The Biggest Streaming Media Mergers and Acquisitions of 2015
Revenues should be dramatically higher, targeted at $20 million in 2016 and at least $35 million in 2017, according to a press release.
Big Media Buys More: News Corp. and Digital First Media
At the beginning of the year, Apollo Global Management, a private equity firm, acquired Digital First Media. The bulk of Digital First Media (DFM) assets are in traditional newspapers, but Apollo apparently hopes to do what Jeff Bezos did for The Washington Post, and is looking to enhance the digital offerings in more than 75 markets across the U.S. The price tag for this bevy of dailies, and almost 100 additional nondaily publications, was around $400 million.
Later in the year, News Corp. announced that it was buying Unruly, a social media platform.
“Unruly is a feisty and creative company with a start-up sensibility that fits perfectly with our own approach to developing businesses in the digital age,” Robert Thomson, chief executive of News Corp., said in a press release.
With the Unruly team reporting as a standalone entity to Rebekah Brooks, chief executive of news U.K., the idea is to leverage Unruly to help extend News Corp.’s storytelling expertise in the digital and mobile video area across the entire News Corp. spectrum. Specific sites mentioned by News Corp. in its announcement were “the fast-growing realtor.com in the U.S., Fox Sports in Australia, News America Marketing, HarperCollins Publishers, or our market-leading mastheads around the world.”
According to News Corp., the Unruly acquisition provides “contemporary insight into how people read, watch, buy and sell in the digital era” which is key for Big Media to play in the new media sandbox.
Unruly bills itself as an online video distribution platform (OVP) and a “pioneer in tracking video sharing and delivering verifiable video views via paid media across mobile, desktop and tablet devices.” The company claims more than 2 trillion video views, allowing it to build targeting algorithms that leverage video advertising.
New Media Buys (Smaller) New Media
If there’s consolidation in old media, there’s also consolidation in the new media space. A mid-2015 acquisition illustrates that point: Vox Media acquired Re/code in May 2015.
Those not familiar with Re/code might know the names behind it: Kara Swisher and Walt Mossberg. They got their start at The Wall Street Journal, but Mossberg decided to strike out on his own, bringing along the tech-savvy Swisher in a bid to do more product reviews.
Terms of the deal were not disclosed, but it came shortly after Gigaom ran out of money and was forced to shut down. In addition, notes Fortune columnist Matthew Ingram, a number of other content sites—some large, others small—have been sold in the past year.
What does that mean to the streaming world? If you’re a provider of OVPs and especially one in the media and entertainment space (an MEVP) then you’re probably seeing parts of your market shrinking.
Even if the market opportunity hasn’t shrunk yet, the fact that small media entities are being bought up by larger new media conglomerates raises an ongoing question: Will these firms bring their video delivery platforms in-house, rather than relying on an OVP to scale with them?
IPO Time or Roku Time?
Back in January 2015, there were questions as to whether Roku would launch an IPO in 2015. “Soon,” CEO Anthony Wood told CNBC, but he didn’t include a 2015 launch of anything except the Roku 4 streaming set-top box.
There’s still lots to like about Roku, a company that some call “the largest pure-play company in the market” while also noting that Fidelity recently raised Roku’s valuation by more than 20 percent—a sign that Fidelity’s overlarge position in setting pre-IPO valuations might be part of the larger scheme of setting Roku on the path toward an IPO.
And speaking of IPOs, over in Australia Telstra is launching an IPO for Ooyala.
The acquisition of Ooyala by Telstra in 2014 was listed at a fivefold revenue valuation, according to a blog post by Rayburn. But while rumors of an Ooyala IPO swirl about, Rayburn is quick to note that the market might not be as big as Telstra or Ooyala had hoped.
“Ooyala is predicting they will do $100 million in revenue for 2015,” Rayburn wrote in August 2015. “At the same time, Ooyala keeps talking about how they think their business can grow to do $1 billion in revenue in a few years, which isn’t realistic.”
Rayburn argued that the market isn’t worth tens of billions of dollars in the next 5 years, which means that an IPO at an unrealistic multiple of the current $100 million in revenue could fall flat.
Still it seems that Ooyala’s CEO isn’t giving up on the chance to take the company public.
“Over time this will become a multi-billion (sic) market-cap business,” Ooyala CEO Jay Fulcher told The Australian. “Our intent is to take the company public.”
Not Everyone’s a Winner
In last year’s Sourcebook, a number of writers addressed the impending Comcast/Time Warner merger, almost as if it was a done deal.
Turns out it was a bit too soon, as the FCC informed Comcast in April that it would recommend a hearing, putting Comcast at a significant uphill in the battle to convince the FCC of the merger’s merits.
A few days later, at the time of Comcast’s subsequent announcement that it was scuttling the deal, the Justice Department was keen to throw its weight behind the idea that the merger was against the best interest of the American consumer.
“This is a victory not only for the Department of Justice, but also for providers of content and streaming services who work to bring innovative products to consumers across America and around the world,” then-Attorney General Eric Holder said.
Netflix was apparently one of the companies that objected to the proposed merger; CEO Reed Hastings, said the combination of Comcast and Time Warner would be “just too much in one company.”
In the end, Comcast and Time Warner will pursue additional partners, and consolidation might be inevitable for the major players in both the cable and mobile operator spaces.
Expect a number of consolidation attempts in 2016, such as the proposed O2 and Three merger that’s currently under scrutiny in the U.K. amid concerns from Ofcom that pricing competition wouldn’t be as strong between mobile providers should the deal go through.
That’s a wrap for this year’s Streamticker. We’re certain that 2016 will bring as many, if not more, opportunities to cover the shifting business landscape of the streaming media industry.
[This article appears in the 2015 Streaming Media Industry Sourcebook as Streamticker.]
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