Yesterday’s confirmation by Comcast that it is preparing an all-cash bid for Fox assets that would top Disney’s current bid came as no surprise. All that remains now for this corporate drama to go into overdrive is the decision on June 12th in the AT&T-Time Warner court case. If that deal is approved (which I believe is likely), Comcast is expected to formalize its Fox offer almost immediately. As these machinations continue, one looming question is what will become of Hulu?
Hulu is of course a joint venture among Disney, Fox and Comcast (via its NBCUniversal acquisition), with each company owning 30% and Time Warner owning 10% (that’s rounding as Hulu employees also own a piece). That means the ultimate owner of the Fox assets - Disney or Comcast - will also become a majority owner of Hulu. It seems to me Hulu would be more valuable to Comcast, and indeed Comcast should be angling to try to figure out how to take control of Hulu regardless of how the larger Fox deal sorts out. Why?
A couple of weeks ago, RhythmOne closed its acquisition of YuMe, one of the original leaders in video advertising. The deal was announced last September and was valued at approximately $185 million. The deal is the latest in a series of mergers and acquisitions consolidating the fragmented video ad tech landscape. To learn more about the deal and RhythmOne’s plans, I interviewed Dan Slivjanovski, Chief Operating Officer.
VideoNuze: Explain what RhythmOne does and why it acquired YuMe
Dan Slivjanovski: RhythmOne connects advertisers to audiences through a combination of differentiated supply, innovative technology and data-driven insights. Our end-to-end platform, called RhythmMax, offers direct, efficient and effective connections, driving ROI for advertisers and publishers. We were founded in 2004, focused primarily on internet video search. In 2007, we became a public company, and are traded on the AIM exchange, or the LSE, in London.
I'm pleased to present the 400th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
In this week’s podcast Colin and I discuss our top 10 online video stories of 2017. It’s been another incredibly busy year with tons of industry innovation and progress. As always, it has been a lot of fun to analyze all of this and report on it. Let us know what you think of our choices, whether you agree or disagree!
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Unless there’s some big news, this will be my last post for 2017.
Happy Holidays to all!
Independent programmatic mobile video ad platform Beachfront Media has sold a majority stake to two private equity firms, Growth Catalyst Partners and PSP Capital, a fund started by Penny Pritzker who was previously Secretary of Commerce in the Obama administration. Deal terms were not announced.
As part of the investment, Bill Jennings, previously president of Page Science, will become CEO of Beachfront, with prior colleague Rich O’Connor becoming CFO. Beachfront co-founder and CEO Frank Sinton will become president, while is co-founder and wife Lisa Connell, will leave the business (both will remain owners).
Topics: Beachfront Media
Yesterday the U.S. Department of Justice’s Antitrust Division sued to block AT&T’s proposed $108 billion acquisition of Time Warner. The suit breaks with decades of past practice where the DOJ has permitted “vertical mergers” (deals between companies operating in different segments of an industry) accompanied by certain operational limitations (so-called “behavioral remedies”). AT&T has pledged to counter sue, which means the deal’s outcome will now be decided in court.
Though I’m not a lawyer, I’m willing to bet that AT&T is going to prevail for one simple reason: the DOJ’s complaint virtually ignores realities in the TV and video industries. It is only by ignoring these facts that the DOJ is able to lay its foundation for asserting that the AT&T-Time Warner would have too much power, potentially harm competitors and stifle innovation. AT&T’s task is to demonstrate the DOJ’s foundation is faulty, and therefore that its decision to block the deal is unfounded.
I’m pleased to present the 395th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia. Many thanks to Brightcove, this week’s podcast sponsor. Brightcove will be presenting insights on server-side ad insertion at our SHIFT Programmatic conference on Nov. 29th.
The Justice Department’s Antitrust Division has reportedly put 2 unpalatable options in front of AT&T to gain approval for its proposed acquisition of Time Warner: divest Turner (including CNN) or divest DirecTV, which was only acquired 2 years ago.
On today’s podcast, Colin and I discuss how incongruous it feels for the government to assert AT&T will be gaining too much market power by acquiring Time Warner. To the contrary, Colin and I believe the market power of all incumbent media and telecom companies has dramatically decreased as big digital players like Google, Amazon, Apple, Netflix, Facebook, etc. have become leaders in advanced advertising and subscription business models.
Recognizing the massive disruptions, including accelerating cord-cutting, established providers are scrambling to reinvent themselves, with Disney’s decision to go direct to consumer with its most premium content the best example. We discuss how government limits on the ways established companies can reposition themselves for this era would be a major limitation.
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Click here to listen to the podcast (23 minutes, 31 seconds)
No doubt you’ve already heard about the remarkable turn of events in the saga of AT&T’s acquisition of Time Warner. As reported by multiple news outlets yesterday, the Justice Department’s Antitrust division is apparently telling AT&T it would have to commit to either divesting Turner (including CNN) or DirecTV in order to gain regulatory approval for the deal. Both are totally unpalatable to AT&T.
All of this puts Makan Delrahim, the recently confirmed head of the Antitrust division in the hot seat. Assuming he decides to block the deal and AT&T then sues the government, it will fall to Delrahim to make the government’s case that absent any divestitures, the deal would be anti-competitive. The bar is even higher for Delrahim because when he was a professor at Pepperdine, he said in a telephone interview with Canada’s BNN that he did not see the deal as a “major antitrust problem.” He explained that any Antitrust objection must be based on a belief that the deal would “substantially lessen competition” by “very defined legal and econometric standards” and that the burden of proof is on the government to prove this in federal court.
It’s a good day for video tech providers with Israeli roots as Wibbitz has announced a $20 million Series C funding and Connatix has raised a $15 million Series A round. The Wibbitz round was led by Bertelsmann Digital Media Investments, with participation from The Weather Channel, The Associated Press, TF1 and existing investors NantMobile, lool Ventures and Horizons Ventures and brings total funding to $30.8 million. The Connatix round was led by Volition Capital.
While the companies have different value propositions, they’re both playing to the broader industry trends of enabling publishers to enrich their properties with more video, which creates more opportunities for video advertising.
Video distribution platform Vemba has raised $6 million in a series A-1 round, bringing its total funding to $11 million. The new round was led by Time Warner Investments and SpotX, with existing investors Upfront Ventures and Bertelsmann Digital Media Investments participating as well.
Vemba’s CEO Garrick Tiplady told me in a briefing that the company’s vision is to become the industry standard platform for scale in video distribution on any device. Vemba’s platform allows content providers to create flexible models to distribute their videos and receive real-time analytics on their performance and monetization.
Penthera, which makes software to power video downloading to mobile devices, has raised $6 million from Liberty Global Ventures, the venture investment arm of Liberty Global International, which is the biggest international cable company and chaired by John Malone. Liberty Global is also a Penthera customer.
Penthera’s Cache&Carry software enables video providers to let their viewers download video to their iOS and Android mobile devices. Cache&Carry includes DRM support, configurable business rules, download queuing options, mobile DVR and “FastPlay” which launches buffer-free viewing.
There’s plenty of M&A and financing activity in the video adtech space, with the latest news coming this morning with RhythmOne acquiring YuMe for $185 million. The deal had been rumored for a while and unites YuMe’s demand-side capabilities with RhythmOne’s supply-side and programmatic platform. YuMe was one of the earliest video adtech players to go public, back in 2013, but has had a bumpy ride as the industry rapidly evolved.
Two video ad tech providers, Genesis Media and Altitude Digital, announced they have merged in a deal that is rooted in using data to optimize video publishers’ ad inventory. The new company combines Genesis Media’s technology to analyze publishers’ content, ads and audience with Altitude’s video supply side platform. The merged company will be called Genesis Media and be led by CEO Mark Yakanich, with Altitude’s Joe Grover becoming president and chief marketing officer.
TV data provider Alphonso has raised $5.6 million, led by Manifest Investment Partners and including individual investors such as former TV executive Jeff Sagansky. Alphonso plans to use the funds to increase domestic and global distribution and ramp up hiring. Alphonso said it’s been profitable since 2014 and has been customer-funded.
Alphonso is among the companies that is using data to improve the impact and efficiency of TV advertising. The company has built its Alphonso TV Data Cloud by tracking all of the programming and ads that appear on 200+ broadcast and cable TV networks in the U.S. plus top OTT services. In addition, Alphonso has its automated content recognition (ACR) embedded in 40 million+ set-top boxes, smart TVs and smartphones that monitor and record what viewers are watching in real time.
Startup Vinyl Trading Desk, founded by longtime Altitude Digital COO Devin Yeager, has raised an initial round of $750K from FastPay. Devin told me in a briefing that Vinyl’s platform unifies and simplifies ad buying across video, search and social for clients starting with budgets as little as $1,500. The new funds will be used mainly for product development and building sales and marketing staff.
Topics: Vinyl Trading Desk
OpenSlate, which provides contextual data on YouTube channels to 600+ advertisers and agencies, has raised a $7 million round led by North Base Media and hired 2 new senior executives.
New COO JoAnna Foyle was most recently SVP of Enterprise Platform Services at AOL and will oversee client services, account management, enterprise partnerships and business operations at OpenSlate. Brian Quinn takes over as President of OpenSlate, a newly-created role, heading up domestic and international sales, business development and strategic partnerships. He was most recently Chief Revenue and Innovation officer at Triad Retail Media, which was acquired by WPP/Xaxis last October.
Teads, which pioneered the outstream video ad format that has been widely emulated, is being acquired by Altice, the multinational telecom provider. The purchase price is up to 285 million Euros, or approximately $307 million, with 75% paid at closing and the remaining 25% based on Teads’ 2017 revenue performance. Teads’ Executive Chairman Pierre Chappaz and CEO Bertrand Quesada will continue leading Teads.
For Altice, which previously acquired and combined 2 large U.S. cable TV providers Cablevision and Suddenlink over the past 2 years, creating the 4th-largest player in the industry, the Teads deal is a bid to increase its advertising footprint, which the company said will be 700 million Euros or nearly $650 million per year.
Online video is booming. But that doesn’t mean all industry initiatives will succeed. Two examples in just the past two days illustrate the point. Yesterday Verizon announced it was acquiring Vessel for an undisclosed amount in what appears to be a straightforward asset purchase and talent acquisition. And on Tuesday, Google Fiber announced that it was stopping all expansion into new markets. Both companies’ leaders, Jason Kilar at Vessel and Craig Barratt at Google Access, will be departing their positions.
While the two companies operate in distinct segments of the market - Vessel in content and Google Fiber in infrastructure - both were bets on new business models and consumer demand that do not seem to have panned out.
No doubt by now you’ve read all about AT&T’s plan to acquire Time Warner for approximately $85 billion - it was hard to miss the wall-to-wall press coverage over the weekend. As has been observed by a number of others, this deal is mostly about diversification, specifically AT&T’s desire to add another large revenue stream that offsets its declining wireless business.
Looked at through this lens, the deal represents a kind of “two plus two equals four” motivation; Time Warner brings a totally different set of revenues to AT&T, which makes the company less reliant on its sagging wireless business. If Time Warner can continue to perform at the same level as part of AT&T as it would have on its own, then AT&T wins because it achieved its diversification goal. The key of course is that AT&T didn’t overpay, in turn generating a suboptimal ROI. I’ll leave it to the Wall Street analysts to determine if the deal’s price is appropriate relative to Time Warner’s financial forecast.
Where the deal gets off track to me is the high falutin statements found in the companies’ press release that promise all kinds of benefits that are no more likely to happen as a result of Time Warner being owned by AT&T, and arguably, could actually be LESS likely to happen as a result of the deal. This is the risk that two plus two may actually LESS than four. This is the all too common outcome of many corporate mergers (with the infamous AOL-Time Warner one right at the top of the list).
Tout has raised a $26 million Series C round led by the Melohn Group, with new investors Windsor Media, Pittco Capital Partners and HL Capital, along with existing investors Seavest Capital, 819 Capital and the WWE. Michael Downing, Tout’s founder and CEO, told me in a briefing that it was an up round and was oversubscribed. Including the new round, Tout has raised $40 million.
Tout has flown relatively below the radar, but has made significant progress toward building out a classic “syndicated video economy” business, distributing premium video from over 230 different content providers including CNN, Fox Sports CBS, Scripps, Bloomberg and other to over 2,800 different publishers’ sites including Salon, Breitbrart, Independent Journal Review and others. Michael said that Tout now ingests 5,000-7,000 videos per day and drives 380M video views from 57 million unique viewers per month.
Multi-screen video app platform You.i TV has raised a $12 million Series B round, led by Time Warner Investments and including new investor Vistara Capital Partners and existing investor Kayne Anderson Capital Advisors. Funds will be used for product development and channel partner development. You.i TV includes among its customers Sony Crackle, Turner Broadcasting, Rogers Communications and Corus Entertainment.