(Reuters) — AT&T said on Monday it would buy online advertisement exchange company AppNexus, less than a month after the No. 2 U.S. wireless carrier closed its $85 billion deal to acquire media company Time Warner.
AT&T did not disclose the AppNexus deal value. The Wall Street Journal, citing sources, reported last week the company was in talks to buy AppNexus for about $1.6 billion.
AppNexus, which runs a digital platform for advertisers to purchase online ads, will become part of AT&T advertising & analytics, as the U.S. telecom company aims to expand its online advertising to better compete with Alphabet Inc’s (GOOGL.O) Google and Facebook Inc (FB.O).
The company will start selling targeted ads for Turner networks such as TNT and CNN “in short order,” John Stankey, chief executive of newly named AT&T unit WarnerMedia had said last week.
“Think of this as buying a sofa to furnish the new house (Time Warner) they just bought,” said Moffett Nathanson analyst Craig Moffett, adding that AppNexus will add muscle to AT&T’s strategy of making its ads more targeted.
New York-based AppNexus, which claims over 11.4 billion impressions transacted daily, extends AT&T’s advertising and analytics’ footprint into Asia-Pacific, Australia, Europe, and Latin America, the company said.
“AppNexus would provide the company with one of the largest digital ad exchanges,” Barclays analyst Amir Rozwadowski said in a note.
The acquisition also adds to AT&T’s ad-supported premium video content portfolio including WarnerMedia’s Turner Networks and Otter Media, the company said.
Last week, AT&T revealed its plans for fewer commercials while using mobile phone and video data supplied by customers who have given permission to sell targeted advertisements.
“AT&T currently has two minutes of ad space per TV hour to sell on satellite service DirecTV. Time Warner’s Turner cable channels, which include CNN, TNT and TBS, will give it about 14 more minutes per hour,” Rozwadowski said.
The transaction is expected to close in the third quarter of 2018.