Rumor Mill: Defy Media Latest MCN on the Block – Asking Price Approaches $500M

/ Feb 3, 2016

Defy Media

One of the earliest-formed MCN’s Defy Media is rumored to be on the block. And true to MCN form, Defy is chasing a pretty big sale price that is said to stretch towards $500 million, according to various sources. Executives close to senior management at Defy have told VideoInk that most of the major traditional media companies have come to the table, but Viacom is the likely buyer — not surprising given Viacom joined ABS Capital Partners, ZelnickMedia, and Lionsgate as a minority stakeholder in 2014. A Defy spokesperson declined to comment or confirm.

Defy Media, which is the post-merger moniker of Alloy Digital and Break Media, has built a multi-platform media business that includes owned and operated sites for teens, young adults – both female and male, video properties and apps. Some of these brands include gURL, The Escapist, Clevver TV, and Shut Up! Cartoons. Cumulatively, Defy’s brands reach over 750 million monthly unique views from over 80 millon monthly visitors.

SMOSH#s_TubularLabs_VideoInk

*Data from Tubular Labs

Perhaps the most well known brand in Defy’s portfolio is SMOSH, a YouTube brand it acquired from DECA (now known as Kin Community) and one that currently reaches over 21 million subscribers on YouTube where it draws over 140 million views monthly, on average.

According to SocialBlade, those kinds of numbers could generate up to $4.3 million annually, from ad revenue on YouTube alone and not factoring custom branded or commissioned content, merch, or other revenue streams for the brand. Under Defy’s leadership, SMOSH expanded the brand to include SMOSH Games, which in its own right has over 6 million subscribers.

Defy’s timing in the market might be tricky as it chases down a $500 million sale. The hype on multichannel networks has significantly cooled as even those associated with “MCN’s”  dissociate with the term in favor of a new acronym “MPN” (multi-platform network). And Defy may be too far behind the heat wave that surged in 2014 and 2015 around multichannel networks and the gargantuan valuations sparked by Maker Studios sale to Disney in 2014 for $500 million, followed by Fullscreen’s attempt at a sale for around the same pricetag.

But, sources familiar with Defy’s annual revenue, recent business growth and projected revenues, claim that while a $500 million valuation could strike a bit high for the company, it’s not far off based on a valuation of 2-3x Defy’s annual revenue. And since Viacom’s investment in 2014, Defy’s O&O reach has grown by 53% and the company has seen roughly 42% increase in downloads of its video-related mobile apps.

With Defy potentially off the map, and Omnia’s recent sale to Blue Ant, the only major “MCN’s” left in the neighborhood are DanceOn, Machinima, MiTu, WhistleSports, The Young Turks and Kin Community.

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