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ProSieben Acquires Control of Collective Digital Studio, Invests $83 Million in Online Video

Merged company to be called Collective Studio71

German broadcaster ProSiebenSat.1 is buying a controlling interest in multichannel network Collective Digital Studio, with plans to merge CDS with its Studio71 MCN and invest $83 million in the combined entity.

Last year ProSieben acquired a 20% stake in CDS for an undisclosed amount. The new online-video business will be named Collective Studio71, a global multichannel network with operations in Los Angeles, New York, Berlin, Toronto and London, generating around 2 billion video views monthly, according to the companies.

The deal comes after a frenzy of large media companies last year snapped up or invested in YouTube-oriented MCNs. Those include Disney’s purchase of Maker Studios; Chernin Group and AT&T’s Otter Media buying Fullscreen; RTL Group acquiring StyleHaul; Vice Media securing $500 million from A+E Networks and Technology Crossover Ventures; and Warner Bros. taking a stake in fanboy-focused Machinima.

ProSieben said the $83 million investment gives Collective Studio71 a post-money valuation of $240 million. The broadcaster will own 75% of the new entity, with the remaining shares held by the founders of CDS — Michael Green, Reza Izad, Gary Binkow and Dan Weinstein — and GF Capital Private Equity Fund, an investor in CDS, also retaining a stake in Collective Studio71.

CDS’s top YouTube channels include Epic Meal Time, Rhett & Link’s Good Mythical Morning and Lilly Singh (aka Superwoman), and it also has produced series including RocketJump’s “Video Game High School.” The Collective, which formed as a management agency in 2005, last year shut down its music-management business to focus on digital video. In May, CDS’s top 100 channels had 1.7 billion video views across all platforms, including YouTube, Facebook and Twitter’s Vine, with 25% of those being Vine loops, according to analytics firm Tubular Labs.

ProSieben’s Studio71 digital properties include “Let’s Play Together,” “Last Man Standing” and “The Mansion.”

Collective Studio71 will be jointly overseen by ProSieben’s Christof Wahl, Sebastian Weil and Ronald Horstman, and CDS’ Green and Izad. The group will have 250 employees combined.

The merged entity will manage distribution and technology buildout, as well as expand content formats globally, while Studio71 and CDS will run autonomously in their regions. Studio71 will oversee European and U.K. operations and CDS will be responsible for the Americas and other English-speaking territories.

“Studio71 and CDS are joined by the same digital DNA: a strong focus on developing innovative Web-only productions and branded entertainment formats, and intensive cultivation for our creators,” Christof Wahl, managing director of ProSiebenSat.1 Digital, said in announcing the pact. “By this merger we will reach a global audience and can thereby offer additional marketing opportunities to advertising customers.”

CDS chairman Michael Green added, “The combination of our two MCNs, backed by a strong financial foundation, will enable us to leverage opportunities throughout Europe, the Americas and other territories to establish the first truly global MCN. There will also be a strong focus on bringing in broadcast partners for all these territories worldwide.”

Separately, ProSiebenSat is reportedly in merger talks with German publishing giant Axel Springer in a potential deal worth an estimated $16 billion.

ProSieben was represented in the CDS transaction by Milbank and Moelis & Company Investment Bank, and CDS was repped by law firm Paul Hastings.

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