Comcast will acquire video ad-serving platform FreeWheel, the companies confirmed Thursday. The development comes just weeks after the cable giant made public its intent to acquire Time Warner Cable for $42.5 billion.
TechCrunch first reported the news, and Re/code confirmed Thursday it's a done deal and pegged its value at approximately $360 million. That's roughly in line with the $405 million AOL paid for the Adap.tv video ad platform.
"FreeWheel’s mission has always been to unify television advertising wherever content is viewed," Freewheel stated in a blog post. "To make this a reality, the industry needs an enterprise advertising platform that works on all screens, across the entire ecosystem, at scale.
"Comcast’s investment in our business and our future innovations will accelerate our ability to deliver on our vision, providing us with the strength and staying power that our clients demand, while maintaining our commitment to the success of our extensive and diverse customer base."
Strategic investors in FreeWheel include Turner Broadcasting and DirecTV, which calls into question the effect Comcast's potential ownership will have on standing FreeWheel investors and customers.
The 7-year-old company has already worked with numerous competing multichannel video program distributors (MVPDs). According to FierceCable, Comcast’s NBCUniversal began using FreeWheel’s Monetization Rights Management system for multiplatform advertising during the spring of 2012.
About a year later, satellite TV provider DirecTV planted a stake in FreeWheel to launch the DirecTV Everywhere service using FreeWheel’s video ad-insertion capabilities.
FreeWheel is used by more than 70% of the brands in the standard cable television lineup. Distributors and digital pure plays like AOL also use its services and platform to help monetize premium content.
FreeWheel, which employs 200, according to co-founder and co-CEO Doug Knopper, also worked with Amazon to surface short-form video ad placements in search results and as movie trailer prerolls.
Regardless of how Comcast's ownership of FreeWheel will affect its current client base, the acquisition underscores a major trend: The industry at large is moving toward addressable TV buys at programmatic scale.
Comcast's recent moves have encouraged industry insiders. Matt Bayer, VP of advanced TV at MAGNA GLOBAL, predicted last week at the Advanced Advertising forum in New York that Comcast's Time Warner Cable acquisition "will increase the amount of available impressions able to be bought at the household or audience-based level.”
Additionally, while addressable TV currently supplements broadcast buys, smartphones and tablets still accounted for 20% of all video ad views last quarter, said Brian Dutt, FreeWheel's director of advisory services, at the Advanced Advertising forum. The result, he said, will be advertisers’ continued interest in cross-platform buys and addressability.
According to Jeff Lanctot, CEO of video ad serving and analytics technology provider Mixpo and former chief media officer for Razorfish, both Comcast and FreeWheel have been "close partners for us," and called the acquisition a great development for the video ad business.
"Comcast has been quietly building a powerful multiscreen solution for several years," he commented. "The acquisition of FreeWheel signals that, in doing so, they are just as serious about technology as they are content. Through both in-house development and acquisition, they are pulling together an incredibly formidable solution."
Although many companies claim to offer a true multiscreen solution, "few can claim the scale and capabilities of Comcast. I'm looking forward to working with the combined entity once the deal closes and I'm sure major advertisers feel the same way."
In this market, "you are either the network, the content or the arms dealer," commented Ray Wang, chairman and principal analyst at Constellation Research. "Comcast wants to be the arms dealer."
Update: Comcast's history of video acquisitions that spans online video management tool thePlatform and buy-and-sell-side media platform STRATA, outlines the direction FreeWheel could take as part of the media conglomerate. Since Comcast's acquisition of thePlatform in 2006, the company has made a number of advancements to the service that include extending television and video on demand offerings multi-screen. Strata Marketing's scope, which is estimated at more than $60 billion in media billings annually, could expand FreeWheel's background in network/operator service to the brand advertiser/agency side of the equation.
FreeWheel confirmed to AdExchanger that there would be no imminent layoffs as a result of the acquisition and that the company's existing employees will become Comcast employees. "The three of us have each signed multi-year agreements to stay on in our roles and are fully committed to seeing our dream become a reality within the Comcast family," FreeWheel's three-member founding team consisting of Jon Heller, Doug Knopper and Diane Yu included in their acquisition announcement Thursday.
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