LionTree Bets on Streaming Ads in Live Sports

3 weeks ago 30

LionTree LLC is betting that live sports is going to continue to migrate to streaming services and that advertising will follow.  

The boutique bank has led an investment group to take a majority stake in Transmit.Live, a five-year-old company whose technology helps insert ads into sports programming. An example is the addition of commercials on the bottom of the screen during lulls in the action.

As more entertainment and tech companies look to stream live sports, LionTree believes the companies are going to rely more on advertising to help pay for the escalating costs of sports rights, said Andrew Olinick, managing partner at LionTree’s asset-management division, the lead investor. Despite the current economic uncertainty, advertising in live sports continues to be strong, he said.

“Advertising always sells out in sports, even in economically difficult times,” Mr. Olinick said.  

High-profile sporting events are increasingly making their way to such streaming services as Apple Inc.’s Apple TV+, Comcast Corp.’s Peacock, Paramount Global ‘s Paramount+ and Inc. ‘s Prime Video. Last month Alphabet Inc.’s YouTube agreed to pay roughly $2 billion a year for the rights to the NFL Sunday Ticket franchise. Netflix Inc., which historically has shied away from live sports, recently bid for some streaming sports rights and discussed taking stakes in smaller leagues.

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The amount paid for U.S. sports rights was $21.3 billion last year, up from $16.95 billion in 2019, according to analysts at MoffettNathanson.

Transmit allows entertainment companies and leagues not only to insert ad breaks into their content, but also to make incremental ad revenue by offering the capability of running on-screen ads while play is under way.

For example, using data it collects, Transmit can detect when a basketball player is shooting a foul shot and can run an ad on the lower third of the screen that might be relevant to viewers when they are most engaged, said Seth Hittman, the company’s chief executive. The ads that users are shown will vary based on the data Transmit collects, including their viewing histories, Mr. Hittman said, though the data doesn’t have personally identifiable information. 

LionTree and Transmit declined to comment on the size of the investment, except to say that it is a slight majority. Transmit executives said the investment values the company at $350 million. Other firms that participated in the fundraising include SC Holdings, which was already an investor in the company.

Transmit, whose clients include CBS Sports, the National Hockey League and TelevisaUnivision, started its business focused on live sports because it saw opportunity in the challenge of inserting ads given the live nature of the programming, Mr. Hittman said. The company is looking to expand into entertainment programming as more streaming services adopt advertising. The streaming industry’s largest players, Netflix and Disney +, have recently launched ad-supported versions

Transmit expects to use the funding to invest more in tech and engineering, Mr. Hittman said.

LionTree is perhaps best known for being an adviser on major M&A media deals, having worked with the Hollywood studio MGM in its sale to Amazon. The firm’s asset-management division has focused on tech and media, with a bent toward sports content. Last month the company participated in a $700 million fundraising round by the sports-merchandising company Fanatics.

Write to Jessica Toonkel at [email protected]

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