Walt Disney Company Acquires Maker Studios, An Online Content Network, For $500 Million

 @SnehaShankar30 on March 25 2014 6:16 AM
Robert Iger- The Walt Disney Company
Walt Disney Company Chairman and Chief Executive Officer Robert Iger announced Monday that Disney will be buying Maker Studios. Reuters/Gary Cameron

The Walt Disney Company (NYSE:DIS) announced Monday that it has agreed to acquire Maker Studios, which creates content for YouTube, for $500 million.

California-based Disney said in a statement that it would pay Maker an additional $450 million in bonuses if the network meets targets. The deal, subject to regulatory approvals, would help Disney gain ownership of more than 55,000 channels created by Maker, 380 million subscribers with 5.5 billion views, and a clearer path toward creating short-form online content.

“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 Robert A. Iger, Disney's chairman and CEO, in a company statement.

Founded in 2009, Maker is one of the largest video-production networks on Google Inc's (NYSE:GOOG) YouTube website and targets its content toward younger users.

"This gives a presence online to reach the millennial group that is increasingly getting its video online," Kevin Mayer, Disney’s executive vice president for corporate strategy, said, according to Reuters. "And it gives us a lot of data to help promote our other businesses to them."

The deal is expected to be closed in the third quarter and may lower Disney's earnings in the fiscal year 2017, The Washington Post reported, citing Mayer.

It is one of the biggest acquisitions for Disney since it bought Lucasfilm in 2012 for $4 billion, according to Bloomberg. The media and entertainment organization also bought mobile game maker, Playdom, in 2010 for $563 million, and spent about $350 million in 2007 to buy Club Penguin, an online gaming portal for kids.

“Maker brings to Disney a substantial digital audience, some of the biggest stars in the space and also a real understanding of how to manage big brands on YouTube,” said Brent Weinstein, who leads United Talent Agency’s digital media division, according to the New York Times, adding: “Look at what Maker has done for Epic Rap Battles and Snoop, and imagine what they can do for Iron Man, Mickey and Yoda.”

Disney’s stock rose 0.4 percent in extended trading just after the deal was announced, according to Bloomberg, but the stock dropped more than 1 percent at close Monday.

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