AT&T said Monday that it is buying the digital advertising company AppNexus, in an effort to hasten the growth of its new media empire.
AppNexus gives the telecom giant control over one of the world’s largest Internet advertising exchanges, which marketers use to buy ad space from online publishers. It could help AT&T challenge Google and Facebook – the two giants of online advertising – by bolstering its ability to analyze customer behavior and advertise against content produced by Time Warner, now renamed WarnerMedia.
AT&T didn’t disclose the terms of the AppNexus deal, which came days after AT&T completed its landmark merger with Time Warner. AppNexus sought a valuation of $2 billion when it filed confidentially for an IPO in 2016. The acquisition is expected to close in the third quarter of 2018.
AT&T’s aggressive expansion underscores the speed at which the telecom industry is changing. No longer satisfied with selling access to voice services, mobile data and home Internet, providers such as AT&T are increasingly seeking control over digital media content that they can use to set themselves apart from the competition. The trend reflects a mind-set, common among Silicon Valley companies, that customer attention is a valuable product.
Companies across the broadband industry are catching on. A day after AT&T gained approval from a federal judge to purchase Time Warner, Comcast announced it was seeking to outbid Disney for cable networks and film studios controlled by 21st Century Fox. Verizon in recent years has also made moves to acquire content, purchasing AOL and then Yahoo in two separate deals that sought to monetize their respective technologies and user bases.
The feeding frenzy has also spurred more traditional types of mergers, including T-Mobile’s proposed acquisition of Sprint, the nation’s third- and fourth-largest wireless networks. In an interview last week, Sprint CEO Michel Combes said he believes the combined company will face similar pressures to acquire digital content, whether by buying media properties or licensing their programming.
“Do I believe that moving forward, all the distributors – meaning the guys like us – will need to secure access to content? The answer is yes,” said Combes, who was appointed in May and is running day-to-day operations at Sprint while the T-Mobile merger is under review.
That deal could face regulatory scrutiny: Policymakers have previously signaled that competition is best preserved when consumers have access to at least four national cellular networks. But officials at both companies have argued they cannot hope to compete alone against an enlarged AT&T and Verizon without bulking up themselves.
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