The Walt Disney Company (DIS) Buys YouTube Network Maker Studios

The Walt Disney Company (NYSE:DIS) will acquire Maker Studios, which is one of the biggest YouTube’s networks, for $500 million. The deal will make Disney a significant player in online video distribution, and would help attract more teens to the company’s entertainment group. According to Disney, the price paid may rise to $950 million if Maker Studios achieves certain milestones.

Maker quite popular

Established in 2009, Maker is one of the major video production networks on Google Inc (NASDAQ:GOOG)’s YouTube. The company targets the younger generation, which is more inclined towards the online video.

Maker facilitates in producing and distributing videos to over 380 million subscribers globally on more than 55000 channels. Citing sources, Reuters say that the videos of the company attract some 5.5 billion views every month.

Investors in the company include names like Time Warner Investments, Upfront Ventures and Greycroft Partners, is partners with PewDiePie, the online persona of 24 year-old video gamer Felix Kjellberg, who is the most followed star on YouTube with over 25 million subscribers.

Ynon Kreiz, executive chairman and CEO of Maker said, “Disney is synonymous with the best entertainment and is the ideal partner for us, strengthening our position as the leading player in online video.”

Deal to close in third quarter

The Walt Disney Company (NYSE:DIS) executive vice president for corporate strategy, Kevin Mayer said,“ This gives a presence online to reach the millennial group that is increasingly getting its video online,” and added “it gives us a lot of data to help promote our other businesses to them.”

According to Mayer, the deal would be “mildly dilutive” to the earnings per share through fiscal 2017

In a statement, Disney CEO Bob Iger said, “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.”

The Walt Disney Company (NYSE:DIS)’s, whose fiscal year ends in September, expect the deal to close in the third fiscal quarter.

YouTube networks are attracting massive popularity in Hollywood. In a similar deal, though smaller, DreamWorks Animation bought teen-skewing YouTube multichannel network Awesomeness TV for $33 million. This deal, also, included a provision to raise the price to over $100 million if the performance meets certain standards.