Magnite adds CTV muscle with SpotX acquisition

Magnite, the adtech firm that was created last year via a merger of sell-side platforms Rubicon Project and Telaria, is to acquire SpotX to scale its CTV capabilities.

The firm has entered into a definitive agreement to acquire SpotX from European media company RTL Group for US$1.17 billion in cash and stock.

The transaction is expected to close in the second quarter of 2021, subject to regulatory approvals and customary closing conditions.

Once combined, the companies claim they will create "the largest independent CTV and video advertising platform in the programmatic marketplace".

The combined supply base of CTV inventory will include A+E Networks, Crackle Plus, The CW Network, Discovery, Disney/Hulu, Electronic Arts, Fox Corporation, FuboTV, Microsoft, Newsy, Philo TV, Pluto TV, Roku, Samsung, Sling TV, Tubi, ViacomCBS, Vizio, Vudu, WarnerMedia and Xumo.

Until the transaction closes, both companies will continue to operate independently.

Magnite president and CEO Michael Barrett said: "Sellers have been looking for a scaled independent alternative to the giant companies who dominate the CTV marketplace. The combination of Magnite and SpotX will make this a reality by bringing together the best CTV technologies and teams at a critical time."

Barrett added that the addition of SpotX's CTV capabilities will make Magnite "well-positioned to participate in the strongest segment of industry growth for the foreseeable future".

SpotX cofounder and CEO Mike Shehan said he was "thrilled about what we will achieve together".

"As CTV flourishes and the media industry continues to turn to programmatic, there is a huge opportunity for an independent scaled company to offer the single most comprehensive technology in the market. We built SpotX with the mission of becoming the leading global video advertising platform, and our goal is now coming to fruition with Magnite," he said.

Magnite is targeting in excess of $35 million in run-rate operating cost synergies, with more than half of the synergies realised within the first year of combined operations.

Magnite plans to finance the transaction with cash on hand, 14 million shares issued to RTL Group and committed financing from Goldman Sachs.

RTL Group will become shareholders in the combined entity, with CEO Thomas Rabe commenting that the transaction "allows for significant value creation and upside potential for the parties, sellers and advertisers in the growing CTV market".

Magnite already has CTV capabilities that it acquired through Telaria. Magnite was launched in July last year following a merging of Rubicon Project and Telaria, which had completed in April. The new combined company offers a single platform for transacting CTV, desktop display, video, audio, and mobile inventory across all geographies and auction types.

While the majority of Magnite's revenue comes from desktop and mobile, CTV is reeling in fast growth. Its total CTV revenue grew by more than 50% year-on-year in the third quarter of 2020, it said in January. Chief operating officer Katie Evans noted that CTV was "a bright spot in a tumultuous year for publishers and advertisers alike".