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Disney
to buy YouTube network Maker Studios for $500 million
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[March 25, 2014]
By Ronald Grover
LOS ANGELES (Reuters) — The Walt Disney
Co has agreed to buy Maker Studios, one of YouTube's largest
networks, for $500 million, a deal that makes Disney a major online
video distributor and should help draw more teens into the Disney
entertainment empire.
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 The price tag could rise to $950 million if Maker hits certain
performance milestones, Disney said, confirming what a source told
Reuters earlier on Monday.
Maker, founded in 2009, is one of the largest video production
networks on Google Inc's YouTube. Its producers target the younger
millennial generation, known for its high appetite for online video.
"This gives a presence online to reach the millennial group that is
increasingly getting its video online," said Kevin Mayer, Disney
executive vice president for corporate strategy. "And it gives us a
lot of data to help promote our other businesses to them."
The deal will be "mildly dilutive" to earnings per share through
fiscal 2017, Mayer said. Disney's fiscal year closes at the end of
September.
Maker helps produce and distribute videos to more than 380 million
subscribers worldwide across more than 55,000 channels. Its videos
now collectively garner some 5.5 billion views every month,
according to the source.
The company, whose backers include Time Warner Investments, Upfront
Ventures and Greycroft Partners, is partners with PewDiePie, the
online persona of 24 year-old video gamer Felix Kjellberg. Kjellberg
has more than 25 million subscribers and is YouTube's single
most-subscribed star.
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"Short-form online video is growing at an astonishing pace and with
Maker Studios, Disney will now be at the center of this dynamic
industry," Disney CEO Bob Iger said in a statement.
The deal is expected to close in Disney's third fiscal quarter.
(Reporting by Ronald Grover and Malathi Nayak.
editing by Andre Grenon and David Gregorio)
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