A Race to Acquire Fullscreen – Who Should Win?
Right now, the MCN space is piping hot with strategic investment activity, sparked largely in part to Maker Studios’ recent acquisition by Disney for $500M. Now at the center of that frenzy is Fullscreen – the multi-channel network started by former Google / YouTube exec George Strompolous.
Most entrepreneurs dream about “the exit” and in the case of Maker Studios, it was a pretty grand f*#king exit, all things considered. But in an even more favorable situation for Fullscreen, it’s baited multiple mega-suitors – Ryan Kavanaugh’s Relativity Media, said to be the furthest along according to multiple sources, Yahoo, and Time Warner, which reportedly already exited from the deal, though others close to the discussions claim it’s still a very real conversation.
Choices, choices, choices.
But just like any courtship, let’s evaluate the pros and cons of each suitor and a few reasons why each might make a beautiful partner in matrimony.
And for fun, at the end, I’m going to throw in a few new players I think would make this much more interesting.
Relativity Media – At first glance, a partnership between Relativity and Fullscreen seems like a reach, a good far reach. Relativity is a blockbuster-producing power house with a talent-repping sports arm and now a Bollywood play in motion. Fullscreen is a technology company that aggregates YouTube channels, has launched an “original content division” but has yet to produce any original content (though the company is fishing for a new President of Programming and a Licensing and Content Acquisition exec to help shepherd that along.) Relativity stands to gain a foot in the digital space, Fullscreen would inherit the production capabilities and expertise it hasn’t executed, but the reality is, neither have dabbled in each other’s playing field. *In an interview with Sharon Waxman Kavanaugh claims he’s not interested in “Fullscreen’s content at all” but owning the consumer.
Time Warner – Time Warner has already made bets in the online video space, with investment in Maker Studios and Machinima’s recent round with TW-owned Warner Bros., and Turner Broadcasting’s strategic investment in Funny or Die. So while this isn’t fully out of left field, if Time Warner is looking to Fullscreen much in the way Disney looked to Maker Studios, then this deal doesn’t make sense. Fullscreen would need to start developing IP and somewhat have a proven record for content production, which it doesn’t have currently, especially if Fullscreen’s asking price is $500-$750M. However, if Time Warner converted Fullscreen into a Digital Studio, leveraged the production power of Turner and integrated the content into HLN for instance (which also recently announced a few solid digital deals), then I could see this as a huge win, not just for Fullscreen, but if executed properly, for the industry.
And finally, Yahooooooo ooo ooo!
Yahoo – This deal makes a bit more sense to me; in fact, it makes the most sense and snags my vote. Here’s why: Yahoo has been said, quite erroneously, to be building a “YouTube competitor.” Well, while what it is building may not be taking YouTube head on – not an open UGC platform – Yahoo has built a backend exchange that will allow select YouTube creators to upload their videos to Yahoo, integrated with Tumblr so that creators can instantly embed their content. A platform like this means higher CPM’s for the YouTube creator, a new audience stream for Yahoo and expanded video inventory for Yahoo’s editorial team to use via an exchange-like system.
So, pair Fullscreen’s technology and talent pool with Yahoo’s premium platform, new backend dashboard and editorial integration, and you’ve got yourself an interesting equation. Much like Vimeo’s recent partnership with IPG Mediabrands, this type of deal would ensure Yahoo had a content pipeline, a built-in reach, and a technology to power its exchange, aggregating system.
AOL is also rumored to be in the mix, but because AOL and Fullscreen would mix like oil and water, I’m scratching this from the discussion pool as I don’t think AOL and Fullscreen are a likely strategic play.
And as if these contenders aren’t interesting enough, here’s a couple I think could be fun additions:
1. Facebook – With Former Blip head Mike Hudak helming product development, the recent hire of Sibyl Goldman as Head of Entertainment Partnerships, the “test” that Facebook did with Ray William Johnson, and the push for users to use Facebook’s own player, the social networking site is clearly chasing YouTube / Google in the video game. Pairing that with the only broadly relevant MCN left and Instagram video could really move the needle for Facebook in the video category and in taking on Vine, where a number of YouTubers are already finding viral success.
2. AT&T – ATT has recently partnered with The Chernin Group to invest heavily in OTT. Fullscreen is part of The Chernin Group’s portfolio. If Fullscreen was able to turn up its content production, and build out its own off-YouTube strategy, perhaps through Supernova mobile video apps, then a deal with AT&T could make a lot of sense.
3. Verizon. The wireless provider has millions watching and engaging with content, video and text, every second, of every minute of every day. Mobile viewing is higher than ever and climbing. Verizon has also invested in building a mobile video offering but doesn’t have content. Fullscreen and its younger audience would solve the content problem and help drive meaningful video viewership, owned and operated by Verizon. Not to mention Fullscreen’s mobile video acquisition of Supernova. This kind of deal would be huge. But for many reasons, I doubt this would get done simply because Verizon’s product is said to need further development.
And there you have it! The race continues but we’ll be right there breaking the news when the deal is done – and you better believe it will.
Who do you think should buy Fullscreen and Why? Tell us in the comments!
*updated to reflect new informationTags: Acquisition, at&t, facebook, fullscreen, funny or die, Machinima, MCN, mcn land, multi-channel network, relativity, time warner, verizon, Yahoo!