RTL Group will not exercise its call option to acquire the 49% of YouTube multichannel network BroadbandTV that it does not already own, and has decided to explore “all strategic alternatives” for the company together with minority shareholders.
The shareholders have hired boutique investment advisor outfit Liontree to lead the process.
An RTL spokesman told DTVE that RTL and the minority investors aimed to conclude the process of exploring strategic alternatives by the end of the year. He said that all options were on the table, including the addition of a new strategic investor, an IPO – with RTL retaining its existing 51% stake – or a sale of the company.
BroadbandTV’s largest minority shareholder is the company’s founder and CEO, Shahrzad Rafati. Interviewed by US trade paper Variety, Rafati said that the decision by RTL and minority shareholders was “amicable” and would allow the company to consider what was in the best interest of shareholders, employees and customers. She pointed out that BroadbandTV remained a standalone entity that had not integrated its operations with RTL.
The Canadian MCN has a strong record to date, generating over 22 billion monthly impressions across its network of content creators.
“The company has grown significantly so it suggests that some of the minority shareholders may want to see a return on their investment. The future continues to be bright given the explosion we’ve seen in OTT video and recent corporate activity. Regardless of what happens, we expect RTL to continue having a prominent role in the company,” Paolo Pescatore, director, multiplay and media, at analyst outfit CCS Insight told DTVE.
Other analysts are more sceptical about the longer-term prospects for multichannel networks, which have proliferated in recent years but which have more yet to carve a stable long-term model, and about the prospects for advertising-based VOD in general.
“The video Internet advertising market has boomed over the past few years, and Ovum forecasts that the global market will reach a value of almost US$50 billion by 2021, more than double its value in 2016. But, with much of this revenue growth being accounted for by mobile video, the major mobile video platforms, such as YouTube, Facebook, and Snapchat – look set to be the biggest beneficiaries, with multi-platform networks – such as BroadbandTV – essentially reliant on them for reach and revenue generation,” said Matthew Bailey, digital media analyst at Ovum.
“Furthermore, we expect a tough environment for other AVOD players in the coming years, despite high levels of market growth, given consumers’ widespread adoption of ad-free SVOD alternatives such as Netflix, and increased competition for video audiences from both digital publishers and messaging platforms.”
While BroadbandTV has grown rapidly, digital activities as a whole have contributed a relatively small fraction of RTL’s overall revenue to date.
However, RTL has made digital growth central to its strategy to tackle the challenge of competition from internet giants. CEO Guillaume de Posch told an audience at MIPTV in Cannes last year that companies like Facebook and YouTube along with other MCNs were “trying to grab our business”. He said that while RTL had begun to address these new challenges by investing the likes of BroadbandTV and fashion and beauty MCS Stylehaul, it would “take us probably 10 years to master it”.