Fast growing video search platform provider Blinkx is about to grow again through the acquisition of specialist mobile video advertising platform provider Rhythm NewMedia. Blinkx will pay $65m (£39.7m) in cash and shares ($30m in cash, $35m in equity) and is raising additional funds through a share placing to help fund the deal.
The proposed purchase is twice the price of its previous significant acquisitions (PVMG $36m and Burst Media $30m –see here) but Blinkx has gained scale since then via organic and inorganic growth (and practice at integrating acquisitions) so it should be manageable. Blinkx had revenue of $112m in H1 (to September 30 2013), which was up 36% yoy and has maintained a powerful upward revenue curve over the past year or more.
Rhythm NewMedia is also a high growth outfit with FY14 revenues estimated at $25m and expected to grow 30% annually over the next 24 months. Its FY14 EBITDA loss is expected to be $4.6m. (In the year to December 31 2012 it had a $7.4m operational loss on $19m revenue). $1m of the estimated FY14 loss is likely to hit Blinkx’s pre-exceptional EBITDA in FY14, but breakeven is anticipated within the first full year under Blinkx and with material profit after that.
This is a strategic move for Blinkx which will boost its mobile business. Mobile video advertising is accelerating fast and the Rhythm NewMedia platform is specifically designed to serve video to smartphones and tablets. Blinkx also improves its ability to meet advertiser demand for integrated, cross-platform online and mobile video advertising campaigns, addressing multi-screen distribution needs. It also gets access to Rhythm NewMedia’s premium broadcasting brands, while Rhythm NewMedia will be able to extend its services to the many providers Blinkx serves. It is a complementary acquisition on both sides in a competitive market – other players in the in-stream premium content video field include Vevo and Hulu, while iAd, Pandora and MobileThoery operate in the in-banner area, with ESPN crossing both areas.