RMG exploring $250-million IPO

June 22, 2011 by Dave Haynes

The Bloomberg news service is reporting that San Franisco-based RMG Networks is putting the components together for an estimated$250 million IPO that would, if it went out successfully, go a long way to making RMG the dominant Digital OOH network in North America.

There are arguments to be made that the company already is among the big boys, but that kind of money would enable it to go on an acquisition spree and roll up several networks. Without a doubt, there are numerous networks that would LOVE to be picked up and give the owners the exit they probably envisioned on start-up.

But RMG’s CEO Garry McGuire has already been buying networks and looked at many more than he bought, because most aren’t all that profitable or efficient in terms of revenues versus operating costs.

McGuire has confirmed he is meeting money people and that the proceeds may fund acquisitions. RMG already has 200,000 screens directly or indirectly through sales representation deals.

McGuire, reports Bloomberg, is also talking to banks and private equity firms about a financing round that may eliminate the immediate need for an IPO. He has rebuffed several unsolicited buyout offers.

RMG is profitable and will double revenue this year, McGuire said, while declining to disclose sales figures. He’s watching professional-networking site LinkedIn Corp. and radio- service Pandora Media Inc., two recent technology IPOs, to help gauge whether it’s the right time to take his company public.

To expand its national advertising network, RMG spent $75 million on three acquisitions since 2009, McGuire said. In April, he bought airport and train display operator Executive Media Network. He also bought IdeaCast to grow in the airline industry and PharmacyTV to augment the company’s retail business.

McGuire wants to do two more deals this year to boost his coverage across the U.S. and abroad, including emerging markets in China and India.

I have (disclaimer) done some work for RMG, so I know the company reasonably well. Good, smart people. I have a lot of time for Garry. The company went through a belt-tightening exercise a few months ago that was probably necessary for a few reasons, notably how headcount versus revenues looked for the banks and VCs.

I know a couple of senior people are leaving, including VP Sales Suzanne LaForgia (headed to another Digital OOH firm) and the other going into consulting. RMG had a very large management team because of acquisitions and that appears to be getting trimmed back to something more manageable.

Established media companies will invariably be among the big players as this industry matures, but RMG is positioned as well as anybody because its existing scale and big-money Silicon Valley ties to pull off an IPO and get really big. Being a publicly-traded company has its considerable downsides, but having the cash to buy good but distressed networks at bargain prices could make RMG into a very large player.

I am not sure if there has been another IPO on the Digital OOH side of this business. Ronin did one but as a vendor. I know Captivate, the old Elevator News Network and the Next Generation Network raised piles of money a decade ago, pre tech bubble, but I don’t think there has been a media company with an actual IPO.

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