While the multichannel YouTube network awaits a big buyout payday, it has signed a deal to create its first scripted drama series. Maker Studios, which last week thwarted Relativity’s acquisition bid weeks after making a deal with …
In this week’s podcast, Deadline Executive Editor David Lieberman and host David Bloom preview what could be a very big day in the history of broadcasting and technology, as the Supreme Court hears legal arguments Monday about Aereo and its business model. The Davids talk about what’s at stake and how it might play out, where broadcasters might go if they lose and whether a win will turn the broadcasting business upside down. They also look over that very messy, and pricey Disney acquisition of online video powerhouse Maker Studios, and examine why ESPN, pay-TV’s most valuable brand, felt compelled to pitch investors that it’s just fine despite competition, cord-cutting and other existential challenges.
UPDATED: Maker says Relativity is too late. The online studio’s deal with Disney “has been approved by Maker Studios’ Board of Directors and the majority of its shareholders and is expected to close in the next few weeks, subject to regulatory approval.” Oh, it also notes that the effort to block he deal in court “was denied today by The Superior Court of California; County of Los Angeles, Central District.” Relativity responds that it “made a compelling offer” and will “continue to aggressively explore future opportunities that align with our strategy to accelerate digital content creation and distribution.”
PREVIOUS, 8:58 AM: Is $1B in stock from Relativity worth more than $950M in cash from Disney? That’s the proposition Relativity is offering online multichannel company Maker Studios today. It sent a letter of intent last night that it says “is superior to the current offer from Walt Disney” that the Maker board accepted last month. The plan developed with help from Jefferies and Barclays includes $500M in Relativity shares, $400M in stock when Maker hits “certain financial milestones,” plus $100M in stock to go to “key talent and executives” who also “are not existing stockholders of the Company.” Relativity says that both it and Maker “are natural partners” because both “share a commitment to challenging the status quo, breaking down old models that don’t work and inventing new ones that do.” Disney believes that the deal it struck with Maker last month — $500M upfront and $450M with milestones — is binding, so we’ll see where this goes.
The proposal does not appear to be directly related to an effort by former Maker execs including co-founder Danny Zapplin to persuade the LA Superior Court to block the deal with Disney. The application for a temporary restraining order wants to put things on hold while the plaintiffs try to demonstrate that current Maker execs are “skimming tens of millions of dollars for themselves by kicking back to the other stock adverse to the common shareholder.” Disney isn’t named as a defendant in the matter.
Disney’s proposed $500 million plus purchase of Maker Studios may have a problem from the past. The former CEO of the multichannel YouTube network wants a California judge to issue a temporary restring order against the planned vote next week on the big ticket merger. “Permitting the April 15, 2014 vote on the Merger to proceed without requiring additional disclosures would irreparably harm Plaintiffs, as well as Maker shareholders, because it would deprive them of the opportunity to make an informed vote in the Merger,” says the redacted and previously sealed application, filed yesterday in LA Superior Court by co-founder Danny Zapplin and three other former Maker execs. The TRO application alleges that something has to be done before it “will be too late” because current Maker execs are “skimming tens of millions of dollars for themselves by kicking back to the other stock adverse to the common shareholder.” The application to Judge Elihu Berle became public today. Disney is not named as a defendant in the matter.
UPDATE, 2:35 PM: Nearly two weeks after the first report surfaced about an acquisition of the multichannel YouTube network, the studio made it official today. Disney said Maker Studios shareholders will be compensated to the tune of $550M plus a “performance-linked earn-out” of as much as $450M more. The full release is below the original story.
PREVIOUSLY, MARCH 11: The deal isn’t set, but if it makes, it would represent the biggest bet yet that a Hollywood studio has made in a company built on YouTube, the world’s largest video site. Disney reportedly is in talks to buy Maker Studios for at least $500 million, Re/Code reports, citing people familiar with the negotiations. According to Maker Studios, the multichannel network generates 5.5 billion video views a month, with almost all of its content on YouTube. This is the latest move by a traditional media company to expand its focus on digital content. Just yesterday we reported on Warner Bros leading an $18 million financing effort for Machinima. a YouTube network aimed at gamers and other young men. Online video company FullScreen also scored an investment led by Comcast and others, and in May DreamWorks Animation agreed to pay $33 million for YouTube destination AwesomenessTV. The reported talks also come after Disney’s announcement last week that it was laying off 26% of its interactive division.
If you have kids — or, let’s face it, if you’ve been alive during the past few decades — you know about the Mario Bros video game franchise. Evan Daugherty certainly knows the Bros: The Snow …
David Bloom is a Deadline contributor.
That’s the intriguing notion floated by Kelly Day, who headed online video distributor Blip.TV before it was bought by Maker Studios, the even bigger creator and distributor of online content based in Culver City. Day, still an adviser to Maker, was keynote speaker as the WestDoc conference for documentary, nonfiction and reality-show makers opened this morning. Online pundits have been griping lately about the 45% cut of ad revenue that Google takes for video it distributes on YouTube, up from a 70-30 split early in the platform’s life. While Day acknowledged it’s expensive and technically complicated for Google to host and distribute the massive amounts of video it makes available on YouTube, show creators have a sense that, because YouTube has so much content, “for the most part there hasn’t been a lot of sophistication about how to monetize the best of that content.” For companies such as Maker that operate so-called Multi-Channel Networks, or MCNs, that represent dozens or even thousands of individual online creators, “there is a great opportunity to think about how to package and monetize that content better,” Day said. And Google might not even mind, she said, given its previous pronouncements and how it allowed a similar ecology of outside companies to grow and thrive atop its core search-engine business.