Time Warner and Singapore Telecommunications are set to garner a huge return after entertainment conglomerate The Walt Disney Company confirmed that it is acquiring US-based online video content provider Maker Studios for $500m in a deal that could eventually rise to $950m if “strong perfromance targets” are met.
Launched in 2009, Maker produces a range of original online programming, and offers development, production, promotion, distribution, sales, and marketing services to programming partners. The company estimates its videos generate 5.5 billion monthly views, and its biggest star is PewDewPie, the Swedish games blogger whose YouTube channel boasts 25 million subscribers.
Time Warner Investments, the corporate venturing arm of media conglomerate Time Warner, led the $36m first close of Maker’s series C round in 2012, which also included Downey Ventures, the investment unit of entertainment producer Team Downey, Greycroft Partners and Upfront Ventures, the two venture capital firms that funded Maker’s $1.5m series A, and family office Daher Capital.
Singtel Innov8, the corporate venturing unit for Singapore Telecommunications, participated in the $26m second close of the series C in September 2013 alongside French TV and film distributor Canal+, venture capital fund Astrolabe Ventures, private equity and VC fund Northgate Capital and investment group Lakestar. Maker had received approximately $69m in equity funding prior to its acquisition, according to SEC filings.
The purchase represents the latest part of Disney strategy that involves making strategic acquisitions in areas where it is comparatively weak, particularly in the young adult demographic.
Most notably, this has resulted in the acquisitions of comics-based entertainment company Marvel Entertainment and LucasFilm, the producers of the Star Wars series, for a combined $8bn in recent years, but it is also shoring up its digital output, buying games developer Playdom for $763m in 2010 and online community site Babble for $40m, the following year. The Maker deal will allow Disney to gain a foothold in online content, and it plans to incorporate short form Disney content into Maker’s programming.
Robert A. Iger, The Walt Disney Company’s Chief Executive Officer, said: “Short-form online video is growing at an astonishing pace and with Maker Studios, Disney will now be at the centre of this dynamic industry with an unmatched combination of advanced technology and programming expertise and capabilities.”