Walt Disney Co. is in talks to acquire popular online-video
producer Maker Studios for about $500 million, said people with
knowledge of the talks.
The negotiations are ongoing, but should the deal close, it
would mark the biggest acquisition for a major media company in the
fast-growing but challenging business of producing and promoting
video programming for sites like Google Inc.'s YouTube.
If certain performance goals are met, Disney could end up paying
as much as $900 million, one of the people said.
News of the talks was reported earlier by the website
Recode.
Maker Studios is among the largest of a new wave of so-called
"multichannel networks" that make deals with people who make
YouTube videos in areas like music or comedy. The company then
helps those video makers sell advertising and make
product-placement deals. Some, including Maker, also consult for
other companies on their online-video strategy and produce videos
for them.
MCNs have had difficulty generating significant profits because
YouTube takes a large share of advertising revenue on the site.
Maker, which boasts more than 5.5 billion video views a month
and 380 million subscribers, runs popular YouTube channels
including one starring GloZell Simon, a comedian known for
over-the-top monologues, and Bart Baker, who makes music-video
parodies.
It has recently ramped up efforts to sign clients in overseas
markets, including the U.K. and Brazil, but has seen tumult in the
executive suite--the firm's current chief executive, Ynon Kreiz,
has been in the job since last May.
For Disney, Maker would immediately give it a huge presence on
YouTube as well as new online outlet for its animated characters
and brands like Marvel and Star Wars.
It wasn't immediately clear whether Maker would become part of
Disney's interactive media unit, which recently laid off about 700
of 3,000 employees, its television group, or would sit
independently within the company.
Disney has long been one of the most aggressive entertainment
conglomerates in digital media. It was the first to sell movies and
television shows through Apple Inc.'s iTunes and to stream
broadcast network programs online. Its ESPN sports network has
invested heavily in Internet and mobile distribution.
The company has a history of making major acquisitions to move
into hot new digital media fields, with mixed success. In 2007 it
acquired virtual world Club Penguin for $350 million. It didn't
perform well enough to earn another $350 million in payouts as part
of the deal. In 2010 it acquired social-games company Playdom for
$563 million.
Playdom and several other videogame developers Disney acquired
have been hard hit by multiple rounds of layoffs at the company's
struggling interactive media unit.
If it goes through, the Disney acquisition would be the biggest
foray yet by a traditional entertainment company into YouTube
programming. Earlier this month, a network catering to videogame
fans, Machinima, closed an $18 million round of funding led by Time
Warner Inc.'s Warner Bros.
However, the market has seen few all-out acquisitions. Last
year, DreamWorks Animation SKG Inc. purchased a competitor called
AwesomenessTV for $33 million. DreamWorks Animation executives said
on a recent call with investors that the AwesomenessTV deal could
lead to an additional cost up to $117 million.
Investors in Maker include Time Warner Ventures, Greycroft
Partners, GRP Partners, actor Robert Downey, Jr.'s Downey Ventures,
Elisabeth Murdoch, and "Avatar" producer Jon Landau.
Mike Shields contributed to this article
Write to Ben Fritz at ben.fritz@wsj.com and Erich Schwartzel at
erich.schwartzel@wsj.com
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