In 2006, Comcast acquired thePlatform for what was rumored to be about a $70M acquisition. (Note: I've never seen that number verified.) Now five years later, multiple sources are telling me that Comcast is looking to divest itself of thePlatform and has been shopping the company for the past couple of months. I've heard that so far, the only really interested party is KIT digital who in November raised $90M $102M saying that the proceeds would be used for a "transformative" acquisition.
While KIT digital has never mentioned by name what company they are in talks with, at a financial conference last week, KIT's CEO showed a slide that broke out thePlatform's revenue to be $48M and during KIT's Q4 earnings call, the company said that they expected to be able to announce an acquisition in the very near future, "in the vicinity of $50 million of total revenues." The company also said that while the deal has been taking longer to close than they anticipated, that's primarily due to the "larger kind of parent share holding dynamic" of the company they are looking to acquire having, "other irons in the fire, so to speak." Sounds a lot like KIT is describing Comcast's recent merger with NBC if you ask me.
Sources I have spoken to say that Comcast is still looking at all of their options in the market and that there is no guarantee that KIT digital will be the buyer. If in fact a deal is finalized between Comcast and KIT digital, I expect the asking price will be between $40-$50M, which is all KIT can afford to pay, and I would expect it to be an all cash transaction, something else that KIT mentioned on their Q4 earnings call in regards to the terms of the deal they are working on.
In the financial community, rumors have been speculating for a few months now that thePlatform is the company KIT digital is looking to acquire and while KIT was originally expecting to announce their acquisition news sometime this quarter, the company is now saying they will have more news sometime in April. Other financial analysts have speculated that the company KIT digital is looking at is Deltatre, which is in the media asset management business but their revenues of $65M does not match KIT's earlier comment that the company they were looking to acquire was in the $50M range.
Of course all of this acquisition talk makes one wonder why Comcast would want to sell off thePlatform to begin with? I don't know how much Comcast relies on thePlatform's technology for their Xfinity service, but if thePlatform is crucial to their Xfinity offering, why sell it to a third party company that Comcast would now have to rely on for support? One could suggest that maybe Comcast gets to keep the technology for their own internal use, but then why would KIT digital acquire the company if the revenue associated with Comcast's use of thePlatform would disappear? Financially, it would not make a lot of sense for KIT digital.
The other scenario is that Comcast doesn't plan to use thePlatform's technology moving forward and hence can afford to divest the company. If thePlatform is in fact doing $48M a year in revenue, that's not much growth for a company that they purchased five years ago so thePlatform is not contributing a lot of revenue to Comcast. It clear that Comcast is looking for a buyer for thePlatform, but whether or not they reach a deal with KIT digital remains to be seen.
Note: Not surprisingly, when I reached out to Comcast and KIT digital for comments, Comcast said they don't comment on rumors and speculation and KIT's CEO would not confirm or deny who they may be purchasing.