Commentary
Past Billion-Dollar Deals Raise Big Questions Now
- by Wayne Friedman , Staff Writer, September 18, 2020
Many think about this when considering AT&T's deals in recent years. Two -- DirecTV and AppNexus (now Xandr) -- came into focus.
In light of news reports about these businesses, John Stankey, CEO of AT&T was perfectly, shall we say, reflective.
The question from a Goldman Sachs analyst with reference to DirecTV and Xandr, which could be on the market, according to reports: How do you define which businesses are or are not the most strategic to your future?
Stankey: “Things are less contained and maybe there’s a little bit more rumors leaking out on whether or not that’s something that’s going to come to fruition ... I’m not going to comment on anything, specifically on any unique transaction.”
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OK. Maybe the answer is about market share, then -- especially in considering DirecTV -- one of the strongest traditional pay TV providers for years -- has a much smaller share of the entire business. But don’t write it off yet.
Stankey: “How we’ve traditionally defined things like share is no longer sufficient, and we can be very successful having 25%, 28% share in a particular market we served and run great businesses. But moving forward, I don’t know if that’s going to be the basis of success.”
He then alludes to new businesses and products with a different price point. “We really need products and services that may have different characterizations -- characterizations of the buy-in ... that’s why HBO Max is so attractive.”
We get it. Have one foot in the old, while moving onto the new.
For Xandr, it perhaps looks to be a different issue -- building an advanced advertising business that not only sells inventory from AT&T’s own Turner ad-supported networks but non-AT&T owned networks.
And there’s a rub. How do you convince cable TV networks to let a competitor's ad platform unit -- sister company to Turner cable networks -- sell its inventory? To its credit, Xandr has signed up Disney and AMC Networks linear TV inventory recently among others — no doubt with lot of competitive protections in place. No doubt sharing some of AT&T's 170 million customer interactions is a good selling point.
Maybe all this has Xandr looking for ad deals around tough-to-sell inventory in dayparts few are interested in. Still, the whole frenemy positioning has never been taken lightly by media companies.
Major TV/movie studios whose sister companies include TV networks do sell -- from time to time -- programming to competing TV networks. But it is getting to be an increasingly rare occurrence.
Perhaps Xandr's original thinking was to grab just a small piece, lending a helping hand to those that need it, all in an overall industry effort to boost higher=priced advanced ad inventory.
It that all one might need?
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
The answer to your question, Wayne is that you must show your would be "partner" that you will be able to sell a ton of "addressable" time in their program content and give them much more money in return for alowing you access than they would get by selling the time themselves. So far, that's a proposition that nobody has been able to sell with any degree of credibility. Of course, you could guarantee the "partner" network the income---providing it's a meaningful amount---even if you aren't certain that you can make such sales in sufficient quantity---but that's a very high risk gambit that few sensible sales organizations will want to try---even if management OKs it. Last, but not least, very few networks want to muddy the waters as well as tarnishing their image by alowing somebody else to sell time in their "premium" content---except for last minute, distressed merchandise GRPs caused by sudden cancellations or time in almost zero rated late, late night fare that is a bother for their sales force to handle. So the solution my be to simply buy one or more networks and see if you can convert them into full or partial "addressable TV" channels---but, that will be very costly and certainly a super high risk ploy.