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Friday, September 19, 2014

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  • Comcast Has Acquired FreeWheel for $375 Million Cash

    Comcast has acquired video ad manager FreeWheel for $375 million cash, validating reports that have been circulating since the weekend, but at a higher valuation than rumored. The deal is subject to customary regulatory approvals and is expected to close in a couple of weeks. FreeWheel will become an independent operating subsidiary within Comcast, comparable to how thePlatform and STRATA, two prior Comcast acquisitions, function. FreeWheel's 3 co-founders, Doug Knopper, Jon Heller and Diane Yu have signed multi-year employment agreements.

    In a blog post today and in a conversation I had with Doug, he stated that the acquisition is all about helping FreeWheel accelerate its vision of unifying TV and video advertising across all screens. Doug sees the deal as a huge positive for customers as FreeWheel will have access to greater resources to pursue its roadmap. The FreeWheel team obviously feels very strongly about the fit with Comcast as it didn't engage with any other potential acquirers.  

    For Comcast, the deal is yet another sign of its intentions to fully blend traditional linear TV with on-demand, IP-delivered video. Comcast has been pursuing this agenda through initiatives like its X1 set-top box, X2 interface, Xfinity TV Go app, Streampix, expanding VOD library, download-to-own store, etc.

    With FreeWheel, Comcast will, over time, be able to bring dynamic, targeted advertising from online into the TV realm. To the extent that Comcast/FreeWheel can help better monetize traditional TV views, this is clearly a positive. On the flipside, any network or other pay-TV operator (such as DirecTV which uses and is an investor in FreeWheel), may be concerned that, absent a strict Chinese wall, Comcast would potentially have deep access to data about its viewership patterns. This insight would in turn give Comcast extra bargaining power in carriage negotiations. I broached this with Doug, but he doesn't see it as an issue since Comcast and subsidiaries already license Comcast technologies to others in the industry without issue.

    Net, net, the Comcast-FreeWheel deal underscores how the concept of traditional TV is melting away, replaced by an anywhere/any device viewing model that creates significant opportunities and challenges for advertisers.

     
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