New in IPO Buzz: Broadband TV

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The transition from cable TV to online streaming means the ads follow us. Advertising has to be quick, straight to point and personalized. With investors swooning over companies with exposure to digital ad revenue, do you wonder what the ‘ad-makers’ look like? Enter Broadband TV, the latest in the IPO talks; let’s dive in:

Broadband TV (BBTV) is a digital platform that provides one-stop content management and technology solutions for independent creators and media companies. In other words, it helps video content creators create, distribute, monetize, and grow awareness from advertising that runs on digital platforms such as YouTube, Facebook, and Snapchat.

Headquartered in Vancouver, BC, this media-based tech company announced in 2019, that its video content is viewed by more than 575 million unique viewers each month, coming in at 53% of Google's Unique Video Viewers and approximately four times Facebook’s Unique Video Viewers. Furthermore, BBTV represented 56% of Google’s unique viewership (~1.02B) in 2019. Additionally, BBTV ranked number one in 2019 for ComScore’s top 12 countries report, across media companies, with a total monthly watch-time of 46.9 billion minutes, surpassing Disney’s 16.9 billion minutes, and NBC’s 10.3 billion. Management also unveiled that its total annual video viewership increased at a compound annual growth rate (CAGR) of 102% from 2014 to 2018, while its revenue grew at a CAGR of 79% over the four-year period, achieving break-even EBITDA in 2018. BBTV operates in 10 languages and 29 countries and is a leading player in English, Spanish, and Portuguese markets in content viewership.

How does BBTV make money?

To put the numbers in another way, more than one in every two people worldwide watching videos on Google platforms alone are watching BBTV content, but how does BBTV make money? BBTV’s revenue streams include advertising, video on demand, subscription video-on-demand, SaaS, mobile apps, e-commerce, and licensing.

BBTV’s base solutions, powered by its VISO platform, focus on audience growth, engagement, and monetization solutions. The primary revenue source within this segment is advertising wherein BBTV acquires exclusive license rights to content from content owners and earns revenues from the advertisements sold against the content by the platform hosting the content. The overall aim is to increase the views and overall ad revenues. The Plus Solutions segments include monetization opportunities through direct advertising sales, content management and SaaS, and mobile gaming apps. Given BBTV’s platforms and software, it can monetize content in both segment formats benefiting content owners as well as increasing BBTV’s overall revenues. Base solutions represent over 90% of the total revenues. The company recognizes revenue net of any fees paid to platform partners and shares the remaining revenue with the content owner, which is recorded as cost of revenue. The company nets about 10% after the platforms and content creators get their cut. 

For the Plus solutions, revenue is recognized on a gross basis before any fees are paid to platform partners and cost of revenue includes the platform fee and share of the revenue. BBTV’s VISO platform powers most of its solutions, which uses deep learning, machine learning, digital signal processing, and big data to drive content optimization, engagement, and growth. The technology attracts content owners to work with the company as BBTV continues to enhance the value of its owned and licensed content.

Excluding its top two content owners, as of June 2020, BBTV has a library of more than 24.5 million licensed video assets, for which it has exclusive rights for both solution segments. On average, the company licenses 400,000 new videos every month across all its geographic and language offerings. 

Numbers and figures

BBTV Holdings, the holding company, will issue 10.7 million shares, priced at $16 each raising more than $172 million. The proceeds are to be used to buy out Luxembourg-based RTL Group, a publicly-traded unit of Bertelsmann, and a 51 percent shareholder of BroadbandTV, under a tentative deal between shareholders. The European media company made a $36 million investment to BroadbandTV in 2013 in exchange for a 51 percent equity stake, making it one of the largest private placements into an internet media company in Canada at the time. BBTV controls the remaining 49% of BroadbandTV.

Management

Appointed by Prime Minister Justin Trudeau to represent Canada on G20 Business Women Leaders task force, Ms. Shahrzad Rafati founded BroadbandTV in 2005. In 2009, NBA signed on to become a client with Sony Pictures quickly signing up next. The popularity caught on to individual YouTube channels looking to monetize their content. Media group RTL bought 51% of BBTV in 2013 for $36 million USD. BBTV has since then expanded on its offerings and its relationship with Sony Pictures, in particular, has deepened as in 2018 BBTV co-released the official Breaking Bad YouTube channel.

BBTV is a name with a fresh perspective on ad revenues and content monetization and very unique to the Canadian markets. We will definitely be keeping an eye on this one.

 

Happy Investing!

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Disclosure: Please note that the author does not hold a financial or other interest in stocks or funds mentioned at the time of publishing.