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Inside the Deal: How DreamWorks Animation Snagged AwesomenessTV

Deal sheds light on what it means for a talent agency to incubate a new media venture.

DreamWorks Animation’s decision to buy YouTube teen and tween network AwesomenessTV sheds some light on what it means when a talent agency “incubates” a startup.

That term is becoming more common at Hollywood’s major tenpercentaries as they invest their time and money into new ventures to make up for lost revenue from more traditional film and TV deals. But incubation is a term that tends to roll off the tongues of Silicon Valley’s investors and entrepreneurs, not agents or the rest of the entertainment community.

That may soon change now that TV producer Brian Robbins (“Smallville”) and the backers of his online network are $33 million richer through DWA’s deal, which could reach as high as $117 million should the channel meet traffic and other performance levels over the next two years. Either way, it’s the largest deal of its kind for an agency and will have others taking a look at how they can unload their own portfolio of channels or start launching some as soon as possible.

In this case, AwesomenessTV was incubated inside United Talent Agency, with the firm helping build the network’s brand with its young audience, raise $3.5 million in series A financing, assemble its management team, and land $5 million from YouTube as it doled out $100 million in grants to online channels producing original programming. Brent Weinstein, head of digital media at UTA, brokered those earlier deals.

Initial round of coin came from lead investor and board member Mark Terbeek of MK Capital, with minority investments made by UTA’s co-founder and CEO Jeremy Zimmer, Machinima topper Allen DeBevoise, MediaLink CEO Michael Kassan, Greycroft Venture Partners, New World Ventures and Matt Coffin, founder of LowerMyBills. Zimmer is also on AwesomenessTV’s board, as part of his stake in the company.

What attracted DreamWorks Animation was the 14 million subscribers AwesomenessTV has been able to attract to its channels over the past 14 months — an audience the toon studio is clearly looking to target with its animated films, TV shows, live events and consumer products.

But what’s even more noteworthy is how quickly the deal came together.

DWA chief Jeffrey Katzenberg spent the past two weeks negotiating with Robbins after the two were introduced by Robert Kyncl, VP and global head of content for YouTube and Google, a month ago. They wanted to have a deal in place before YouTube hosted its NewFronts presentation in New York City on Wednesday.

UTA helped negotiate the final deal with DreamWorks Animation, along with law firm Ziffren Brittenham.

The speed of the deal surprised even Zimmer.

“This all happened very quickly,” he says. “Within days (of the introduction between Katzenberg and Robbins) we were discussing the sale.”

However, Zimmer won’t be surprised if more of UTA’s clients choose to launch their own non-traditional businesses soon — digital or otherwise. It’s all about taking advantage of the changing business climate, he says. Agency has also incubated e-commerce site Shop Hers.

“Many of our clients today are looking to be more entrepreneurial and working with their agencies to be partners in how they build their businesses,” Zimmer said. “We feel very well situated to do that. We’re diversified enough and built out enough to really offer a lot of expertise. We’re also of the size enough to get down into the weeds with our clients and work with them.”

UTA continues to rep Robbins now that he’s an executive at DreamWorks Animation, as part of the deal, and will continue to collect coin from AwesomenessTV’s success, as well.

“There’s an ongoing earnout from Awesomeness that we’ll continue to participate in,” Zimmer said. “And now that he’s a buyer at DreamWorks, we’ll continue to find ways to work with him that way, too.”

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