Commentary

The NewsCoRubicon Project

Speaking of time machines, let me travel back to a few weeks ago when I was sitting in Rubicon Project’s nice new Playa Vista digs (a.k.a. "Silicon Beach"). It should’ve occurred to me then that there was a deeper News Corp. connection when I tried to battle my way past the hyper vigilant Fox offices security guard -- that this wasn’t just any sublet. The offices were originally built for former Fox Digital properties Myspace, Fox Audience Network, etc. until they were sold off. But it didn’t register why Rubicon got such a sweet deal until yesterday when News Corp. unveiled the launch of The News Corp. Global Exchange, and the fact that it was consolidating all its programmatic trading on Rubicon’s real estate, effectively evicting all third-party ad nets.

 

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That’s when sources began reminding me that the ties between News Corp. and Rubicon run deeper than real estate, geographically or digitally. For that, we need to go a little further back in our time machine, to the fall of 2010, when News Corp. shut down its last big effort to centralize all its digital audience trading -- the Fox Audience Network -- and folded it into then fledgling Rubicon for an equity stake.

News Corp. was and is public, and Rubicon was and is private, but neither has disclosed exactly what that stake is. Rubicon only disclosed that it was a “non-controlling minority equity stake.” At the same time, Rubicon announced an $18 million round of conventional funding from investors that also included News Corp., as well as NBC (now Comcast's) Universal’s Peacock Equity Fund, bringing its total investments to that date to $50 million in equity and $10 million in debt.

While News Corp.’s stake has never been disclosed, sources with knowledge of the two companies estimate it has invested upwards of $80 million to date (mainly in the form of FAN's assets, not cash) in Rubicon, and is its No. 1 strategic investor. But none of that may ever come to light, unless Rubicon -- as many expect it to -- files for an initial public offering and has to disclose its financial history. Given the spate of advertising technology IPOs, that seems like a logical assumption. But others believe News Corp. is such a good strategic investor that it might also want to become a strategic acquirer, and take out Rubicon altogether.

In fact, News Corp.’s most senior managers may already feel proprietary about it, given their history. When News Corp. originally put FAN on the market, the likes of Google, Microsoft, Yahoo and Specific Media (the company that eventually bought Myspace) reportedly were bidding on it, until Rupert Murdoch made the strategic decision to invest in an “alternative” approach altogether, believing it was in the best long-term interests of News Corp. to have a strong alternative, and most importantly, independent competitor in the rapidly emerging digital programmatic marketplace. If he was going to make some technology company’s cash registers ring, he reasoned, he didn’t want it to be owned by one of this biggest competitors.

Meanwhile, let’s clear up some confusion surrounding the impact of The News Corp. Global Exchange on the overall programmatic marketplace, especially the third party ad nets, who have been disinvited to News Corp.’s party. That’s actually not 100% accurate. While they’re no longer permitted to enter through the front door -- vis a vis a direct ad repping relationship -- third-party ad networks can enter the party through the back door, just the way everyone else can on Rubicon’s platform, by casting winning bids.

“The can still buy, but it has to be through Rubicon technology,” explains one knowledgeable source, noting that News Corp. is merely seeking to give more controlled access to its audience inventory based on its own rules, not the way some third parties like to manage things.

The News Corp. exchange will enable both auctions (RTB, as well as static bids from ad networks), as well as director orders with advertisers, agencies and agency trading desks.

The other big advantage of the exchange, is its aggregated scale. Collectively, it makes News Corp. one of the biggest publishers participating in programmatic trading -- most likely placing it among the Big 5 players. And by using technology to automate and make it easier for the buy-side, they could get even bigger.

“If they can make it as easy to buy News Corp. at scale as it is to buy Yahoo or Google, then they potentially shift money away from both of them,” says one observer, noting that previously all of News Corp.’s sites were traded piecemeal, and rarely if ever even showed up in the comScore Top 10. And buying those disparate properties individually made it costly and inefficient for many buyers.


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