Michael Barrett, CEO of Magnite.
Magnite
Advertising technology company Magnite is acquiring SpotX, a platform for connected TV (CTV) and video advertising, for $ 1.17 billion in cash and shares, the companies announced on Friday.
Magnite’s shares rose more than 25% after the deal was announced. Magnite helps publishers of websites, apps, CTV channels or other digital media properties to sell space on their media. Now, Magnite may be even more set for a prominent 2021 as he rides at the back of the booming CTV industry. The acquisition of SpotX, a video delivery platform, from parent company RTL Group is expected to help deepen this strategic game.
The companies said SpotX’s purchase price consists of $ 560 million in cash and 14 million shares of Magnite, for a total of $ 1.17 billion based on the closing price of Magnite’s shares on Thursday. .
SpotX was a competitor of Magnite before the acquisition, along with companies like PubMatic, which went public recently. Other competitors include Google, which operates at various links in the supply chain, FreeWheel, owned by Comcast, Index Exchange and OpenX.
The deal is expected to close in the second quarter of this year. The company said it will be the largest independent video and CTV ad platform once the deal is closed. The company serves customers in other formats, including display, cell phone and audio.
CTV is a minor part of Magnite’s overall business, but a great opportunity for growth. (A note from Susquehanna in December wrote that about 80% of her revenue came from desktops and mobile devices, but that “CTV is the crown jewel.”) Connected TV has been a booming industry in the pandemic, which has accelerated dramatically what industry experts thought would be a multi-year transition to CTV. The more people watching at home and streaming movies and shows with ads, the more opportunities there are for ad technology partners to show them ads on platforms.
In turn, Magnite said that his total CTV revenue grew by more than 50% year-over-year in his third quarter of 2020. Magnite also said that the number of advertisers using his audience segmentation resources grew two and a half times between the third quarter in 2019 to the same period in 2020.
Magnite says he has an exclusive relationship with Hulu and its owner, Disney. It also works with other services such as Sling TV, Fubo TV, Philo and Pluto TV, owned by ViacomCBS. It also partners with broadcast channels in its CTV app offerings, including Fox and Discovery.
While advertisers have historically worked with a number of supply-side partners, there is a tendency to limit these spendings to fewer partners. Advertisers and agencies seek to do business with fewer delivery platforms to avoid inefficiencies and the potential for fraud. Buying competitors to increase their scale and inventory can be a way for Magnite to give itself a competitive advantage over its competitors.
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Disclosure: Comcast is the parent company of NBCUniversal, owner of CNBC.