BBTV (TSX: BBTV, OTCQX: BBTVF), the company that pioneered the embedding of ads on video platforms like YouTube, plans to go private, just four years after going public.
Originally called Broadband TV, BBTV went public in October 2020 in a $172 million initial public offering and began listing on the Toronto Stock Exchange.
The IPO money was used to buy RTL Group’s 51% stake in BroadbandTV for just under $158.8 million.
That put founder and CEO Shahrzad Rafati firmly back in control of the company, with 83 per cent of its voting power.
But public markets have not been kind to high-tech companies over the last couple of years. BBTV’s shares have fallen in value from $14 per share at the start of 2021 to less than $1 by the start of 2023.
“The benefits to BBTV of being a public company have diminished substantially and are currently unavailable, as both the subordinate voting shares and debentures listed on the TSX are very thinly traded with low volume,” John Kim, chair of a special committee for the board of directors, explained in a press release.
In a management information circular today, the company says going public simply hasn’t paid off, and also points to falling YouTube ad revenue.
“Despite the significant efforts undertaken by the corporation to increase its visibility with investors since its initial public offering in October 2020, the advantages which the corporation expected to realize by becoming a public company have not materialized,” the company says in its circular.
“The lack of liquidity of the listed subordinate voting shares and debentures, and relatively small market capitalization, among other factors, have made it difficult for the corporation to capitalize on its public company status, which has not had any meaningful impact on its ability to attract capital or to realize significant growth opportunities through mergers and acquisitions.”
“In the meantime, the corporation has been buffeted by a number of financial and operational challenges.”
Those challenges relate to “a shift in YouTube viewership from traditional content to YouTube shorts.” These short video clips were not monetized until February this year, and even then, YouTube shorts provide only a fraction of the revenue that traditional YouTube videos provide.
Rafati and her company pioneered the placing of ads in video. YouTube ad revenue is still an important part of the company’s business.
Under the go-private arrangement, the “purchaser” -- Shahrzad Rafati and Hamed Shahbazi -- will acquire all of the company's issued and outstanding subordinate voting shares for $0.375 per share.
Two special shareholder meetings will be held November 30, in which shareholders will be asked to approve the arrangement to take the company private.
-- with files from Tyler Orton