Shares of advertising platform Magnite (MGNI -0.89%) -- product of the merger between The Rubicon Project and Telaria last summer -- are up over 20% today. The company is building on its strength in connected TV (CTV) by acquiring SpotX from RTL Group for $1.17 billion. The deal will create the largest stand-alone CTV and video-advertising platform, exceptional positioning given the preliminary fourth-quarter 2020 results Magnite just reported.  

Even before the pandemic struck last year, streaming TV was a hot industry. With consumers stuck at home, COVID-19 has accelerated their migration to internet-based streaming and video. Magnite said its CTV revenue grew 53% year over year in the fourth quarter of 2020 (compared with stand-alone results from the Rubicon Project and Telaria last year) to $15.3 million, or just shy of 19% of its total revenue of $82 million in the fourth quarter.  

A family of four sitting on a couch watching TV.

Image source: Getty Images.

Adding SpotX to the mix, though, would have brought Magnite's total CTV revenue up to two-thirds of the total in the final months of 2020. Given how many streaming services are now available for consumers to choose from, this puts Magnite in position to benefit no matter who wins the streaming TV war.

Magnite and SpotX will count among their high-profile customers Disney's Hulu, Roku, Discovery, fuboTV, and Electronic Arts, among many others.  

Of the $1.17 billion Magnite will pay RTL Group, $527 million will be cash (with some financing provided by Goldman Sachs), and the balance will be paid using 14 million new shares of Magnite. Considering that its share price has skyrocketed over 400% in the last few months alone, Magnite's move to use its stock as a type of currency in the deal helps it avoid excessive debt as it tries to capitalize on the fast-developing CTV industry. 

Investors are cheering the news of the tie-up as well as Magnite's solid results to close out a forgettable 2020. Streaming video is the future of the media industry, and Magnite has set itself up to be a leader among ad platforms as media companies look for new ways to monetize entertainment.