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Sept 1 (Reuters) - AT&T Inc is exploring a sale of its advertising unit Xandr, according to a person familiar with the matter, as it appears to reverse expensive plans to transform from a wireless carrier to a media and advertising powerhouse.
AT&T has spent more than $135 billion to stitch together a media company, satellite TV provider and advertising platform to grow its business. But it has faced skepticism from investors.
The discussions come as AT&T’s new chief executive, John Stankey, reviews the conglomerate’s assets in an attempt to reduce nearly $152 billion in net debt.
The talks on selling Xandr are in the early stages and may not necessarily result in a sale. The company intends to keep Crunchyroll, the popular anime streaming site, as it fits its content strategy, the source added.
AT&T declined to comment. Shares of the company were down 1.5% at midday on Tuesday.
The Wall Street Journal first reported the potential sale earlier on Tuesday.
Selling Xandr, “really puts a nail in the coffin of this whole idea that there is money to be made for [telecom companies] in marketing,” said Tal Chalozin, chief technology officer and founder of ad tech firm Innovid. AT&T rival Verizon Communications Inc has also struggled to make money from its acquisitions spree that led to the formation of Verizon Media.
AT&T launched Xandr in 2018 after buying ad tech firm AppNexus for $1.6 billion to offer partners a better way to target ads at consumers using data collected from phone, internet and TV services.
A sale of Xandr would be particularly difficult right now, given its large size and growing regulatory concerns in the industry, said Ari Paparo, chief executive of ad tech firm Beeswax and a former executive at AppNexus.
“There’s a lot of doubt and skepticism over the digital ad space,” he said. “That puts a lot of question marks on the business.”
Ad agency executives who spoke with Reuters earlier this year have viewed Xandr’s progress as slow, citing few new product offerings for advertisers since its launch.
Xandr is continuing to work on new deals with other media owners to sell portions of their ad inventory through Xandr’s marketplace, according to a person familiar with the matter. (Reporting by Krystal Hu in New York; Sheila Dang in Dallas, and Munsif Vengattil in Bengaluru Editing by Kenneth Li, Matthew Lewis and Dan Grebler)
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