AT&T's Stephens: Data will be key to digital media revenues

Data will be crucial for AT&T to monetize its digital content and ad businesses, according to CFO John Stephens.

Like its rival Verizon, AT&T continues to build out its digital media business as growth in the overall U.S. wireless market stalls. And data will play a huge role in that effort, CFO John Stephens said this morning.

The nation’s second-largest mobile network operator hopes to spend $85.4 billion to acquire Time Warner in a move that includes HBO, CNN, TNT and TBS, as well as Warner Bros. Pictures and Warner Bros. TV Studios operation. And it continues to move aggressively to capitalize on DirecTV, which it acquired in 2015 for $48.5 billion.

Such moves are primarily about scale: The ability to leverage millions of points of distribution of video and other content to a wide variety of devices and digital platforms—and scale will be just as valuable when it comes to compiling and monetizing data.

“You’ve got this tremendous amount of data,” Stephens told attendees at an investors conference, “and when you take that data (you can) say, ‘Hey, Warner Studios, this is what people are actually watching, this is what people are engaging in, this is what they want to do with it. Can you take this information and help me with the production side of how you choose movies and what projects you want to do? Hey, (Warner properties) Turner, Cartoon Network, here is what viewers are actually looking at. Can you take this information and learn more about your business?'”

That information can be used to create optimized content that can then be targeted at the right users based on factors such as their personal tastes and viewing habits as well as which device they’re using at the time. Just as importantly, it can be used to target lucrative ads based on those same factors, Stephens suggested.

U.S. carriers have struggled to compete in mobile content and advertising even as revenues in those markets have ramped up in recent years. According to recent data from eMarketer, Facebook and Google dominate mobile-ad revenues, claiming more than half the market worldwide.

Both AT&T and Verizon face huge hurdles as they begin to vie for parts of the market against massive players in the digital media space. Having a major presence in both the media and wireless worlds will provide access to enormous amounts of data, Stephens said.

The looming question is how well AT&T—or any other wireless carrier—can use that data to unlock revenues.