[ad_1]
AT & T (NYSE: T) recently agreed to acquire the AppNexus digital ad exchange for an estimated between 1.6 billion and 2 billion of dollars. This purchase will allow the telecommunications company to integrate the AppNexus network, which automatically associates advertisers with online publishers, its wireless services, DirecTV, and the new properties of Time Warner
] TCV investment company, and News Corporation . The company was valued at $ 1.8 billion after its last round of financing in 2015, so low purchase price estimates may reflect the challenges facing AppNexus from the Internet giants Facebook (NASDAQ: FB) and Alphabet & nbsp; (NASDAQ: GOOG) (NASDAQ: GOOGL) Google. The search firm eMarketer expects Facebook and Google to control nearly 60% of the US digital advertising market this year.
Source of the image: Getty Images.
Verizon (NYSE: VZ) and AT & T do not plan to let these two tech giants conquer the market. Verizon acquired AOL's and Yahoo's Internet assets to form Oath, a subsidiary that manages the digital content and advertising activities of the parent company. AT & T, meanwhile, has bought DirecTV, which has made it the largest pay-TV provider in America, and Time Warner, one of the largest media companies in the world. According to Recode, AT & T could soon acquire the Otter Media streaming video company for more than $ 1 billion. The addition of AppNexus, one of the country's largest digital ad exchanges, could connect these fragments with a single data-driven ad network.
Why AT & T needs an advertising company
AT & T In recent years, the saturation of the smartphone market in the United States has settled. To offset the impact of this slowdown, AT & T has proposed new wireless plans for devices such as cars, wearables and other devices of the Internet of Things (IoT), and expanded its ecosystem with DirecTV. These measures reinforce AT & T's grouping capabilities, which widens its gap against rivals and helps to "lock in" customers.
Another challenge for AT & T was the rise of technology companies that operated their wired and wireless networks. The rise of Netflix (NASDAQ: NFLX) convinced many customers to give up AT & T pay TV services, while one increasing number of connected devices per household increased bandwidth requirements. Alphabet even launched an independent broadband service, Google Fiber, to challenge AT & T.
AT & T realized that it was controlling the pipes, but could not control the content without them. group with DirecTV, the assets of Time Warner advertising platforms together. That's why AT & T began offering streaming DirecTV streaming to its own wireless customers in 2016, and why it launched HBO for free to all of its wireless customers last year.
A picture of "Westworld" from HBO. Source of the image: HBO.
He also recently launched a new free streaming video service AT & T Watch TV, for his unlimited data customers. The service offers approximately 30 live channels and more than 15,000 on-demand programs and films, nearly a third of which come from Time Warner. These new services are clearly intended for Netflix, which may have a hard time countering AT & T's plans to bundle its tubes and content into competing offers. They could also widen the AT & T rift against rivals like Verizon and T-Mobile US .
However, the ambitious plans of AT & T are also expensive. AT & T's takeover of Time Warner has raised its long-term debt to more than $ 180 billion and its bundling of "free" services could hurt its margins. To offset the costs of this expansion, AT & T needs its growing media ecosystem to generate new revenue streams. The most obvious choice would be digital advertising, which could be disseminated in its pay and streaming services.
Companies looking for an alternative advertising platform for Facebook and Google consider AT & T and Verizon viable alternatives. AT & T and Verizon have recently committed to stop selling their location data to outside brokers, but the two companies still operate user data on their own networks to display targeted advertising.
Could AT & T repeat the mistakes?
The acquisition of smaller digital players like AppNexus and Otter Media will complete AT & T's plans to become a powerhouse of digital media, but this expansion could still implode if the company loses the trace of all moving parts. AT & T can leverage the strength of its wireless, wireline, pay and media businesses to keep growing, but at the same time challenging Netflix, Facebook, Google, Verizon and other businesses is a complicated and daunting task.
and Time Warner had similar clustering ambitions when they merged in 2000, but that marriage has collapsed and is widely regarded as one of the worst mergers in history. AT & T could avoid this fate if she plays her cards well, but she could also bite more than she can chew.
Suzanne Frey, executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun owns shares of AT & T. The Motley Fool owns shares and recommends Alphabet (A Shares), Alphabet (C Shares), Facebook and Netflix. The Motley Fool owns shares of Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.
Another challenge for AT & T was the rise of technology companies that operated their wired and wireless networks. The rise of Netflix (NASDAQ: NFLX) convinced many customers to give up AT & T pay TV services, while one increasing number of connected devices per household increased bandwidth requirements. Alphabet even launched an independent broadband service, Google Fiber, to challenge AT & T.
AT & T realized that it was controlling the pipes, but could not control the content without them. group with DirecTV, the assets of Time Warner advertising platforms together. That's why AT & T began offering streaming DirecTV streaming to its own wireless customers in 2016, and why it launched HBO for free to all of its wireless customers last year.
A picture of "Westworld" from HBO. Source of the image: HBO.
He also recently launched a new free streaming video service AT & T Watch TV, for his unlimited data customers. The service offers approximately 30 live channels and more than 15,000 on-demand programs and films, nearly a third of which come from Time Warner. These new services are clearly intended for Netflix, which may have a hard time countering AT & T's plans to bundle its tubes and content into competing offers. They could also widen the AT & T rift against rivals like Verizon and T-Mobile US .
However, the ambitious plans of AT & T are also expensive. AT & T's takeover of Time Warner has raised its long-term debt to more than $ 180 billion and its bundling of "free" services could hurt its margins. To offset the costs of this expansion, AT & T needs its growing media ecosystem to generate new revenue streams. The most obvious choice would be digital advertising, which could be disseminated in its pay and streaming services.
Companies looking for an alternative advertising platform for Facebook and Google consider AT & T and Verizon viable alternatives. AT & T and Verizon have recently committed to stop selling their location data to outside brokers, but the two companies still operate user data on their own networks to display targeted advertising.
Could AT & T repeat the mistakes?
The acquisition of smaller digital players like AppNexus and Otter Media will complete AT & T's plans to become a powerhouse of digital media, but this expansion could still implode if the company loses the trace of all moving parts. AT & T can leverage the strength of its wireless, wireline, pay and media businesses to keep growing, but at the same time challenging Netflix, Facebook, Google, Verizon and other businesses is a complicated and daunting task.
and Time Warner had similar clustering ambitions when they merged in 2000, but that marriage has collapsed and is widely regarded as one of the worst mergers in history. AT & T could avoid this fate if she plays her cards well, but she could also bite more than she can chew.
Suzanne Frey, executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun owns shares of AT & T. The Motley Fool owns shares and recommends Alphabet (A Shares), Alphabet (C Shares), Facebook and Netflix. The Motley Fool owns shares of Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.
[ad_2]
Source link
