Michael Barrett, CEO of Magnite.
Magnite
Advertising player Magnite is acquiring SpotX, a connected TV (CTV) and video advertising platform, for $ 1.17 billion in cash and stock, the companies announced Friday.
Magnite stock 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 poised for a standout 2021 as it rides on the back of the booming CTV sector. The acquisition of SpotX, a video offering platform, from parent company RTL Group should help deepen that strategic game.
The companies said the SpotX purchase price consists of $ 560 million in cash and 14 million shares of Magnite stock, for a total of $ 1.17 billion based on the closing price of Magnite stock as of Thursday.
SpotX was a competitor of Magnite before the acquisition, along with companies such as PubMatic, which recently went public. Other competitors include Google, which operates at multiple links in the supply chain, FreeWheel, owned by Comcast, Index Exchange and OpenX.
The deal is expected to be completed in the second quarter of this year. The company said it will be the largest independent CTV and video ad platform once the deal closes. The company serves customers on other formats, including display, mobile and audio.
CTV is a smaller part of Magnite’s overall business, but offers great growth opportunity. (A note from Susquehanna in December wrote that about 80% of revenue came from desktop and mobile, but that “CTV is the crown jewel.”) Connected TV is a white-hot sector in the pandemic, which has accelerated dramatically some industry experts thought it would be a multi-year transition to CTV. The more people go home and stream ad-supported movies and shows, the more opportunities there are for ad tech partners to show them ads on platforms.
Magnite, for its part, has said that its total CTV revenues in the third quarter of 2020 are up more than 50% year over year. Magnite also said the number of advertisers that its audience targeting features will be 2019 to the same period in 2020.
Magnite says it 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 on their CTV app offering, including Fox and Discovery.
While advertisers have traditionally worked with a slew of suppliers on the supply side, there has been a trend to limit that spend to fewer partners. Advertisers and agencies want to do business with fewer offering platforms to avoid inefficiencies and potential fraud. Buying from competitors to increase its scale and inventory could be one way Magnite gives itself a competitive advantage over its competitors.
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Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.