It’s Official: Disney Acquires Maker Studios For At Least $500M

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Media conglomerate Disney has taken a big step to embracing the new digital world of video, announcing the acquisition of YouTube network Maker Studios for $500 million, along with a potential $450 million in performance-based earn outs. The acquisition, which was first reported by Re/Code, represents the largest acquisition of a YouTube multichannel network, and could spell more consolidation in the space.

“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 with an unmatched combination of advanced technology and programming expertise and capabilities,” said Disney CEO Robert Iger in the acquisition release.

Maker will remain headquartered in Culver City, Calif., and will report to Disney Chief Financial Officer Jay Rasulo, the companies say.

Maker was originally founded by a team of individual YouTube creators who hoped to leverage each other’s separate audiences and skill sets to increase the number of views and subscribers of each. Think of it as a sort of “whole being greater than the sum of its parts” strategy.

But over time it’s evolved into a much bigger business than those original founders could have possibly predicted. It represents thousands of creators who have hundreds of millions of subscribers and together have 5.5 billion video views per month.

Maker has also raised a ton of money along the way. It’s raised $66 million over three rounds of funding, with investors that include Canal+, Astro, SingTel Innov8, Lakestar, Northgate Capital, Time Warner Ventures, Upfront Ventures, Greycroft Partners, Maker executive chairman Ynon Kreiz, Downey Ventures, Elisabeth Murdoch, FUEL: M+C, Daher Capital, and producer Jon Landau.

The acquisition comes at a premium over its most recent valuation of around $300 million, when it raised $26 million from Canal+, Singtel, and others to go after the international market.

Maker isn’t the only multichannel network to exist on YouTube, but it’s certainly one of the biggest. And being acquired by Disney could have a big impact on the industry, as other major media conglomerates or TV networks stake out their own place in the YouTube ecosystem.

That said, there are still questions to be answered about the acquisition. For instance: the vast majority of Maker’s views and revenues come from YouTube — how does it begin to move beyond the online video giant as its main distribution platform and establish its own set of mobile and connected TV apps?

It’s starting to get more serious about that, and has taken steps to improve its presence on new platforms outside of YouTube. Last summer it acquired Blip, which gave it another distribution platform, as well as a tech team with experience connecting to multiple different mobile and TV ecosystems.

Having the backing of Disney and all of its media marketing power, as well as its tech prowess, could help make Maker even bigger — or at least more profitable.

The deal is expected to close in the third quarter of Disney’s fiscal year.

Update: Anthony just spoke with Kevin Mayer, Disney’s executive vice president of corporate development, who offered a little more context around the deal. He said that Disney tends to be “pretty proactive” when it comes to strategic acquisitions, and in this case it was searching for a deal that could help the company “take that big step on YouTube.”

Disney has more than 70 channels on YouTube already, but it mostly treats the video supersite as a promotional channel, Mayer said, so it could doing a lot more to both repackage existing content for YouTube and create programs that are entirely new. He added that Maker was the right partner for this shift, not just because of the size of its audience, but also the quality of its executive team. (There are also some connections on that side, with Maker’s Chief Audience Officer Chris M. Williams previously serving as vice president and general manager of Disney Online Originals.)

As for why Maker will be reporting to Disney’s CFO, Mayer said that structure will create “the best chance for each and every one of our business units to build a better presence on YouTube.”