By Ryan Nakashima, Business Writer
LOS ANGELES (AP) --Disney said Monday that it is buying YouTube channel operator Maker Studios for $500 million as the family entertainment giant seeks to stay in front of younger viewers who are increasingly watching short videos online.
It's the latest and largest acquisition of a YouTube channel network by a major Hollywood studio and represents another vote of confidence in the video service as an incubator of talent.
The Walt Disney Co. said it would pay up to $450 million more in bonuses if Maker meets performance targets, the company said. The Maker deal is Disney's biggest acquisition since it bought "Star Wars" creator Lucasfilm Ltd. for $4.06 billion in late 2012.
The purchase will give Disney ownership of 55,000 channels — including Epic Rap Battles of History and makeup expert Amy Pham's The Fashion Statement. Combined, Maker has 380 million subscribers and generates 5.5 billion views per month.
Buying Maker Studios will help Disney reach young audiences, said Kevin Mayer, Disney's executive vice president of corporate strategy, in an interview.
"They have the biggest audience on YouTube. It's very hard to replicate," Mayer said.
He said that while Disney also reaches younger viewers, their habits are changing.
"To the extent that they're finding YouTube, we want to be there too," he said. "We don't want to have any vacuums."
Mayer said that Disney could also find talent for its TV shows and movies in the YouTube stars on Maker Studios' channels.
It wouldn't be the first to attempt to mine YouTube for characters that could be taken mainstream. In 2010, Lions Gate Entertainment Corp. released "Fred: The Movie" in 2010, using the character that Lucas Cruikshank turned into a viral, if annoying, sensation on YouTube.
It also follows other media giants into the space.
Earlier this month, Time Warner Inc.'s Warner Bros. led an $18 million investment into videogamer network Machinima. Last year, DreamWorks Animation SKG Inc. bought the AwesomenessTV network for $33 million, with a bonus potential of $117 million if the studio met earnings targets over two years.
Peter Csathy, chief executive of investment fund Manatt Digital Media Ventures, said the scarcity of leading YouTube channel networks has contributed to a run-up in the price for the few that remain.
"The mass numbers of viewers coming to these channels is what it's all about," Csathy said. "It's the numbers and the scale. It's that coveted young demographic. Those are the contexts underlying all of this."
Richard Raddon, co-founder of online video management company ZEFR, said traditional media companies have only recently begun to see YouTube as a valuable platform to invest in.
"A few years ago, I don't think YouTube was on their radar as a big, broad, viable global platform with an enormous audience. It is today," Raddon said.
For Maker, the acquisition marks a stunning ascent.
Founded in 2009 by YouTube stars Lisa Donovan and her brother Ben, Danny Zappin, Shay Carl Butler and Kassem Gharaibeh, the company operates out of makeshift offices spread over several buildings in Culver City, Calif., and generates hundreds of videos every month.
When The Associated Press visited Maker in late 2011, it was shooting videos in the alley. The space was full of costumes, props, computers, and cables running everywhere.
Maker raised $70 million in two fundraising rounds from 2012 to 2013 that reportedly valued it around $300 million. Investors included Time Warner Inc. and others.
Last year, former CEO of production company Endemol Ynon Kreiz became Maker's CEO after Zappin stepped down in acrimony. Zappin later sued his co-founders over his ouster.
The combination of Maker's earnings and accounting charges Disney will have to make on the purchase will dampen Disney's earnings per share "mildly" through the 2017 fiscal year, Mayer said.
Disney shares rose 35 cents to $79.84 in after-hours trading Monday after falling 86 cents, or 1.1 percent, to close at $79.49 in regular trading.
“Dune: Part Two” and “House of the Dragon” Win 2 HPA Awards Apiece
Dune: Part Two and House of the Dragon each scored two HPA Awards during a gala ceremony at the Television Academy’s Wolf Theatre in North Hollywood, Calif. on Thursday night (11/7). The HPA Awards honor trailblazing talent in the postproduction industry, celebrating standout achievements in color grading, sound, editing, restoration, and visual effects across theatrical features, commercials, and episodics.
Dune: Part Two topped the Outstanding Color Grading--Live Action Theatrical Feature and the Outstanding Sound--Theatrical Feature categories.
House of the Dragon’s two wins were for “The Red Dragon and the Gold” episode which scored for Outstanding Visual Effects--Live Action Episode or Series Season, and Outstanding Editing--Episode or Non-Theatrical Feature (Over 30 Minutes). In the latter HPA Creative Category, House of the Dragon tied with the “Part Six: Far,l Far Away” episode of Ahsoka.
The HPA’s Judges Award for Creativity and Innovation honored Taylor Swift | The Eras Tour. This recognition celebrates the profound impact on both live and filmed entertainment that defined The Eras Tour, underscoring its exceptional impact on audiences and the industry. The jury issued a statement outlining their choice: “Celebrated as the cultural phenomenon of 2023, Taylor Swift | The Eras Tour set new records in box office sales, tour revenues, and attendance. The tour showcased exceptional artistry and innovation, making a profound impact on both live and filmed entertainment.”
This year, FotoKem was awarded the Charles S. Swartz Award for its role in supporting filmmakers, studios, cinematographers, and artists across diverse film and media landscapes. Also celebrated... Read More