Michael Barrett, CEO of Magnite.
Magnita
Advertising technology player Magnite acquires SpotX, a platform for connected television (CTV) and video advertising, for $ 1.17 billion in cash and shares, the companies announced Friday.
Magnita shares rose more than 26% after the deal was announced. Magnite helps publishers of websites, applications, CTV channels or other digital media properties to sell space to their media. Now, Magnite may be even more prepared for an outstanding 2021 as it moves to the back of the growing TVC sector. The acquisition of SpotX, a video supply platform, from the parent company RTL Group should help to deepen this strategic game.
The companies said SpotX’s purchase price consists of $ 560 million in cash and $ 14 million in Magnite shares, for a total of $ 1.17 billion, according to the closing price of the shares in Magnite from Thursday.
SpotX was a competitor to Magnite before the acquisition, along with companies like PubMatic, which recently went public. Other competitors are Google, which operates on several 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 television advertising platform in the programmatic space once the deal is closed. The company serves customers in other formats, including screen, mobile and audio.
CTV is a smaller piece of Magnite’s global business, but it’s a great growth opportunity. (A note from Susquehanna in December wrote that about 80 percent of her income came from desktops and cell phones, but that “CTV is the jewel in the crown”). it would be thought to be a multi-year transition to CTV. The more people there are at home and broadcast movies and ad programs, the more opportunities there are for advertising technology partners to show them ads on platforms.
For its part, Magnite said its total television revenue grew more than 50% year-over-year in its third quarter of 2020. Magnite also said the number of advertisers using its targeting features per audience grew twice and a half between the third quarter 2019 to the same period of 2020.
Magnite says she has an exclusive relationship with Hulu and its Disney owner. 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 application offerings, including Fox and Discovery.
Although historically advertisers worked with a large number of supply partners, there has been a tendency to limit this spending to fewer partners. Advertisers and agencies are looking to do business with fewer supply platforms to avoid inefficiencies and the potential for fraud. Buying competitors to increase their scale and inventory could be a way for Magnite to give itself a competitive edge over its peers.
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Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.