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MarketScreener Homepage  >  Equities  >  Nyse  >  AT&T Inc.    T

AT&T INC.

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AT&T Explores Potential Sale of Xandr Digital Ad Unit, Sources Say

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09/01/2020 | 10:17am EDT

By Drew FitzGerald and Patience Haggin

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 private-equity firms.

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 August.

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 services.

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.

 


Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 2.25% 1585.99 Delayed Quote.18.41%
AT&T INC. -0.15% 26.72 Delayed Quote.-31.63%
MADISON HOLDINGS GROUP LIMITED 9.09% 0.06 End-of-day quote.-71.43%
MCDONALD'S CORPORATION 0.33% 228.19 Delayed Quote.15.47%
SONY CORPORATION -0.05% 7896 End-of-day quote.6.69%
VERIZON COMMUNICATIONS INC. -0.87% 56.75 Delayed Quote.-7.57%
WPP PLC -0.82% 653.8 Delayed Quote.-38.21%
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Financials (USD)
Sales 2020 169 B - -
Net income 2020 13 116 M - -
Net Debt 2020 146 B - -
P/E ratio 2020 14,9x
Yield 2020 7,80%
Capitalization 190 B 190 B -
EV / Sales 2020 1,98x
EV / Sales 2021 1,93x
Nbr of Employees 243 000
Free-Float 93,4%
Chart AT&T INC.
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AT&T Inc. Technical Analysis Chart | T | US00206R1023 | MarketScreener
Technical analysis trends AT&T INC.
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 32,54 $
Last Close Price 26,72 $
Spread / Highest target 42,2%
Spread / Average Target 21,8%
Spread / Lowest Target -36,4%
EPS Revisions
Managers
NameTitle
John T. Stankey President, CEO, COO & Director
Randall L. Stephenson Executive Chairman
John J. Stephens Chief Financial Officer & Senior Executive VP
Matthew K. Rose Lead Independent Director
Scott T. Ford Independent Director
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