Alloy Digital, Break Media Will Merge

Alloy Digital and Break Media have entered into an agreement to merge in a 50-50 partnership to form a new Internet video company — Defy Media — marking the latest move in the sector by companies seeking better economies of scale.

Defy Media will create video properties aimed at younger Internet audiences with a sweet spot of consumers 12 to 34, which is a demo both Alloy Digital and Break Media have catered to.

Alloy Digital is one of the largest YouTube multichannel networks, with properties including Smosh, and claims to reach more than 95 million unique users per month. Break Media, whose principal investor is Lionsgate, says it reached 70-plus million uniques monthly, centering on comedy site Break.com.

The companies expect to officially announce the deal as soon as Tuesday, according to an Alloy Digital rep. The combined entity will have more than $100 million in annual revenue and will be profitable, according to the firms.

Alloy Digital and Break Media did not say how many employees would be laid off as a result of the merger, but sources said there would be some cuts. New York-based Alloy Digital has about 200 employees, while Break Media, with headquarters in Los Angeles, currently has 170 full-time staffers.

Alloy Digital CEO Matt Diamond will become chief executive of Defy Media, while Break Media topper Keith Richman will assume the role of president.

In March, Alloy Digital raised $30 million in funding from ABS Capital Partners; previous investors included Zelnick Media. Then in April the company bought Digital Broadcasting Group, one of the biggest online-video syndication networks, which was its sixth acquisition in past two years.

The merger of Alloy Digital and Break Media comes after Maker Studios, another large YouTube MCN, completed the acquisition of Blip last month.

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