Independent SSP platform Magnite is buying SpotX from European broadcaster RTL Group for $1.17 billion in cash and stock. The deal was announced early this morning and positions Magnite as a large, independent CTV and video advertising platform in the SSP arena. 

Magnite and SpotX, a global video advertising platform, both tap into device makers, platforms and streaming services from major media companies to deliver ads. The newly combined company says it can sell ad space on sites like Discovery, Disney/Hulu, Fox and Pluto TV, as well as devices from Roku, Samsung and Microsoft, according to a statement.

“Magnite will be the largest independent CTV and video advertising platform while still serving our clients’ non-CTV needs across all formats including display, mobile, and audio,” said Magnite President and CEO Michael Barrett in a statement. “It will bring together the segment’s best technologies and teams at a time when linear advertising budgets are increasingly shifting to CTV.”

In 2020, eMarketer noted that advertisers spent an additional $1.16 billion on programmatic CTV video ads in 2020 compared with 2019. And there has been a recent surge in streaming services from large players like Amazon, Roku, WarnerMedia, NBCUniversal and Discovery.

Folding SpotX’s business portfolio into Magnite could also help streamline the advertising chain. “We’re not just getting bigger for bigger’s sake,” said Barrett. “It allows us to cement our position, [something] publishers and buyers have been asking us to do.” The deal grows Magnite's capabilities as a “CTV and video advertising platform while still serving our clients’ non-CTV needs across all formats including display, mobile, and audio,” Barrett added. “It will bring together the segment’s best technologies and teams at a time when linear advertising budgets are increasingly shifting to CTV.”

The deal could mark the beginning of a wave of consolidation as the industry tries to adjust to changing user habits—some of which have been turbocharged by the pandemic. Barrett says the deal helps advertisers close the gap as consumer habits change from Netflix-style ad-free subscriptions to advertising-subsidized, lower-priced VOD offering.

“The market has been pointing to consolidation for a long time,” says Chris Maccaro, CEO of Beachfront Media, a video monetization platform focused on convergent TV. “It helps streamline the buying process in many ways, and in my perspective it solidifies Magnite’s position into a must-buy supply partner.” Maccaro sees the supply side as being a key beneficiary. “If you’re a buyer and you split premium TV between Magnite and SpotX between one half and another half, and now with a combined entity you can get everything from one set of pipes, that’s pretty compelling,” he says.

The past year continued a wave of activity. On the content side, Comcast purchased ad-supported free streaming service Xumo for more than $100 million, and Fox bought Tubi for $440 million. In ad tech, TransUnion acquired Tru Optik in October, and, late last year, Comcast's FreeWheel announced it would purchase Beeswax. Magnite itself was formed in April last year after Rubicon Project and Telaria complete a merger into a single supply-side platform.

The deal values SpotX at significantly more than the roughly $276 million RTL initially paid to acquire SpotX. While the price tag is large, said Barrett, it provides great value for shareholders. Shares of Magnite spiked briefly on the news in early morning trades, reaching one-day highs of $58.40 per share before retreating. The deal, which is subject to regulatory and other approvals, is set to close in the second quarter.