2. Scoop: AT&T scrambles to sell Xandr as losses mount
AT&T is in discussions to sell its ad unit to Indian ad tech giant InMobi, sources tell Axios.
The big picture: AT&T is scrambling to get the ad unit off of its balance sheet.
- Sources say it's losing tens of millions a year and has been grossly mismanaged by AT&T. Talks are ongoing and could fall through.
Why it matters: AT&T built Xandr under the leadership of then-CEO Randall Stephenson as a way to bring more automation to TV advertising.
- But without the data and inventory from AT&T's media units, which are being spun off, Xandr's platform is not worth all that much.
- For InMobi, one of India's largest ad tech companies, a Xandr deal could give the company more scale at a fire sale price.
Be smart: Xandr made most of its money from transactions it facilitated on the sell-side internally on behalf of AT&T, monetizing WarnerMedia properties and DirecTV addressable ad inventory.
Details: The company has been shopping the unit for months. Several strategic buyers and private equity firms looked at the asset and passed, including Microsoft, Roku and Mediaocean.
There are three major issues with the business, according to conversations with more a dozen senior ad industry executives:
1) The company's financials are in disarray. Sources say the company will consider the fire sale a success if it can get at least $1 billion for the unit.
- Sources familiar with company financials say that price tag is way too high.
- Xandr brings in roughly $300-$380 million in revenue annually and loses between $50-$90 million, depending on how losses are accounted for, according to at least four sources familiar with its numbers.
2) The company has been mismanaged and neglected by AT&T following the departure of several high-level officials.
- Sources say it became clear AT&T's top management had given up on ad tech when it became clear it was giving up on media.
3) Xandr's tech was good, but its execution misfired.