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AT&T scrambles to sell ad tech unit 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, called Xandr, 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.

  • Xandr was created in 2018 through the $1.6 billion acquisition of AppNexus, an ad exchange, and a smaller acquisition of Clypd, a TV ad tech company. 
  • Last year, the company said it would combine Xandr with WarnerMedia, shortly after the company’s CEO Brian Lesser, an ad tech veteran, departed. 

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 functioned as both a buy-side and a sell-side ad platform. But it 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. 

  • Regulators approved a spin-off of DirecTV last Friday. AT&T is planning to spin outWarnerMedia into a new company with Discovery. Sources say it’s telling that Xandr was not included as a part of that deal.

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: