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DreamWorks Animation Buys YouTube Channel AwesomenessTV for $33 Million

Deal now makes DreamWorks Animation a more significant player in the digital space.

DreamWorks Animation announced Wednesday it has acquired AwesomenessTV, a teen-skewed YouTube channel, for $33 million.

However, DWA could end up spending as much as $117 million depending on AwesomenessTV reaching unspecified earnings and performance targets in 2014 and 2015.

The acquisition validates the growth potential of digital-native brands like AwesomenessTV, which  amass huge global followings outside the traditional TV world. AwesomenessTV is a multichannel network, which has attracted tremendous investment activity in recent months from moguls including Peter Chernin.

As part of the deal, AwesomenessTV CEO Brian Robbins will take on a new role at the toon studio and help develop a DWA-branded digital channel aimed at family auds — something that DreamWorks Animation CEO Jeffrey Katzenberg has been eager to do to grow the company’s brand with younger consumers. Robbins, whose credits include “Smallville” and “Varsity Blues,” launched AwesomenessTV last June.

Last August, it attracted $3.5 million in funding. MK Capital led the Series A investment round, with other contributors including Greycroft Venture Partners and New World Ventures.

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Currently attracting 14 million subscribers and 800 million video views across its network of 55,000 channels, made up of sketch comedy, scripted and reality shows and talk shows for teens, AwesomenessTV received some financial backing from United Talent Agency and law firm Ziffren Brittenham, which incubated the venture.

After taking its time to embrace new media platforms, its decision to buy AwesomenessTV suddenly makes DreamWorks Animation a digital player in the original content creation space. Toon studio already had brokered a deal with Netflix to stream its films and original TV shows.

Pact signals that DWA continues its dealmaking mode. It recently bought the “Trolls” toy brand, and has brokered new licensing deals and promotional partnerships that get its characters in front of more consumers who vacation at resorts, on Royal Caribbean’s cruise ships and various entertainment destinations around the world. It’s clear AwesomenessTV will also serve as a promotional platform for its animated properties.

It’s now pursuing the creation of a cable channel through which it can also exploit its characters and those it now owns after buying Classic Media, which oversees Lassie, the Lone Ranger and Casper the Friendly Ghost, among others, which significantly boost DWA’s consumer products biz, as well.

Analysts, however, believe AwesomenessTV will put the cable plans on hold.

“This deal likely ends the company going down the road of purchasing a cable net, something which had been speculated in the past,” wrote Stifel analyst Benjamin Mogil. “We see this decision as a strategically prudent view given both where viewers are migrating to as well as the pressures on carriage fees for non-sports cable nets, which made that road a challenging one.”

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