RTL Group Spends $144M For Majority Stake In Programmatic Video Ad Platform SpotXchange

RTL Group, a large European media company, on Thursday announced it will buy a majority stake in SpotXchange, a supply-side platform (SSP) for programmatic video advertising. RTL is acquiring a 65% majority stake in SpotXchange for $144 million, with the opportunity to acquire the remaining shareholding in the future.

The news comes just weeks after LiveRail -- one of SpotXchange’s largest competitors -- was acquired by Facebook. TechCrunch reported the price of the Facebook-LiveRail deal to be in the $400 to $500 million range.

The RTL-SpotXchange deal values the latter at just over $220 million, although an earn-out component is in place that could boost the price, depending on SpotXchange’s future performance.

SpotXchange is one of the largest video ad platforms in the market and was sixth on comScore’s June 2014 U.S. online video ad rankings, having reached 32.8% of the U.S. population.

SpotXchange is a Denver-based company, but its sale to a European-based media company was intentional, according to CEO Mike Shehan.

“Instead of selling the company to a major U.S. technology company and becoming one feature in a giant ad tech stack, we’ve taken a route that will allow us to operate independently, while becoming a core part of RTL’s global business and strategy,” he said.

Fittingly, SpotXchange says it will accelerate its European expansion in Europe, and the company is in a good position to do so, having appointed a director of European operations, Claire Kemp-Harper, earlier this year. The company doesn’t plan to change its business approach in the U.S. or Asia-Pacific following the deal.

RTL will appoint three of the five members of the board of directors at SpotXchange, and Shehan and Steve Swoboda (COO and CFO) will continue managing day-to-day operations, reporting to the board.

Last summer, RTL showed its belief in digital video when it acquired a 51% majority stake in BroadbandTV, a Vancouver-based video network and a top YouTube video network.

“Following our investments in non-linear TV services and in multichannel networks on YouTube, RTL Group has already become the leading European media company in terms of online video views,” claimed Anke Schäferkordt and Guillaume de Posch, co-CEOs of RTL Group, in a joint statement. “The logical next step in our strategy is a structural move into the area of digital monetization -- improving our skills by adding innovative data- and technology-based competencies.”

That’s where SpotXchange comes in. The deal is further evidence that the ad industry is focused on setting itself up for the data-driven future of digital media trading. It’s also representative of the worldwide adoption and application of programmatic ad technologies. Shehan believes the deal is also "tremendous validation for video advertising." He had similar beliefs about the LiveRail-Facebook deal.

Shehan called video "a sector that we have long believed would be the top driver of growth for the advertising industry at large. We’re excited to join forces with a company that shares our vision for a better way to buy and sell video.”

SpotXchange has 180 employees with headquarters in Denver and offices in New York, San Francisco, London and Sydney. The deal is expected to close by the end of August 2014. RBC Capital Markets was SpotXchange’s financial advisor for the transaction.

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