RTL Group is selling its US ad-tech business SpotX to Los Angeles-based sell-side advertising platform Magnite. The transaction is subject to receipt of regulatory approvals and is expected to close in Q2.
The purchase price consists of €468 million in cash and 14.0 million shares of Magnite stock. The agreement implies an enterprise value (100 per cent) for SpotX of €977 million, based on the closing price of Magnite stock as of February 4th 2021.
RTL Group’s shareholders will benefit from the cash proceeds in line with the stated dividend policy. RTL Group acquired a 65 per cent majority shareholding in SpotX for €107 million in 2014, and took full ownership of SpotX in 2017, acquiring the remaining shareholding for €123 million.
“The sale of SpotX is fully in line with our strategy to concentrate on growing our European digital businesses in streaming, advertising technology, digital video and audio as well as our global content business, Fremantle. SpotX is a fantastic business, focused on the United States and with significant potential,” commented Thomas Rabe, CEO of RTL Group. “I would like to thank the management and the whole SpotX team for their outstanding performance, commitment and professionalism. We look forward to participating in the future success of SpotX and Magnite as shareholders in the combined entity.”
“Advertising technology remains a strategic priority for RTL Group,” he confirmed. “To successfully transform our business, two factors are particularly important. One is higher reach, in both linear and non-linear TV. The second is better monetisation of our reach, through targeting and personalisation – and this requires state-of-the-art advertising technology and data management. With our European ad-tech companies Smartclip and Yospace, we have made significant progress in building an open European ad-tech platform and in tapping into the high-growth market of addressable TV advertising.”
In Germany alone, the market for addressable TV advertising is expected to grow to more than €500 million by 2025.
Smartclip, part of Mediengruppe RTL Deutschland, is a leading provider for digital video and TV advertising solutions. The UK-based video technology company Yospace, acquired in 2019 by RTL Group, has developed one of the most advanced technologies for Server-Side Dynamic Ad Insertion (SSDAI) which allows the replacement of existing commercials from a broadcast stream with more targeted, personalised advertising.
According to Magnite, together, Magnite and SpotX will create the largest independent CTV and video advertising platform in the programmatic marketplace. The combined company will provide better support for sellers, create an alternative to the CTV advertising market’s largest players, and greatly improve scale and efficiency for buyers.
“Sellers have been looking for a scaled independent alternative to the giant companies who dominate the CTV marketplace,” said Michael Barrett, President & CEO of Magnite. “The combination of Magnite and SpotX will make this a reality by bringing together the best CTV technologies and teams at a critical time. Ad-supported CTV is just beginning to draw budgets from linear TV and we will be well-positioned to participate in the strongest segment of industry growth for the foreseeable future.”
“As CTV flourishes and the media industry continues to turn to programmatic, there is a huge opportunity for an independent scaled company to offer the single most comprehensive technology in the market,” said Mike Shehan, Co-Founder and CEO at SpotX. “We built SpotX with the mission of becoming the leading global video advertising platform, and our goal is now coming to fruition with Magnite. I am thrilled about what we will achieve together.”
“We are excited about the combination of SpotX and Magnite, two leading CTV advertising providers,” declared Rabe. This transaction allows for significant value creation and upside potential for the parties, sellers and advertisers in the growing CTV market. We look forward to participating in the future success of SpotX and Magnite as shareholders in the combined entity.”
Together, Magnite and SpotX will serve some of the world’s leading programmers, broadcasters, platforms and device manufacturers, including A+E Networks, Crackle Plus, The CW Network, Discovery, Disney/Hulu, Electronic Arts, Fox Corporation, fuboTV, Microsoft, Newsy, Philo TV, Pluto TV, Roku, Samsung, Sling TV, Tubi, ViacomCBS, Vizio, Vudu, WarnerMedia and Xumo.
Magnite’s expanded technical capabilities and teams will be able to move more quickly and cater to a broader set of client needs, including sellers that are newer to the world of programmatic and those who have mature, programmatic-only operations. Likewise, the acquisition will make it easier for brands and agencies to buy premium CTV inventory at scale with standard features and a single, addressable pool of audiences.
Magnite is targeting in excess of $35 million in run-rate operating cost synergies, with more than half of the synergies realised within the first year of combined operations.
Magnite plans to finance the transaction with cash on hand, 14 million shares issued to RTL Group and committed financing from Goldman Sachs. Until the transaction closes, both companies will continue to operate independently.