Outlook Mixed On Implications Of AT&T Time Warner Tie-Up

The $85 billion merger between AT&T and Time Warner would be a historic deal and form a giant, to be sure.  It would offer AT&T control over a cache of valuable content properties—think of all the HBO properties, TNT, CNN, sports franchises, and more.

It would make AT&T, the second-largest wireless carrier in the U.S., an entertainment giant. There are also implications for the TV business, audience targeting, data, analytics, you name it. The dimensions of this deal are staggering. In fact, the prospect of more data-driven ad targeting is one of the opportunities the deal presents, which  could be a boon for programmatic media.

There are many different takes on the deal depending on who you talk to “AT&T is promising that this deal will deliver any content on any device at any time -- the nirvana of convergence,” Jim Nail, principal analyst, Forrester, told RTBlog in an email. Nail will issue a research note on the deal today.  

Nail said the same could be said about the convergence for advertisers. “The potential is there for AT&T to deliver any ad to any individual at any time. AT&T has huge potential to link mobile, broadband, and TV device usage to individuals. With [AT&T] Adworks already doing a lot of addressable ad delivery, especially in the legacy DirecTV world, AT&T has a core technology to accelerate the transition to broader application of addressable advertising,” Nail said.

However, Nail said that he expects this aspect and privacy implications to be key parts of regulators’ review of the deal.

Matt Prohaska, CEO and Principal, Prohaska Consulting, said the deal would allow for some dynamic targeting and creative messaging to be served from a more automated demand source. And, a tie-up would make AT&T/Time Warner No. 4 in the U.S. in total audience aggregation in  all digital media capabilities, across all devices, and the No. 1 opportunity for programmatic TV, Prohaska said.

“When you take AT&T’s AdWorks and the joint venture with DirecTV’s DISH, and couple it with Time Warner’s linear TV programming and Turner’s ad sales team and work in advanced TV—a merger puts it behind Google, Facebook,  Verizon/AOL/Yahoo, among all publishers,” Prohaska said.  

The combined companies will have a leg up in  programmatic TV (PTV) because of the work they’ve done independently. Prohaska’s referring to what Nail mentioned—AT&T/s AdWorks data division, combined with Time Warner’s work on PTV could make it a power player in PTV. Then you combine that with AT&T’s joint venture with DISH and selling PTV into the political realm. “This kind of deal should remove the hurdles [for programmatic TV],” Prohaska said.

An AT&T and Time Warner tie-up could make it No. 1 in advanced TV, Prohaska maintained. Why? Because they can leverage first-party data and couple it with content with some form of automation and TV advertising could be purchased beyond a simple demographic.

“To be able to have addressability at the front end, to identify who’s in the room, who’s watching on any screen, to serve a dynamic ad in real time to the right people,” is the goal, Prohaska said. Both companies have the most  combined experience in leveraging these assets and selling in this way. “They’ve executed the largest number of campaigns and tech assets to tie mobile first-party data at a screen and program level,” he explained.

Brian Wieiser, senior research analyst, Pivotal Research, in a research note issued today, noted that “Time Warner is one of the largest sellers of television advertising in the United States. It is also a decent-sized seller of TV advertising in other markets and of digital advertising within the U.S. AT&T has the relatively small AT&T AdWorks, which primarily focuses on video advertising using the two minutes per hour it controls on its video networks, and also controls digital ad inventory as an ISP. It is probably most differentiated for its addressable advertising products as well as for inventory on NFL."

But despite the company’s scale as a content distributor, Wieser’s note said, “we are skeptical that there is a meaningful opportunity for addressable advertising (the delivery [of] different ads to different set-top boxes or mobile devices during the same ad breaks) at this time, although we do see value to be realized from using related data to inform budget allocations.”

Weiser’s note went on to say that Turner’s advertisers generally need to buy their video/TV ads cost-effectively, “and need units that reach all parts of the country, not only those who are AT&T subscribers. This means that enhanced ad units that AT&T may offer when ads are delivered on its platform are of limited use if those enhanced ad units are not available through other distributors.” This is a nuance that RTBlog hasn’t picked up elsewhere.

The bottom line: If the deal gets by regulators, the impact on digital advertising sales may be that while it may offer some efficiencies (combining ad tech-platforms, and others), the combined company may spend less as advertisers themselves.


1 comment about "Outlook Mixed On Implications Of AT&T Time Warner Tie-Up".
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  1. Matt Prohaska from Prohaska Consulting, October 25, 2016 at 9:45 p.m.

    Big thanks Toby for the inclusion - one slight clarification would be that this deal would remove some hurdles but certainly not all in advancing programmatic tv - plenty of obstacles still in aligning Tech, Targets & Teams, but this would grease a couple key wheels in getting the engines going more on the supply/sales side for advertisers. Also some key advantages as Brian Wieser has mentioned elsewhere in streamlining their own marketing arms - "house" ads just got a lot more advanced...thanks again

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