerMedia still retains some
ad-selling operations tied to its pay-TV channels.
Mike Welch, an AT&T veteran, became head of Xandr in
Rival Verizon Communications Inc. also has struggled to dent
Google's and Facebook's dominance over the online ad market after
acquiring both Yahoo and AOL. The digital business's former leader,
Tim Armstrong, left Verizon in 2018. Verizon has taken several
large write-downs and scaled back the operations.
The latest AT&T deal talks were spurred by Chief Executive
John Stankey, an AT&T veteran who took over in July from
longtime boss Randall Stephenson, who remains chairman. Mr. Stankey
has said the company should sharpen its focus on core connectivity
AT&T is also fielding bids for Crunchyroll, a Japanese anime
streaming service with a cult following, from potential buyers
including Sony Corp., according to a person familiar with the
matter. The animated TV show library made some of its catalog
available on HBO Max but remains a separate brand.
(END) Dow Jones Newswires
September 02, 2020 02:47 ET (06:47 GMT)
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