Dive Brief:

• In its first full quarter after acquiring Time Warner, AT&T reported “strong growth” for its data-driven ad unit, which was recently renamed Xandr, with ad revenue growing 34% year-over-year in Q3 for a total of $445 million, AdExchanger reported. Overall, the company missed Q3 earnings projections and WarnerMedia was not a focus on its earnings call, according to Deadline. 
• The recent acquisition of AppNexus contributed to the growth for Xandr. AT&T CEO John Stephens said AppNexus, along with the company’s video ad inventory and “significant advertising slots,” will help the company grow its ad business by providing flexibility to advertisers across linear TV, DirecTV Now, OTT and wireless areas. 
• AT&T’s satellite TV division DirecTV reported a net loss of 359,000 subscribers for Q3, more than projections of 245,000, according to CNBC. DirecTV Now, the direct-to-consumer streaming service, added 49,000 subscribers, also lower than the 296,000 subscribers DirecTV Now added last year and the 287,000 analysts were predicting, according to FactSet research cited by CNBC. 

Dive Insight:

AT&T’s recent acquisition of App Nexus and launch of Xandr are paying off for the company but it's too soon to tell what the impact will be of the Time Warner acquisition. As AT&T works to compete with Google and Facebook in the digital sector, the company is leveraging Xandr to better integrate data, premium content, advanced ad technology and multichannel distribution. Xandr is partnering with Altice USA and Frontier Communications to aggregate and sell their national addressable TV ad inventory, which is a step toward creating a national TV marketplace for advertisers and premium content publishers. 

As traditional TV viewership is evolving — including satellite viewing, as evidenced by the decline in DirecTV subscribers —​ Xandr is a key part of AT&T’s future growth in the digital advertising space. AT&T is planning to combine Time Warner's 170 million subscribers with WarnerMedia content and grow its targeted ad business and build out partnerships, according to AdExchanger. 

Consumers are embracing streaming services and cutting the cord at a higher rate than experts previously anticipated. AT&T has said it plans to launch its own streaming service to compete with Netflix later this year, according to CNBC. This could be a risky move, as the marketplace becomes increasingly crowded and consumers report being overwhelmed with all the different streaming options.