Late yesterday Australian telecom provider Telstra acquired online video publishing platform Ooyala, by increasing its ownership stake from 23% to 98%, through an investment of $270 million (the purchase of the incremental 75% stake implies a total enterprise valuation of $360 million. Though Ooyala's revenues are undisclosed, as one point of comparison, Brightcove's current public valuation is approximately $200 million).
Subsequent to the deal's closing Ooyala will become a subsidiary of Telstra and will operate as an independent business with existing management and brand. This is a model that has worked successfully for thePlatform, another major OVP which was acquired by Comcast back in 2006. Ooyala will become part of Telstra's new Global Applications and Platforms group, which is investing in companies that are "adjacent to Telstra's core business, where software disrupts traditional business models."
I'm pleased to present the 238th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week we talk about the now fizzled Fox-Time Warner deal and the imperative of investing for the future. As I wrote, I think the deal's collapse is actually a positive outcome for Fox, as it was a risky bet to double down on the saturated and stressed pay-TV ecosystem. A more forward-looking, growth-oriented investment strategy would capitalize on changes being driven by online and mobile video.
Two of the biggest changes are among viewers and advertisers. Illustrating how younger viewers' attitudes are quickly evolving, we discuss new data showing YouTube stars are now more influential among American teens than Hollywood celebrities.
Meanwhile, underscoring how advertisers are now able to take their messages directly to consumers, we note that Nike dominated World Cup branded video viewership even though it wasn't even an official event partner. Another great example is Acura's creative sponsorship of Jerry Seinfeld's "Comedians in Cars Getting Coffee."
Last but not least, this week brought news that Netflix's subscription revenue for Q2 '14 edged out HBO's for the same period - an important milestone showing how OTT business models are coming of age.
Listen in to learn more!
Click here to listen to the podcast (18 minutes, 47 seconds)
Late yesterday, Fox retracted its $80 billion proposed acquisition of Time Warner. The combination of a recalcitrant Time Warner, falling Fox stock price and need to significantly sweeten the deal all clearly deterred Rupert Murdoch from further pursuit.
From my perspective, this is a good outcome for Fox. Why? Because the deal was mainly premised on certain key assumptions about the pay-TV business that, in reality, are unlikely to play out as Fox hopes. It was dubious that Fox was ready to pay $80 billion for Time Warner and not even gain any entry to new growth markets, but that was basically the case.
European broadcast and entertainment giant RTL Group has bought a 65% stake in online video ad platform SpotXchange for $144 million, plus an earnout based on performance and an option to buy the remaining 35%. SpotXchange will continue to operate as an independent company, with CEO Mike Shehan saying that funds will be used to accelerate growth, particularly in Europe.
Last week's acquisition of LiveRail by Facebook was the latest in a busy year of M&A deals and financings in the video industry. Across the spectrum of advertising, content, distribution, mobile and management/publishing, bigger industry players continue positioning themselves for the online/mobile video future, while innovative startups filling key needs continue getting lots of attention from investors.
I keep pretty close track of all the activity on VideoNuze and below is a summary of the 2014 video industry M&A and financings that I'm aware of (apologies in advance, I'm sure I've missed a few; if so, send over and I'll update). I've included links to appropriate coverage or press releases.
Categories: Deals & Financings
In case you missed it, last Thursday Twitter acquired SnappyTV, a cloud-based video platform that allows content providers and brands to quickly create clips from live video and then distribute them through social media. It's a highly strategic deal for Twitter, further positioning the company to "win the moments that matter" for both audience and monetization.
"Win the moments that matter" is a phrase I first heard from YouTube executives a couple of years ago and it has great relevance for the Twitter-SnappyTV deal. The massive trends around mobile devices, social media, content syndication and video have created a sweet spot for TV networks and rights-holders to drive huge traffic spikes by making highly newsworthy moments readily available to fans.
From a strategic perspective, AT&T's deal to acquire DirecTV for $49 billion ($67 billion when debt is included) sure seems backward-looking, as it completely misses the imperative of broadband and online video in all of our lives.
Broadband and online video have driven many of the recent deals in the headlines (e.g. Comcast-Time Warner Cable, Disney-Maker Studios, the rumored YouTube-Twitch deal, etc.). Smart companies are looking at the massive shifts in consumer behavior and technology and are scrambling to position themselves for future paradigms that look very different from those of the past.
Extreme Reach, which provides video ad solutions across TV and online video, has acquired BrandAds, a startup that has developed a measurement solution for online video ads. Back in Sept. '13, I covered the launch of BrandAds Bridge product, which uses direct audience measurement to report on 30 difference performance metrics.
John Roland, CEO of Extreme Reach, told me that whereas the company's clients already have access to robust insights for TV ads, the BrandAds acquisition will enhance measurement of online video ads, something its clients are seeking. Doing so will provide a more accurate picture of video ads' effectiveness and the ability to reduce waste and inefficiency.
Online video platform provider Kaltura has acquired Tvinci, whose technology powers pay TV and content provider linear and OTT services. Terms were not disclosed. Ron Yekutiel, Chairman, CEO, and co-founder of Kaltura told me yesterday that the Tvinci technology gives Kaltura the ability to support customers' paid live/linear video services in addition to ad-supported VOD.
This is critical because in Ron's view, longer-term, the ability to support the full breadth of services and business models from the cloud will be the defining advantage. Ron sees this most particularly in the media business, which has been Tvinci's focus, but also in education and enterprise, other verticals that Kaltura serves.
I'm pleased to present the 218th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Both of us have continued to observe signs of how online video is coming of age, and today we discuss some of them.
We start with news that Comcast will begin selling episodes of "House of Cards" in its Xfinity online store. Putting aside the question of why someone would buy an episode for $1.99 when they could binge-view all 26 episodes in a month for $7.99, both of us thought it's noteworthy that the largest cable operator believes an online-only series is worth selling (and note too, the deal was done with Sony Pictures, and that Verizon also has been selling the series).
Then there was the report that Disney might acquire Maker Studios, a pure-play online video / YouTube content provider. While Colin and I get a chuckle out of the idea that the Disney flag could fly over Epic Rap Battles and PewDiePie, we agree it would be a smart bet to gain reach into the all-important millennial segment.
Then we turn to the $18 million investment by Warner Bros. in Machinima, an online video gamer-centric content creator also targeting millennials. The 2 companies already had a successful collaboration with the "Mortal Kombat: Legacy" web series. No doubt the new investment will spur more gamer-centric originals for distribution by Warner Bros.
We wrap up by discussing just how important millennials are to the video's future. Recent data suggest this group is still pretty glued into the pay-TV ecosystem, but their behaviors are changing fast, in turn leading established media companies to focus on online video more than ever.
Click here to listen to the podcast (17 minutes, 38 seconds)
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.
Rovi is acquiring Veveo, a search and recommendations technology provider for video and mobile/connected devices, for $62 million cash plus $7 million in incentive payments. In a briefing, John Moakley, Rovi's EVP of Data Solutions, explained that Veveo's search and recommendations are attractive as a compliment to Rovi's core metadata and analytics solutions. Rovi has been working on its own search and recommendations capabilities which Veveo will now augment. John sees the combined end-to-end product as leapfrogging other solutions in the market.
I'm pleased to present the 214th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Note the interesting coincidence that we're publishing our 214th podcast on 2-14-14; hopefully it's some sort of good omen :-)
In today's podcast Colin and I parse the $45 billion Comcast-Time Warner Cable merger, announced yesterday. As I wrote, I see the deal as all about helping Comcast achieve further scale that is required in order to succeed in today's video environment. Colin notes that after TWC's bruising battle with CBS, during which it lost hundreds of thousands of subscribers, the merger will shift some power away from broadcast and cable networks.
We also discuss regulatory issues, net neutrality, the companies' bet that cord-cutting won't accelerate any time soon and lots more. There are many angles to the merger, which we'll continue discussing as the merger review unfolds.
Listen in to learn more!
Click here to listen to the podcast (22 minutes, 7 seconds)
It looks like Apple will be the first casualty of the Comcast-TWC deal. Just yesterday Bloomberg reported that Apple was negotiating with TWC for it to become the first pay-TV operator to make its programming accessible in a new, upgraded Apple TV device. Assuming the report is accurate (and who knows, given the spin game TWC was playing to rebuff Charter's bid), it's pretty fair to say that Comcast will have no interest in Apple getting its nose under the TWC tent.
Comcast has announced that it will acquire Time Warner Cable in an all-stock transaction valued at $45.2 billion. Comcast is already the biggest video and broadband provider in the U.S. and will now get even bigger, assuming the deal is approved. Comcast has committed to divest around 3 million of TWC's video subscribers to stay below 30% of the total U.S. pay-TV market, so the combined company would have approximately 30M video subscribers. Broadband subscribers would be a little less than 30M.
For me, the big takeaway from the deal is that in the broadband era, scale matters a lot - and to compete effectively, a company simply has to have it. Nearly ubiquitous broadband and wireless connectivity, plus massive proliferation of devices, have enabled online-only players to have easy access to massive global audiences. This context has helped fuel the rise of companies including Google, Facebook, Amazon, YouTube, Netflix, Twitter and many others. With innovative services and solid execution, it's now possible to create huge businesses quicker than ever.
Online video platform Kaltura has raised $47 million, bringing its total capital raised to date to approximately $100 million. The round was led by new investors SAP Ventures, Nokia Growth Partners, Commonfund Capital and Gera Ventures, along with participation from existing investors. Kaltura plans to use the new funding for product development and to expand internationally in Brazil, Mexico, China, Japan, Australia, Singapore and Korea.
Categories: Deals & Financings
Extreme Reach has closed its $485 million acquisition of DG's TV ad business, approximately 6 months after announcing the deal. Extreme Reach's CEO and co-founder John Roland told me this morning that all DG customers are being transferred to Extreme Reach's cloud-based delivery platform. The combined company will have $270 million in revenues and 750+ employees.
As John explained, while the short-term tactical benefit of the deal is to gain significant scale in the core business of delivering TV ads to over 7K different broadcast TV stations in North America, the longer-term, more strategic play is to better position Extreme Reach for the fast-approaching era of multi-screen advertising.
Jivox, a multi-screen interactive ad technology provider, has raised a $5.8 million Series C financing. The round was led by Fortisure Ventures, with participation by Shah Capital and existing investors Opus Capital and Helion Advisors. Jivox intends to use the financing to grow its sales and marketing plus further build out its Jivox IQ video ad creation/management platform.
TiVo's acquisition of Digitalsmiths for $135 million, announced yesterday, is further evidence of the cloud's increasingly important role in powering video discovery on TVs and devices. According to Jeff Klugman, TiVo's EVP/GM of Products/Revenue, who shared background on the deal with me, Digitalsmiths' leading cloud-based content discovery and recommendations technology will give TiVo greater flexibility to serve pay-TV operators with branded and white label solutions independent of TiVo's hardware.
When Google drops $3.2 billion in cash on an acquisition, as it did yesterday with Nest Labs, maker of the Nest self-learning thermostat, you know there are some big, long-term visions playing in the background.
Most of the reviews I've read involve the companies capitalizing on the still nascent "Internet of things," where all devices are intelligently connected, exchanging valuable information that improves our lives. Even though Google and Nest were pretty vague in their joint announcement, I more or less buy into this rationale for the acquisition.
But, looking at the deal through my video-centric prism, I can also see some interesting possibilities coming from a tight integration between Nest and Chromecast, Google's hot-selling connected TV device.