RTLRTL Group, the leading European entertainment network, today announced that it has signed a binding agreement with the current shareholders of SpotXchange, Inc. to acquire a 65 per cent majority stake in the Denver-based video advertising monetisation company. In addition to RTL Group’s initial investment of US-$144 million (€107 million), the parties agreed on an earn-out component that might increase the initial consideration subject to the future performance of SpotXchange. Under the terms of the deal, RTL Group also has the opportunity to acquire the remaining shareholding in the future.

RTL Group is one of the largest global producers of entertainment content, with interests in 54 television channels and 27 radio stations. The leading entertainment network in Europe has over 10,000 employees and makes $8 billion in annual revenues. RTL Group’s content production arm, FremantleMedia, is responsible for 8,500 hours of programming a year and distributes over 20,000 hours of content worldwide including hugely successful shows such as American Idol, Got Talent and X Factor, which are watched in over 150 countries.

SpotxChange’s CEO, Mike Shehan, commented: “This deal is yet another example of the broadcast, content and digital worlds converging, but it is very unique in that it represents the first time a major broadcaster has invested in programmatic video advertising. SpotXchange has never been afraid to take the road less traveled, and challenge the norms in the ad tech industry. 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. With this deal, SpotXchange reaffirms our commitment to serving publishers’ needs, as opposed to creating any conflict of interest with either the buy side or supply side. SpotXchange publishers will benefit greatly from the increased investment in the development of our platform, helping them to maximize revenue from video ad inventory while reducing operational costs across the entire spectrum of devices including mobile, tablet and connected TV. This deal is tremendous validation for video advertising, a sector that we have long believed would be the top driver of growth for the advertising industry at large, and we’re excited to join forces with a company that shares our vision for a better way to buy and sell video. RTL Group’s investment represents a huge opportunity for SpotXchange to accelerate our growth, particularly in Europe, and we look forward to further advancing our goal of becoming the leading, comprehensive video advertising monetization platform across all screens for premium publishers around the globe.”

The deal is subject to US competition authority approval and is expected to close by the end of August 2014. The investment is the next step of RTL Group’s strategy to become a leading player in all segments of online video and online video advertising. RTL Group becomes the first major broadcaster to invest in the rapidly growing market of programmatic online video advertising.

Founded in 2007, SpotXchange was the first online advertising marketplace with an exclusive focus on video. Today, SpotXchange provides a comprehensive video advertising monetisation platform to hundreds of publishers around the globe such as The Atlantic, Hearst Corporation, Meredith Video Studios, Mail Online, NDN and Adaptive Media who use the platform to maximise revenue for their desktop, mobile and connected TV video advertising inventory while driving down operational costs. SpotXchange empowers publishers and their sales teams to operate in an ever increasingly complex digital ecosystem by providing innovative and industry-leading programmatic technologies that yield unprecedented transparency, insights and control over the buying behavior of today’s leading brands. Over one billion auctions for video advertising impressions are transacted through the SpotXchange platform daily, with ads delivered to 335 million people in over 100 countries per month. The company currently has 180 employees with headquarters in Denver, Colorado, and offices in several US and international locations.

Online video advertising is currently the fastest growing digital advertising segment, expected to grow globally at a Compound Annual Growth Rate (CAGR) of 24 per cent between 2014 and 2018. This growth is driven particularly by programmatic video advertising which is estimated to increase from US-$2.7 billion in 2013 to US-$15.4 billion in 2018 worldwide (CAGR: +42 per cent).1

Joint statement of Anke Schäferkordt and Guillaume de Posch, Co-CEOs of RTL Group: “Following our investments in non-linear TV services and in multi-channel networks on Youtube, RTL Group has already become the leading European media company in terms of online video views. The logical next step in our strategy is a structural move into the area of digital monetisation – improving our skills by adding innovative data- and technology-based competencies. SpotXchange is the perfect fit for RTL Group for such a move: it has a first-class management team that has built a leading, state-of-the-art platform for programmatic selling of online video advertising. With its impressive growth story and strong positioning in the United States, SpotXchange also represents a unique opportunity to enhance RTL Group’s presence in the world’s biggest and most advanced media market.”

Joint statement from the two co-founders of SpotXchange, Michael Shehan (CEO) and Steve Swoboda (COO and CFO): “We are thrilled to be joining the RTL Group, a global leader in media and entertainment, and believe they are the ideal partner to help SpotXchange expand the reach of our comprehensive video ad monetisation services. This investment demonstrates RTL Group’s progressive vision and embrace of programmatic trading, ad serving and yield optimisation in the digital arena. The companies comprising RTL Group operate in a decentralised fashion which will allow SpotXchange to thrive and grow as the last independent digital video ad monetisation platform while providing significant opportunities through partnership with RTL Group’s leading European broadcast companies and top tier global content producers. Joining   RTL Group will present incredible benefits and opportunities for SpotXchange’s publishers, buyers and people.”

Under the terms of the transaction, RTL Group will appoint three of five members of the Board of SpotXchange. Michael Shehan and Steve Swoboda will continue to manage the day-to-day operations of the company, reporting to its Board.

RTL Group and the management team of SpotXchange have developed a joint growth plan to keep SpotXchange on its current growth path in the US and Asian-Pacific region, while simultaneously focusing on an accelerated roll-out in Europe.

By MediaBUZZ