Many broadcasters spent the past decade on a quest for scale, with a major spike in local station M&A last year.
Now it’s time to start thinking about monetization, and broadcasters know it.
“Once you own a lot of stations, the next logical thing to do is ask, ‘How are we going to monetize these things more holistically?’” said Jay Prasad, chief strategy and business officer at VideoAmp.
AT&T’s multibillion-dollar bet on addressable advertising is also lighting a fire under the broadcasting industry’s collective behind.
“The reason some companies are in play is because of what’s happening with Xandr trying to push the envelope,” said James Shears, VP of advanced advertising at Extreme Reach. “Xandr is focusing on an addressable footprint beyond TV and set-top box data to digital video and connected TV.”
The gauntlet is down. Now the question is, who’s in the market?
Comcast, which already owns FreeWheel, has been kicking the tires on a few ad tech assets this year, including Dataxu and Cadent, to boost its targeted advertising business. Others have already placed early bets, including Disney with BAMTech (now Disney Streaming Services); Nexstar Media Group with mobile video platform LKQD; RTL Group with server-side ad insertion company Yospace, following its acquisition of SpotX and others; and Fox with True[X] … which now belongs to Disney.
“With the convergence of TV and digital, we’ll see more organizations trying to create consolidation,” said Allison Metcalfe, general manager of LiveRamp TV. “They want easier solutions for advertisers to reach audiences, regardless of what screen those audiences are on.”
Here’s a look at who might be readying their checkbooks to buy a little piece of the LUMAscape.
Everyone is hot on over-the-top (OTT), but local players in particular see it as a “strategic lever to level the playing field with access to better data,” which is why local broadcaster TEGNA “definitely comes to mind as a potential buyer,” Prasad said.
As a supporter of ATSC 3.0, a new standard that enables broadcast TV to be transacted over the internet, thereby giving ad buyers the ability to target advertising to individuals, TEGNA is likely eyeing opportunities to enhance its OTT capabilities.
Beyond the 47 TV stations it operates across 39 markets, TEGNA owns digital assets, such as G/O Digital, and runs Premion, an over-the-top ad buying platform that has more than 125 direct partnerships with publishers and streaming services, from CNN, NBC Universal and ESPN to Sling, Pluto and Crackle.
Taken altogether, TEGNA already “has the assets to deliver a large marketing value proposition,” said Lance Neuhauser, CEO of 4C Insights.
But in March, at the Deutsche Bank Securities 2019 Media, Internet and Telecom Conference, Dave Lougee, TEGNA’s president and CEO, hinted at M&A potential “on the Premion side.”
Sinclair Broadcast Group doesn’t have the best track record with station M&A. First, Sorenson declared bankruptcy to escape Sinclair’s clutches, then the Tribune Media deal disintegrated.
But, like TEGNA, Sinclair is a local broadcaster eager for ATSC 3.0 adoption, and it’s got an OTT division of its own called CompulseOTT, which enables advertisers to buy 15- and 30-second spots on smart TVs, gaming consoles and streaming sticks across any Nielsen DMA.
Beyond its OTT solution, Sinclair has numerous other advertising initiatives brewing, including a media network to reach its entire broadcast audience and a long-form paid programming offering.
Although Sorenson and Tribune didn’t work out, Sinclair does have a lot of scale – 191 TV stations and 607 channels across 89 US markets, which could be cobbled together to reach something like national scale.
But for scale to translate into an advanced value proposition for marketers, a broadcaster needs three things, Neuhauser said: distribution, content and “the data to pull it all together.”
Sinclair has pieces of that puzzle, and so its attempts to bring advanced TV into the local sphere “probably aren’t going to stop,” Prasad said.
“They’ve created a lot of digital infrastructure, and they’re clearly willing to invest in concepts and partnerships,” he said. “Do they take this to the next level and make an acquisition? It really could be.”
For what it’s worth, as of a few months ago, Sinclair was looking to hire an ad tech specialist with programmatic chops. (“Experience in DFP or ad server is a plus.”)
Disney already spent big on its streaming vision – $1.8 billion on BAMTech, to be exact.
Some balked at the price and later scoffed at the $469 million write-down Disney took for its investment, but for Disney, the deal was practical, said Brian Wieser, global president of business intelligence at GroupM.
“What types of ad tech do make sense for a broadcaster or any entity to buy? There’s really no one answer to that, because different companies make different calls about what is strategic to them – what a company buys is an expression of corporate priorities,” Wieser said.
And Disney’s priority is DTC all the way. Disney has a strong content and distribution backbone so that it doesn’t necessarily need to buy anything else to bring its streaming vision to life, but never rule out the House of the Mouse.
“Disney has danced with tech platforms in the past and they have an impressive data group, beyond the quality of their content,” Neuhauser said. “So, you have to ask or at least wonder, what else Disney could do in this space?”
Sinclair, TEGNA and Disney declined to comment for this story.