Monday, March 15, 2010

KIT digital Acquires Multicast Media for Approx. $18 Million, Online Video Platform Consolidation Heats Up

In a move that further consolidates its IP-based video assets, KIT digital, Inc., will acquire online video platform Multicast Media Technologies, Inc. for approximately $18 million, comprised of $4.9 million in cash and 1.3 million shares of KIT digital common stock, plus approximately $4.6 million in assumed debt. This is KIT digital's sixth acquisition in recent years, following the purchases of Narrowstep, Visual Connection, Morpheum, Kamera, The Feedroom and Nunet (of which both The Feedroom and Nunet brands were both acquired and retired in late 2009), and this deal follows a $15 Million equity offering that KIT Digital closed just week.

KIT digital is based in Prague, Czech Republic and is known as a leading global provider of on-demand software solutions for managing and monetizing Internet Protocol (IP)-based video assets. It now adds Multicast Media's live event broadcasting, Internet video management and targeted multimedia communications business to its portfolio. The acquisition further expands KIT Digital's U.S. customer base which in 2009, nearly 1,000 organizations used Multicast's hosted solutions to broadcast 50,000 live events and serve more than 250 million video streams.

The deal is set to close at the end of this month, and according to the release several Multicast executives will be appointed to KIT digital's global management team. For now, Multicast's 90+ employees will continue to be based out of Atlanta, Georgia, which will become KIT digital's hub for client delivery in both North and South America.

KIT digital's chairman and CEO, Kaleil Isaza Tuzman affirmed their stake in the North American online video market. In the press release issued today, he noted:
"Multicast complements and substantially expands our North American client base, as well as our capabilities in serving video to the 'three screens' of the mobile device, browser and IP-enabled television... While KIT digital has achieved the leading market share position for enterprise-class IP video management on a global basis, the acquisition of Multicast now makes us the clear number one provider in North America, and strengthens our dominance in the global arena." 
Multicast's clients include government, non-profit and faith-based organizations, as well as a number of Fortune 500 companies, including ncluding FedEx, The Knot, Home Box Office, The Christian Science Publishing Society, AutoTrader.com, and AstraZeneca. Multicast earns an estimated $12 million a year recurring licensing fees for its IP video management software, and additional professional services revenues. Multicast's online video platform, Media Suite, is an end-to-end solution for live and on-demand IP video and multimedia presentations. Multicast was recently awarded first place for Streaming Media Magazine's 2009 Readers' Choice award in the "Transcoding SaaS" category and also sponsored and participated in the Online Video Platform Summit.

According to Multicast Media Founder and CEO Lou Schwartz, the privately-held Atlanta, Georgia-based company had not been looking for a buyer. Schwartz commented:
 "As a profitable and long-term player in the IP video platform industry, we had numerous strategic options. We are excited to be teaming up with the global leader in IP video management and are confident that our collective strength will yield exceptional value and benefits for our newly combined customer base."
In a post today on OnlineVideoWatch.com, Ben Homer acknowledged that KIT digital has come a long way since it's embattled days as ROO. He noted that three years ago the company was headed to the Deadpool, but since Kaleil Isaza Tuzman was installed in December 2007, the company has rebounded to become a viable player within the online video market. KIT Digital earned $47 million in revenue in 2009, and forecasts a 60 percent growth to more than $75 million in 2010. Time will tell if Multicast Media will become a strong component in KIT digital's global growth strategy, or if it will follow the same recent fate as Nunet and The Feedroom.

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