MCN 101: Your ‘Back to School’ Guide to Key M&A, Investments, Partnerships

/ Aug 18, 2014

YouTube advertising in summer
The overall multi-platform video/media and multi-channel network space continues to be white hot, with accelerating M&A, strategic, and venture capital investments, and an ever-growing list of significant strategic partnerships.  Tough to keep up with it all, but my team and I at Manatt Digital Media follow the space very closely.
To help, here is a scorecard/“cheat sheet” of key representative (1) M&A, (2) strategic investments, (3) VC investments, and (4) strategic partnerships — all in reverse chronological order (most recent first, so that you can get a sense of the accelerating pace, even during the purportedly slow-moving dog days of summer):

I.  MCN M&A

StyleHaul (the leading fashion-focused MCN) heavily rumored to be up for sale right now — potential buyers said to include Hearst, Conde Nast, Amazon, and 21st Century Fox.
Rightster (London-based digital video distribution company) acquired European-based Base79 in early August 2014 for up to $85 million.
Legendary Entertainment acquired Geek & Sundry (geek culture) in late July 2014 for an undisclosed sum.
Otter Media widely rumored in late July 2014 to be mulling over taking a majority stake in leading MCN FullScreen for a sum reported to be between $200-$300 million (no updates since initial reports).
Otter Media (the $500 million joint venture of The Chernin Group and AT&T) acquired Creativebug (DIY videos) from Demand Media for $10 million mid-July 2014.
Relativity Media was widely rumored to have bid for leading horizontally-focused Fullscreen for an amount reported to be between $500 million to $1 billion in early May 2014 (since that time, Otter Media is rumored to be the leading contender — as discussed above).
DreamWorks/AwesomenessTV acquired boutique MCN and YouTube talent agency Big Frame for $15 million in early April 2014.
Disney acquired Maker Studios in the mid-March 2014 mega $500-$950 million deal that fueled and accelerated all of this year’s MCN activity.
DreamWorks acquired AwesomenessTV for $100 million+ in the first major MCN deal in early May 2013.
Consider all other major vertically-focused MCNs to be in “play” at this point, given all of the M&A activity (here are my predictions about likely M&A targets from a few months back).

II.  MCN Strategic Investment

As opposed to M&A, this category represents major media companies that have taken significant equity stakes in (but not outright acquisition of) leading MCNs:
Scripps and Liberty Media invested $25 million in leading foodie-focused MCN Tastemade in late June 2014.
AT&T and The Chernin Group committed $500 million in April 2014 to fund the new Otter Media joint venture to acquire, invest in, and launch OTT services (including leading anime-focused MCN Crunchyroll).
Warner Bros invested $18 million in leading and pioneering young male and gamer-focused MCN Machinima in early March 2014 (just before Disney’s acquisition of Maker Studios).
German media powerhouse ProSieben acquired a 20% stake in Collective Digital Studios for an undisclosed eight-figure sum in March 2014.
AMC Networks invested $4 million in leading dance-focused MCN DanceOn in October 2013 (NOTE: Manatt Digital Media is an investor in DanceOn).

III.  MCN Venture Capital Investment

As opposed to the strategic corporate investments discussed above, here are key multi-platform video/MCN-related venture capital investments:
Blue-chip Silicon Valley based VC Andreessen Horowitz invested $50 million to fund premium video development in BuzzFeed in early August 2014.
Russel Simmon’s urban culture-focused All Def Digital raised $5 million from Greycroft, Advancit Capital, E.ventures, and Nu Horizons in early August 2014.
German-based MCN Mediakraft Networks raised $23 million from Iris Capital, Capnamic Ventures, Shortcut Ventures in early July 2014.
Leading Latino-focused MiTu Networks raised $10 million from Upfront Ventures and existing investors mid-June 2014.
Leading sports-focused MCN The Whistle raised $10 million ($18 million to date) from SeventySix Capital and “name brand” long-time media execs Bob DuPuy, Garry Laybourne, Bob Pittman in mid-May 2014.
Tastemade earlier raised $10 million from Raine Venture Partners, Redpoint Ventures, Comcast Ventures in August 2013.
Fullscreen previously raised an undisclosed 8-figure sum from The Chernin Group, Comcast Ventures, and WPP in June 2013.
StyleHaul previously raised $17 million from Bertelsmann Digital Media Investments, RTL Group, RezVen Partners.

IV.  MCN Strategic Partnerships

As opposed to outright M&A or investment, MCN growth also is fueled by strategic partnerships.  Here are a representative few:
The Whistle just announced a major new distribution partnership with Xbox, which included a major branded content component with Suburu (August 2014).Mitu Networks just announced a major new content development and multi-platform distribution partnership with Spanish language media giant Televisa (August 2014).
FC Barcelona will use Dailymotion’s video player on their site and Dailymotion will launch FC Barcelona channel, dedicated to soccer (announced early August 2014).
Fox Sports Digital is partnering with Sporting News Media to share and swap libraries of editorial and video content (announced late July 2014).
Conde Naste launches pioneering brand-focused The Scene with content partners including AOL, ABC News, Forbes, BuzzFeed, Vox Media (announced mid-July 2014).
The Whistle announces continuous string of mega-content co-creation, co-distribution, and co-promotion deals with the NFL, MLB, NASCAR, PGA Tour, AVP Beach Volleyball, Harlem Globetrotters (ongoing throughout 2014).
Maybelline announced a deal with StyleHaul in June 2014 for branded content in its YouTube channels (with StyleHaul videos also appearing in Maybelline’s content hub and on TV).
Leading media company Lionsgate and Freddie Wong’s RocketJump Studios agree to a multi-year film, TV and digital content alliance (announced April 2014).
Mediakraft and British Pathe announce a major content deal in April 2014 to bring 85,000 videos to YouTube from their historical film archives of to YouTube (announced April 2014).
Note: These certainly are key strategic MCN/multi-platform video “moves” — but certainly not all of them.And, the action is still in its early innings…

This article was republished with the author’s permission. Check out more of Peter Csathy’s thoughts on the digital media space at the Digital Media Update.

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