Nexstar Media Group to Acquire Leading Digital Video Advertising Infrastructure Platform, LKQD Technologies, for $90 Million in Accretive Transaction
December 07, 2017 07:00 AM Eastern Standard Time
IRVING, Texas–(BUSINESS WIRE)–Nexstar Media Group, Inc. (Nasdaq: NXST) (“Nexstar” or the “Company”) announced today that it entered into a definitive agreement to acquire LKQD Technologies (“LKQD”), a leading independent video advertising infrastructure company, for approximately $90 million cash, subject to working capital and other adjustments including a minimum cash balance of $10 million, and a contingent earn out payment based on LKQD’s performance at the end of two years under Nexstar’s ownership. The transaction is expected to be immediately accretive to Nexstar’s operating results and free cash flow, does not materially alter the Company’s leverage position and will be financed with cash generated from operations and funds provided by the Company’s revolving credit facility.
Founded in 2014 by industry veterans, LKQD Technologies’ video advertising platform has the largest reach in the US to viewers across digital devices, (comScore Video Metrix®, Video Ad Ecosystem rankings, August, 2017). The acquisition of LKQD substantially broadens and diversifies Nexstar Digital’s portfolio with industry-leading, brand safe systems and technologies that are complementary to its current offerings of leading digital solutions and services for media publishers, and compelling and effective multi-platform marketing solutions for local and national advertisers.
LKQD provides enterprise digital video advertising technology infrastructure for publishers and advertisers on all screens reaching approximately 115 million US online video viewers across desktop, mobile-web, mobile-app and connected TVs. Designed for flexibility, scalability and speed, LKQD’s Infrastructure as a Service (IaaS) technology provides end-to-end systems for ad serving, mediation, programmatic auctions and advanced reporting— allowing publishers to book, manage, optimize and track their operations in real-time from one dashboard.
LKQD’s large-scale, diversified video supply combined with Nexstar’s robust audience reach across 170 stations and 100 U.S. markets and significant hyper-local digital/ mobile platforms, will create new video opportunities which will allow Nexstar’s advertising clients to target their customers across both the television and digital video landscapes. Over the past twelve months LKQD expanded its technology to meet increasing demand for its products and solutions among digital publishers, media partners and advertisers. As a result, in the first half of 2017, LKQD tripled the number of customers using its platform and generated year-over-year gross revenue growth of 180%, outpacing overall video advertising industry revenue growth by approximately 8x.
Perry A. Sook, Chairman, President and Chief Executive Officer of Nexstar added, “Our acquisition of LKQD is consistent with our long-term strategic and financial growth objectives for Nexstar Digital as we unify, expand and invest in our technology platform to optimize results for our clients, while developing new revenue opportunities. By adhering to our disciplined acquisition and integration criteria, we are acquiring the leading, fast-growing, profitable, online video advertising business at an attractive, accretive valuation. Looking ahead, we continue to evaluate additional digital investments and select accretive transactions to drive the next phase of growth and success for Nexstar Digital.”
Gregory R. Raifman, President of Nexstar Digital, commented, “The acquisition of LKQD significantly strengthens and expands Nexstar Digital’s product offerings with flexible and scalable end-to-end technology infrastructure systems that enable cross-device ad delivery with multi-dimensional analytics and reporting— giving buyers and sellers the power to efficiently reach audiences across all screens and devices. LKQD’s rapidly growing revenue, expanded client base and market-leading enterprise video ad technology infrastructure are key differentiators and represent an excellent strategic fit with Nexstar Digital’s leading local digital marketing tools, content monetization solutions and digital agency services.
“Importantly, in an environment where brands and ad buyers are rightfully concerned with online ad safety, LKQD’s inventory is among the highest quality in the ecosystem. This focus results in industry-leading metrics with respect to mitigating fraudulent traffic and ensuring brand safety. LKQD brings to Nexstar Digital a leading, fast-growing, profitable, online video advertising business that will enable us to further improve our competitiveness with other media and deliver more brand safe solutions to advertisers and brands.”
Senior members of the LKQD management team, including CEO and Co-Founder Brian DeFrancesco and CTO and Co-Founder Christophe Clapp, have entered into employment agreements with Nexstar and LKQD will continue to operate its growing business as a division of Nexstar Digital.
Brian DeFrancesco, CEO of LKQD stated, “This is a win-win for clients on both sides, as Nexstar’s suite of local and national digital marketing products, content monetization solutions and digital services combined with LKQD’s end-to-end digital video advertising infrastructure technology, will allow small and mid-sized media publishers and businesses to maximize revenues across every available channel. Nexstar Digital has a strong position in the rapidly growing digital media and advertising technology market and we are excited to join their team as Nexstar’s resources and expertise will help power LKQD’s next phase of growth as we continue to expand our brand, technology capabilities and market presence.”
The transaction is expected to close late in 2017 or the first quarter of 2018 and is subject to Hart-Scott-Rodino (HSR) approval and other customary closing conditions.
About Nexstar Media Group, Inc.
Nexstar Media Group is a leading diversified media company that leverages localism to bring new services and value to consumers and advertisers through its traditional media, digital and mobile media platforms. Nexstar owns, operates, programs or provides sales and other services to 170 television stations and related digital multicast signals reaching 100 markets or approximately 39% of all U.S. television households. Nexstar’s portfolio includes primary affiliates of NBC, CBS, ABC, FOX, MyNetworkTV and The CW. Nexstar’s community portal websites offer additional hyper-local content and verticals for consumers and advertisers, allowing audiences to choose where, when and how they access content while creating new revenue opportunities. For more information please visit www.nexstar.tv.
About Nexstar Digital LLC
Nexstar Digital LLC, a wholly-owned subsidiary of Nexstar Media Group, Inc. (Nasdaq: NXST), offers media companies and advertisers a comprehensive suite of leading digital solutions and services focused on optimizing audience targeting, user engagement and the overall performance of online, mobile and multimedia content and marketing campaigns. Nexstar Digital’s enterprise-class publishing platforms, mobile video monetization technology and professional digital agency services deliver powerful digital advertising and content monetization solutions to clients across the United States. Nexstar Digital products include HYFN, Mass2, and Lakana. For more information please visit nexstar.tv/digital.
About LKQD Technologies
LKQD builds technology that improves video advertising. The Company’s open infrastructure powers a flexible and scalable end-to-end technology stack that enables digital video sellers and buyers to build and grow their businesses. LKQD’s Infrastructure as a Service (IaaS) technology provides a suite of integrated solutions from centralized ad serving, data management and advanced reporting, to highly scalable inventory and demand. Hundreds of companies leverage LKQD’s technology to power their entire video advertising business and customize solutions to efficiently scale across mobile, desktop, and connected TV.
This communication includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Forward-looking statements include information preceded by, followed by, or that includes the words “guidance,” “believes,” “expects,” “anticipates,” “could,” or similar expressions. For these statements, Nexstar claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this communication, concerning, among other things, future financial performance, including changes in net revenue, cash flow and operating expenses, involve risks and uncertainties, and are subject to change based on various important factors, including the impact of changes in national and regional economies, the ability to service and refinance our outstanding debt, successful integration of acquired television stations and digital businesses (including achievement of synergies and cost reductions), pricing fluctuations in local and national advertising, future regulatory actions and conditions in the television stations’ operating areas, competition from others in the broadcast television markets, volatility in programming costs, the effects of governmental regulation of broadcasting, industry consolidation, technological developments and major world news events. Nexstar undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this communication might not occur. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. For more details on factors that could affect these expectations, please see Nexstar’s other filings with the SEC.
Nexstar Media Group, Inc.
Thomas E. Carter, 972-373-8800
Chief Financial Officer
Joseph Jaffoni, Jennifer Neuman