Disney Maker Studios

With Disney’s blockbuster $500 million-plus deal to buy Maker Studios, look for dealmaking activity in the online multichannel network space to continue apace.

MCNs are “now top-of-mind for all the major studios,” said Peter Csathy, CEO of Manatt Digital Media Ventures. “There will certainly be a flurry of M&A activity in the next 12-18 months.”

Fullscreen, another big MCN operator like Maker, is not publicly entertaining major studio suitors, according to CEO George Strompolos. However, he said, Fullscreen does see value in combining with a large, well-heeled entertainment company like Disney.

“A company getting acquired would benefit from deeper access to capital,” Strompolos said in an interview just prior to Disney announcing the Maker acquisition. “There is something to be said for ‘upstreaming’ the best creators, the best intellectual property into more of the avenues that traditional media (offers). We see a lot of promise there in years to come.”

SEE ALSO: Disney Buys Maker Studios In Deal Worth At Least $500 Million

Fullscreen’s investors include Peter Chernin’s Chernin Group, Comcast Ventures and global ad agency WPP. “We do get a lot of interest in third parties, and we do take that seriously,” Strompolos added. “But as of right now, we are planning on staying independent, and growing a strong business the way we know how.”

Stephanie Horbaczewski, president and co-founder and CEO of StyleHaul — an MCN focused on young female audiences with fashion and other programming — called the Disney-Maker deal “a breakthrough in the evolution of the online video ecosystem.”

Disney’s acquisition “clearly shows that online video content is an integral and essential part of the future of media and is strong validation for emerging leaders in the category,” she said. L.A.-based StyleHaul has raised $17 million in funding from Bertelsmann Digital Media Investments, European broadcaster RTL Group and RezVen Partners.

Studios have already been forming closer ties with the MCN players.

Earlier this month, Warner Bros. led an $18 million investment in Machinima, a struggling YouTube MCN focused on videogamers. The studio’s goal with that stake is to tap into the large — and growing — digital audiences for original online video. In particular, Warners sees potential for taking its DC Comics properties to the Machinima audience, said Craig Hunegs, president of business and strategy for Warner Bros. Television Group.

“We are looking for ways to grow and expand our business, and there’s a large, appealing audience on YouTube that is gravitating to MCNs like Maker and Machinima,” Hunegs said. “If the audiences are there, and we stay authentic to what attracted the fan base, a business opportunity will emerge.”

In addition to Hollywood studios, other potential MCN acquirers are Internet-media firms like Yahoo and AOL, which have been looking to expand their video content. Yahoo, for one — which launched unsuccessful bids for Hulu and Dailymotion — stands to rake in billions in cash through the impending IPO of Chinese e-commerce player Alibaba Group. Yahoo, which holds a 24% stake in Alibaba, is obligated to sell half that after Alibaba’s IPO, which values the company at more than $100 billion.

As for which MCNs may be attracting interest from large media companies, Manatt’s Csathy pointed to vertically focused companies such as StyleHaul, DanceOn (which counts AMC Networks among investors), Crunchyroll (the anime MCN in which Chernin Group bought a majority stake) and Indie Music Network, a division of Troytown Entertainment.

“MCNs have a limited ability to monetize what they’ve been able to build,” Csathy said. With studio owners or partners, they have “the ability to take those eyeballs and strategically take those properties upstream to the more traditional world of motion pictures, TV, gaming and merchandise.”

Through MCN partnerships or acquisitions, he added, big media congloms “now can sell a much broader package (of advertising for audiences) that are outside the traditional media ecosystem.”

Kevin Mayer, Disney’s exec VP of corporate strategy and business development, said the company will be able to enhance Maker Studios’ ability to make the MCN model profitable while also expanding Disney’s digital reach. But, he said, the MCNs don’t necessarily need a marriage with a large studio to survive.

“In the fullness of time, as these MCNs continue to grow, they can be profitable even in the standalone model,” Mayer said.

Susanne Ault contributed to this report.

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