AT&T Ups Effort to Sell DirecTV, Xandr and Crunchyroll

After years of acquisitions, AT&T is on a sales mode. The telecom’s on-again, off-again love affair with satellite pay-TV distribution appears to be off again. The company has reportedly hired a major investment banker to help unload DirecTV, which it acquired in 2015 for $48.5 billion just as online TV and subscription streaming video-on-demand was flourishing.

AT&T is also looking to offload anime-based streaming service/publisher Crunchyroll and Xandr, the online advertising unit launched just two years (following the $1.8 billion acquisition of AppNexus), but has struggled to gain traction due to a variety of issues in the rapidly changing digital ecosystem.

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With nearly $180 billion in debt following the $85 billion purchase of Time Warner (now WarnerMedia), AT&T has been looking to cut non-core assets. The debt is now down to $152 billion, and despite repeated denials from senior executives over the years, DirecTV appears to be on sales block.

The Wall Street Journal reports AT&T is working with Goldman Sachs to find a buyer willing to pay around $20 billion for 50% stake in the El Segundo, Calif.-based pay-TV operator. The sale is challenged by ongoing secular changes in home entertainment underscored by the loss of 7 million combined DirecTV/AT&T U-verse video subs in the past year.

As subscription streaming video-on-demand services such as Netflix, Amazon Prime Video and Hulu proliferate, AT&T has attempted to straddle traditional linear TV distribution with over-the-top video. The company has now moved much of its content distribution future into HBO Max, the $15 monthly SVOD platform, which plans to offer an ad-supported tier in 2021.

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“To the extent that we’re able to get those [pay-TV] customers engaged with us on those [streaming] platforms, then we’re in a good place, and we’re OK with that,” CEO John Stankey told CNBC in July. “And if that takes us down a path that says satellite delivery is less important, so be it.”

A possible merger with rival Dish Network is a favorite proposition for Dish founder/CEO Charlie Ergen, but some observers say the idea would trigger anti-trust issues from the government.

Xandr, which generated about $2 billion in revenue in 2019, had hoped to capitalize on the burgeoning digital ad market focusing on non-video displays. That strategy has apparently backfired as online video ads dominate and online TV publishers were reluctant to sell their ad inventory through Xandr due to AT&T’s competing HBO Max platform, The Journal reported, citing sources familiar with the situation.

Crunchyroll, which AT&T acquired in its purchase of Otter Media, is on the block for a reported $1.5 billion with interested suitors including Sony Corp.

WarnerMedia Absorbs Xandr Ad Platform

AT&T continues to rejigger its media operations, combining WarnerMedia and ad platform Xandr for what the telecom claims will be a better advertising value proposition for brands, publishers and consumers. Gerhard Zeiler, chief revenue officer of WarnerMedia and president of WarnerMedia International, will oversee all advertising responsibilities across AT&T.

The merger was foreshadowed last month when Brian Lesser, CEO of Xandr, abruptly resigned, creating some uncertainty about the future the advertising unit.

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​Kirk McDonald, chief business officer of Xandr will continue to lead the unit, reporting directly to Zeiler. The merged goal is to accelerate new advertising formats by 2021 for HBO Max, WarnerMedia’s high-profile subscription streaming video service launching this month. ​

“Now more than ever, we need to simplify advertising and further our marketplace capabilities for our customers,” Zeiler said in a statement.

As the lines between TV and digital video continue to converge, Xandr’s platform aims to make it easier for ad buyers/sellers to find audiences across multiple distribution screens.

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“This is done through one holistic conversation that spans premium content and trusted environments, alongside proven and advanced ad capabilities,” Zeiler said.

WarnerMedia, Xandr to Host First Mixed Media Advertising Upfront

WarnerMedia and Xandr, both part of AT&T, announced they will join together for the first time on the Upfront stage on May 13, 2020. This inaugural event will showcase the future of advertising capabilities in the digital era.

For example, AT&T has reportedly begun running ads during pauses in VOD and on-demand video consumption.

The WarnerMedia and Xandr Upfront will take place at The Theater at Madison Square Garden in New York City.

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After more than a year of collaboration, launching new and enhanced products with dozens of advertising case studies, WarnerMedia and Xandr will disclose what they contend are new advertising opportunities when assembling HBO, Warner Bros. and Turner brands and content with new technology.

“May 13 will be a culmination of two years of commitment, collaboration and innovation with our partners at Xandr to make superlative advertising solutions available in market today, alongside premium content that matters to audiences globally,” Gerhard Zeiler, chief revenue officer, WarnerMedia and president, WarnerMedia International Networks, said in a statement.

Launched in September 2018, Xandr encompasses all aspects of AT&T advertising & analytics businesses, including AT&T’s advanced TV business, AT&T AdWorks; AT&T’s data and analytics business; ATT.net and AppNexus.

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“We are at a pivotal moment in time in the advertising industry. In partnership with our colleagues at WarnerMedia, Xandr aims to not just make advertising better, but completely reinvent it,” said Brian Lesser, CEO, Xandr.

In 2019, both teams collaborated on strategies but featured two separate, complementary Upfront events. Building on what both groups accomplished in the past year, next year’s Upfront claims to not only highlight content coming to the WarnerMedia brands, but also offer tangible results through advertising solutions available currently and in the future, including the anticipated AVOD version of HBO Max, expected in 2021.

WarnerMedia Innovation Lab Becomes Reality with Pending 5G New York Office Construction

WarnerMedia June 17 announced the location and architecture firm for its pending WarnerMedia Innovation Lab New York headquarters — powered by parent AT&T’s upstart 5G wireless network.

The Lab, which aims to address changing consumer media habits creatively and from a marketing/advertising perspective, also announced further details on its partnerships with WarnerMedia Ad Sales and with Xandr, AT&T’s advertising and analytics company.

The 20,000 square foot facility located in the Chelsea neighborhood of Manhattan, will feature an immersive zone for showcasing consumer-ready experiences visible to the public, flexible indoor and outdoor event spaces, dedicated R&D environments and an open and collaborative modern work space.

“The Lab is more than a technology incubator, but also a dream factory for us to create the wonderment that fans have come to love and expect from WarnerMedia,” Jesse Redniss, GM, WarnerMedia Innovation Lab, said in a statement. “Here we’ll flex the best of WarnerMedia’s creative storytelling capabilities combined with cutting edge technology from AT&T and our partners to deliver experiences that will be talked about for a lifetime.”

WarnerMedia properties include Warner Bros. Studios, HBO, Turner and Otter Media.

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The Lab, which is slated to open in early 2020, will bring 5G experiences to life through exploration and development initiatives, enabling a real-time virtualized collaboration ecosystem across WarnerMedia and the AT&T offerings.

In addition to the New York-based Lab, AT&T 5G initiatives include Warner Bros. in Los Angeles in time for AT&T SHAPEThe Lounge by AT&T in Seattle and WarnerMedia’s Atlanta studios.

“By working across AT&T, we’re able to combine the latest in 5G technology with immersive content experiences and cutting-edge advertising capabilities,” said David Christopher, president of AT&T Mobility and Entertainment. “The WarnerMedia Innovation Lab will be a space where developers, creators and visitors will be inspired to push the boundaries of entertainment, all powered by the company that first introduced the U.S. to the power of mobile 5G.”