Barclay: Verizon's Purchases Won't Grant an Immediate Payday

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Verizon and AT&T have both been looking towards the future lately, which is away from the wireless industry. With the wireless industry becoming more and more competitive, and the smartphone market plateauing, the two companies have been looking at ways to continue to grow and drive in more money. And the next step for them is becoming a media company. AT&T is arguably already a media company, with their own U-verse cable company and then picking up DIRECTV last year. Now they are aiming to pick up Time Warner for $80 million, a deal that has not been approved and President-elect Trump has already said he would block the deal. Verizon on the other hand has been picking up companies like AOL, Vessel and Yahoo to build their media empire.

Barclays analysts wrote in a research note today that Verizon's strategy in buying these three companies, appears to be a way for the company to watch consumption trends and change their strategy to fit these trends. This is a fast-moving market, so it's important to identify trends quickly and move on them. Barclays analysts believe that their strategy is to "address how it believes media consumption will evolve and fit with its broader expectations around network evolution." Verizon is also likely to "embrace OTT distribution and create a framework in supporting new content options that can possibly rival those provided by cable operators."

Verizon isn't just looking to be a media company though, they are also looking to become the third largest advertiser. Right now, Google and Facebook are the top two advertisers. Which should surprise no one, given their platforms. And with Verizon having both AOL and Yahoo in their pockets, two companies that were and still are, fairly large advertising companies, they can definitely have a run at the number three spot. Barclays notes that Verizon will likely "face tough competition and high execution risk, in the mid-term we believe its strategy can still benefit from a large and growing digital ad market, even if it remains in a distant third position. They continued by saying that this strategy likely won't bring in a huge pay day for Verizon in the next several years.

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