Disney buys Maker for initial $500m

The Walt Disney Company has made the largest investment a traditional media giant has yet gambled on a digital multichannel network (MCN) by acquiring Maker Studios.

The Mouse House has agreed to pay an initial US$500 million to acquire the US-based YouTube channels operator, whose shareholders will also receive an additional performance-related US$450 million if targets are met.

The deal comes as traditional media congloms look ever more closely at YouTube channel operators and digital businesses in order to reach younger audiences and Millennials, who increasingly pass over TV networks for online video. Disney’s bet is by far the biggest made yet.

Maker has more than 55,000 channels, 380 million subscribers and 5.5 billion views per month, according to Disney. Along with Fullscreen, it is among YouTube’s top channel operators and its best ranking nets include PewDiePie, which until recently was the most subscribed to YouTube channel.

Disney CEO and chairman Bob Iger said the acquisition would place it at the “centre of this dynamic with an unmatched combination of advanced technology and programming expertise and capabilities”.

For the past year, Maker has been led by former Endemol CEO Ynon Kreiz, who said: “Disney is synonymous with the best entertainment and is the ideal partner for us, strengthening our position as the leading player in online video.”

Maker Studios will report into Disney CFO Jay Rasulo, while remaining headquartered in Culver City, California and with bases in New York and London.

Maker’s current investors include Time Warner Investments, who lead a US$36 million financing round in 2012. Other investors include Kreiz himself, French pay TV giant Canal+ and Singaporean telecoms firm and paycaster SingTel.

Time Warner-owned Warner Bros. recently invested US$18 million in another MCN, Machinima, while last year DreamWorks Animation bought Brian Robbins’ AwesomenessTV in deal potentially worth US$117 million.

The Disney deal is subject to regulatory approvals and expected to close in Disney’s third fiscal quarter.