Posts for 'Deals & Financings'

This week Comcast announced its decision to spin out all of its cable networks except Bravo into an independent company. For years cable networks were the financial jewel in the TV industry, driven by both carriage fees pay-TV operators paid to carry them, plus advertising revenues. The shift from analog to digital opened up vast new shelf space which enabled even more cable networks to be created.

But as Colin and I discuss, the Internet and streaming have changed all of that. In the age of cord-cutting, cable networks have become a declining business, and Comcast’s decision to spin off most of its portfolio was inevitable. For a variety of reasons the spin off also paves the way for addition consolidation in the industry.

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Earlier this week the WSJ reported that Walmart is seeking to acquire VIZIO for over $2 billion. Colin and I discuss the likely strategic rationale behind the deal. We both like the benefits to both companies with grabbing a bigger share of CTV ad spending a big upside.

Meanwhile, the Super Bowl scored a record 123.4 viewers across all platforms according to Paramount. The company also said it was the most-streamed Super Bowl in history, but didn’t disclose how many streamers there actually were. We dig into the numbers and Colin provides his estimates.

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This week we interview Jeff Weber, CEO of Zone TV, which was just acquired by Block Communications. Zone TV has been operating for 22 years, and has recently been focused on streaming and FASTs. Jeff explains his motivation for the deal, the evolving market for FASTs and what’s next.

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This week on Inside the Stream nScreenMedia’s Colin Dixon and I interview Geir Skaaden, EVP and Chief Products and Services Officer at Xperi, which recently acquired Vewd to push further into the TVOS market. Geir walks us through the deal’s rationale and the value of providing an independent TVOS platform to TV OEMs who can retain a share of post-sale streaming economics. Geir also explains how Xperi’s TiVo+ service that includes 160 FAST channels enhances the company’s appeal as a partner for TV OEMs.

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This week Colin and I discuss the future integration of Discovery+ and HBO Max. New details were shared this week by the company’s chief financial officer at an industry conference. Specifically, Colin sees strong upside in a discounted bundle of the streaming services and the eventual integration of their respective technology platforms the CFO described. However, he’s skeptical of an eventual plan to actually merge the services. We discuss the pros and cons.

Separate, we dig into a new test by Netflix to potentially charge subscribers an extra fee for out-of-house users.

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Buy-side ad management platform Innovid has announced it will acquire TVSquared, a measurement platform for linear, connected TV and addressable TV. The deal’s value is $160 million, including $100 million cash and the remainder in stock. The companies said that TVSquared had 2021 estimated revenue of $20-22 million, meaning the Innovid is paying about 8 times revenue. The deal is expected to close in Q2.

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Lots of industry executives’ heads snapped to attention around 10:30am Eastern Time on Tuesday when the Wall Street Journal posted exclusively that Reese Witherspoon’s media company Hello Sunshine was being majority acquired for $900 million by a new company being formed by former Disney executives Kevin Mayer and Tom Staggs, which itself is being backed by the private equity behemoth Blackstone Group.

Mine was one of those heads snapping, for a variety of reasons. Foremost, $900 million is a whole lot of money for what on the surface seems like *basically* a production company, not to mention one that was only just started 4 1/2 years ago, which therefore means it doesn’t have a deep, monetizable library (which is what justified the recent Amazon-MGM deal). True, Ms. Witherspoon is one of the savviest players in the industry, and her Hello Sunshine business partner and company CEO Sarah Harden has strong industry experience and is also a Harvard Business School Baker Scholar (as an HBS grad myself, but far from a Baker Scholar, which is the top 5% of your 800-person class, I can personally attest that achieving that ranking puts you in the ultimate elite).

Still….$900 million? Yes, $900 million. I don’t have any insider info, but it wouldn’t surprise me if the company generates $50-$100 million of revenue in 2021, max. So the valuation is likely in the 9-18x revenue range…who knows it could even be more. That’s a rare tech industry valuation these days (for context, Roku's mighty stock has bounced around 12x revenue recently).

The WSJ reported $500 million of the $900 million will go to cash out existing investors and the balance will be retained by Ms. Witherspoon, Ms. Harden and other company executives, to be rolled over into the new company. That’s a huge tell about how big they think the resulting company can ultimately be worth and what the IPO or SPAC will look like. But that’s just part of the story….here are my 5 takeaways:

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Mediaocean is acquiring Flashtalking, an independent ad-serving and analytics provider. Deal terms were not disclosed but the Wall Street Journal reported the valuation at $500 million. Although Flashtalking offers open web ad serving and dynamic creative optimization (DCO) for the buy side, its fastest-growing business is connected TV ad serving and analytics, Mediaocean’s CMO Aaron Goldman told me in a briefing about the deal.

Aaron noted that CTV is also the fastest-growing part of Mediaocean’s business as well, and that the combined companies will be able to do “ad serving and creative optimization along with audience planning and other workflow for both the buy side and the sell side.” A year ago Mediaocean acquired 4C, giving the company a key role in walled garden ad serving and optimization. Aaron said Flashtalking fills a big remaining gap in its portfolio focused on CTV on the open web for the buy side.

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

This week we’re pleased to have Zvika Netter, CEO and Co-Founder of Innovid, as our guest. Innovid has been in video advertising for 14 years, evolving from an early player in interactive ads to become the leading delivery and measurement platform for brands and agencies. Importantly, as Zvika explains, Innovid has held fast over the years to being independent - not involved with any media buying or selling, which he views as a clear differentiator.

Late last week Innovid achieved a major milestone, by filing to go public via a SPAC. Zvika explains the decision process, and his points are a great counterpart to our conversation last week with JW Player’s Dave Otten, who also considered a SPAC, but decided instead to raise a large private round.

But the bulk of our time with Zvika is spent drilling into CTV, what’s driving the business, the key challenges, how they’re being addressed, what’s ahead, and of course, what role Innovid is playing. For anyone who wants a really deep dive into CTV, the interview is an intimate window into the CTV ad buyers’ perspective and how this is influencing the future shape of the industry.

(Note, Colin and I will be taking a break next week for the holiday, so we’ll be back in a couple of weeks)

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

Yesterday, JW Player announced a $100 million financing from LLR Partners. On this week’s podcast, we’re privileged to have JW’s CEO and co-founder Dave Otten joins us as a guest for a wide-ranging discussion.

Dave provides an update on JW and its competitive differentiators including its ease of deployment and focus on the “monetization layer” (i.e. helping its publishing partners drive revenue from their video assets). Importantly, Dave dives deeply into JW’s data strategy, and how being the video player for such a massive range of publishers gives it critical insights into usage and provides contextual data that can then be leveraged for improved monetization. Dave also gets into why he’s bullish on live, subscription-based models, connected TV, where the industry is heading and much more.

Dave explains the new financing round and how JW decided to go this route instead of doing a SPAC/IPO which are both very popular (just yesterday Innovid and Buzzfeed announced SPAC deals, here and here).  

It’s a fascinating interview, which I highly recommend for anyone interested especially in the role of data, and what’s ahead for the video industry.

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The Wall Street Journal reported yesterday that the FTC will be the agency to review Amazon’s acquisition of MGM. A review was expected, either by the Justice Department or the FTC. The plot thickener here is that the brand new FTC chair is Lina Khan, a law professor and journalist who was confirmed by the Senate last week in a bipartisan 69-29 vote. Importantly Khan is a critic of Amazon and Big Tech, having written a widely circulated article, “Amazon’s Antitrust Paradox,” in 2017.

The article argues, in a nutshell, that the current approach to antitrust, which is focused on “consumer welfare,” is insufficient to oversee platform-based businesses like Amazon which can use predatory pricing for their overall competitive benefit. Rather, Khan believes that antitrust oversight needs to be driven by gauging the concentration of market structures and competitive process, which she writes is a more traditional approach. Khan shares five factors for how to evaluate the competitive process.

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’a Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

After weeks of rumors, Amazon officially announced its acquisition of MGM for $8.45 billion. On this week’s podcast Colin and I explore what the deal means to Amazon and to its Prime members. Colin sees benefits to Amazon beyond bolstering Prime member retention and acquisition, whereas I think these are the deal’s primary rationale.

Nearly five years ago, Jeff Bezos articulated the “flywheel” dynamic of Prime - how video contributes to member acquisition, usage and retention (jump to the 37 minute point in the video interview). I’m guessing that Amazon did extensive consumer research on different parts of the MGM massive catalog to understand how filtering them into Prime could move the membership needle.

While the James Bond franchise has received a lot of attention, the MGM catalog includes 4,000 movies and 17,000 TV show. These, plus the potential spinoffs or as Amazon’s Mike Hopkins put it - “the treasure trove of IP in the deep catalog that we plan to reimagine” - give Amazon a huge amount of programming optionality for years into the future. It will be fun to see how Amazon curates all of this programming into Prime.

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

AT&T is spinning off WarnerMedia, closing a chapter on its ill-advised media foray that cost the company billions of dollars. VideoNuze readers know that I thought the acquisition of Time Warner did not make sense from the beginning as any hoped-for benefits were illusory and it was based on a backward-looking approach that distribution and content belong together. As this became more evident, AT&T, groaning under a mountain of debt and faced with heavy upcoming investments in 5G and streaming to stay competitive, decided on a U-turn in strategy.

In today’s podcast Colin and I dig deeper into all of this and also consider the prospects for Discovery-WarnerMedia. We both believe it makes a lot more sense than AT&T-WarnerMedia but we’re curious how broad the appeal will be for a bundle of HBO Max and discovery+ which is the most likely route for the deal to work out. The devil is always in the details for whether these big deals actually pay off, and interestingly, once again, company executives were vague about the specifics.

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AT&T is spinning off WarnerMedia to Discovery, just 4 1/2 years since it announced it was acquiring Time Warner (as WarnerMedia was then known) and just three years since the deal actually closed, following exhaustive regulatory challenges and litigation. For AT&T, the U-turn in strategy is a tacit admission that it didn’t realize the benefits it touted as the rationale for the deal.

That’s no surprise because, as I said at the time, the benefits were illusory and were completely out of synch with realities that broadband, streaming and connected TV were driving. The press release announcing the Time Warner acquisition was filled with corporate gobbledygook such as “The future of video is mobile and the future of mobile is video” and “Combined company positioned to create new customer choices - from content creation and distribution to a mobile-first experience that’s personal and social.”

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Extreme Reach is acquiring Australia-based Adstream to create a comprehensive platform that will streamline workflows for global brands activating video campaigns across devices and services. The combined company is addressing pain points for brands that have arisen from the fragmentation of video consumption. There is a lot more complexity because every ad that is served must be properly formatted to deliver an appropriate user experience and tracked so that talent is accurately compensated.

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Last Friday’s announcement that Magnite is acquiring SpotX from RTL Group for almost $1.2 billion was further evidence of connected TV advertising’s momentum and the combined company’s market opportunity. Considering Magnite’s pro forma financial results with eMarketer’s forecast of CTV ad revenue shows how much potential growth lies ahead for the combined company.

In its release, Magnite said the combined company would have $42 million of pro forma CTV ad revenue ($15.3 million from Magnite and around $27 million from SpotX) in Q4 ’20. Magnite also said the $42 million would have represented around 34% of Q4’s revenue for the combined company. It further said the combined company would have had pro forma revenue for 2020 of $350 million, so applying the same 34% proportion, the combined company would have had approximately $119 million in CTV revenue in 2020.

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Peacock has obtained exclusive streaming rights to WWE Network in the U.S. in a multi-year deal, the companies announced today. WWE Network will be added to Peacock Premium on March 18th.

The exact details of the migration plan for WWE Network subscribers weren’t shared. WWE Network has 1.1 million domestic subscribers who pay $9.99 per month. They would be saving half of that because Peacock Premium is $4.99 per month, with ads. Plus these subscribers would also get access to the full Peacock Premium library which is over 30K hours of content.

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Video ad platform SpotX has made an undisclosed investment in SpringServe, an independent OTT and connected TV ad server, extending an existing partnership. SpotX is owned by RTL Group; it says it reaches 50 million CTV households per month and it acquired server-side ad insertion provider Yospace last year. SpringServe was founded in 2015 and serves publishers and content owners.

The deal underscores how viewership is moving to OTT and CTV, driving publishers and content owners to seek stronger monetization of every view and manage their inventory in more sophisticated ways across programmatic and direct sold. I reached out to both companies for more details on what the deal will mean for them, the broader market and their respective roadmaps going forward as viewership of OTT and CTV accelerates. Below is what they shared with me:

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Now that NBCU has revealed its launch plan, pricing and forecast for the Peacock streaming service, some quick math shows how much Comcast missed out on by not buying out Disney’s stake in Hulu. VideoNuze readers will recall this is what I proposed back in May 2018 (“Why Comcast Should Take Control of Hulu”) when Comcast and Disney battled to take over Fox. With Disney and Comcast each owning around 30% of Hulu at the time, as well as Fox owning around 30% and AT&T 10%, it was clear that whoever ultimately bought Fox would assume majority ownership of Hulu.

At the time I articulated all the reasons why, as part of any deal Comcast might make to step away from Fox, it should negotiate to take control of Hulu. Instead Comcast prioritized Sky (which it ultimately bought for $39 billion) and made a subsequent deal with Disney to sell off its Hulu stake. Disney also acquired AT&T’s approximately 10% stake in Hulu, making it Hulu’s 100% owner. Taken together, the moves make Disney CEO Bob Iger look like a genius, even if Disney was overcoming a late entry into the streaming party.

Comcast could have likely acquired the 70% or so of Hulu it didn’t own for around $13-15 billion, based on the $5.8 billion Disney ended up paying Comcast for its 30% share (Comcast also has an upside based on Hulu’s valuation  in 2024) Comcast could have done this in reverse. All of this is assuming Disney would have sold its share to Comcast. My hunch is there was a deal to be had if Comcast had said it wouldn’t bid up Fox’s valuation, in turn saving Disney billions of dollars. All in all, it would have been a very modest deal for a company Comcast’s size.

I think all of my original reasons why Comcast should have acquired Hulu still stand up pretty well a year and a half later. But now some quick math also reveals that acquiring could have generated nearly $6 billion/year for Comcast and NBCU and the springboard it could have become for Peacock, before even factoring in cost savings. I suppose it is worth keeping in mind that had the deal gone the other way, Comcast wouldn’t have received the $5.8 billion for its share in Hulu, but then again Comcast didn’t need the cash, so does that really matter?

In my view there are 5 key things to understand, 3 that relate to subscription revenue and 2 that relate to advertising revenue.

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I’m pleased to present the 479th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

Q2 was a very tough quarter for pay-TV operators, with cord-cutting soaring to a record level. This week we dive into the numbers and discuss why things have changed so dramatically since Q2 ’18. Then we transition to the Viacom-CBS deal, which was formally announced this week. Colin sees substantial upside, leveraging Pluto TV, which Viacom acquired earlier this year.

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