AT & T Inc. Is Not Breaking Business Following Blockbuster Purchase by Time Warner, Inc. ($ 85 Billion)
Just a week after closing the transaction, AT & T agreed to broker data center operations to Brookfield Infrastructure for sale for $ 1.1 billion on Thursday. And it's reportedly on the hunt for other potential deals, putting its sights on AppNexus Inc. and preparing to acquire the part of Otter Media it does not yet own.
This is all part of AT & T's grand plan to reform the company as a media conglomerate, rather than just a series of telecommunications tubes. A particular focus is on the advertising opportunities of the company. Chief Executive Officer Randall Stephenson said he plans to make further acquisitions to support AT & T's targeted advertising – even if it's not massive business.
"It's getting smaller M & A," he said at Wells Fargo & Co. conference in New York. "With time and investment, we are convinced that we can do it."
Under the recent agreement, Brookfield will take control of AT & T's colocation operations and facilities. The network operator will continue to provide services to its customers at 31 Internet data centers in the US and abroad following a statement. AT & T plans to use proceeds from the sale to repay debt.
The deal is one of several announcements AT & T has made in recent days. The phone giant changed the name of Time Warner to WarnerMedia last week, and on Thursday launched a new online television service called WatchTV, which costs $ 15 a month. The idea is to give customers a cheap way to get more than 30 channels without sports.
AT & T took over Time Warner a week ago after a lengthy antitrust war. The deal, originally announced in 2016, will enable the telco giant to offer new packages of mobile data and entertainment content.
He also hopes to sell more lucrative ads with his new offer. This is exactly where AppNexus comes in. The company operates an online ad exchange and could help AT & T challenge Google and Facebook Inc. for a larger market segment. AT & T is in the process of taking over the business for around $ 1.6 billion, the Wall Street Journal reported this week.
AT & T also wants to buy Otter Media, the online video company of the shipping company Chernin Group. This deal, which could also top $ 1 billion, could be completed this summer, the website reported.
Stephenson's vision is to combine AT & T's TV and mobile data with Time Warner's shows. This would shorten advertising time and help advertisers seamlessly switch from your TV to your phone – where you're more likely to make a purchase. There will be fewer, shorter ads, but advertisers will pay more because the marketing will be more effective.
For example, DirecTV from AT & T could show a TV commercial in their living room that is tailored to their interests, Stephenson said Thursday. If you want to know more about the product, the TV commercial ends and continues on your phone.
"We are not interrupting programming extensively and if you want to engage in advertising, it's in your pocket smartphone," he said. "These are the things that are aggressively worked on to change the advertising business."
AT & T may use customer information about the likes and behaviors of viewers, but it will not be easy "We're trying to challenge Facebook and Google in online ads," said Allan Nichols, an analyst at Morningstar Inc
AT & T is "late," he said. According to Nichols, the mobile service provider will probably know even less about their customers than Facebook and Google.
"A company like AppNexus would probably enhance its ability to offer ads, but I'm skeptical of advertising, which is significantly changing AT & T," he said. In addition, spending on business deals could ultimately raise the question of whether the company is smarter with its money.
"While a $ billions purchase would not concern me, several would," Nichols said. 196590000] ( Updated with the analyst's commentary in the last four paragraphs. )