×

AT&T Buys Out Chernin Group’s Stake in Otter Media

AT&T has acquired the Chernin Group’s controlling interest in Otter Media, the four-year-old joint internet-video venture between the two companies, in a deal reported to be worth $1 billion.

Terms of the deal were not disclosed but AT&T said it did not have a material effect on its first-half 2018 results, which is when the majority of the deal was funded. Analysts valued Chernin Group’s deal to sell its stake in Otter to AT&T at $1 billion, according to the New York Times.

The deal will merge Otter Media’s portfolio — which includes Fullscreen, Rooster Teeth and Crunchyroll — into AT&T’s WarnerMedia unit, formed after the telco closed the Time Warner takeover in June. Tony Goncalves, the former DirecTV exec who was appointed Otter Media’s CEO earlier this year, will continue to run the company, reporting to WarnerMedia CEO John Stankey.

Chernin Group is cashing out of the Otter partnership as AT&T has dramatically expanded its media footprint with Time Warner — and now AT&T wants to tap into internet-native media brands to capture a new generation of consumers and, ideally, amplify the ability of the Time Warner businesses to do the same.

Peter Chernin, CEO of the company that bears his name, said in announcing the deal that the combination of Otter with WarnerMedia will create “a new-era media company, serving customers with every type of content delivered through every possible distribution channel.”

In 2014, Chernin Group and AT&T formed what would later be named Otter Media, with the companies pledging to invest upwards of $500 million in acquiring, investing and launching over-the-top video properties. AT&T had previously held a 49.8% interest in Otter Media.

“We are thrilled to incorporate the Otter Media brands and talent into WarnerMedia,” Stankey said in a statement. “Working with Tony, we look to harness Otter’s expertise in feeding the passion of online audiences to augment our portfolio of digital assets and help us further engage, connect and entertain consumers around the globe.”

Currently, the Otter Media portfolio includes digital-media company Fullscreen, in which AT&T and Chernin Group acquired a majority stake less than six months after forming their partnership. Fullscreen started out as a multichannel network that aggregated YouTube channels and now counts 4,500 creator partners (down from as many as 75,000 three years ago).

Otter Media also includes Ellation, an online subscription video service provider that operates the Crunchyroll anime service — in which Chernin Group had acquired a majority stake for $75 million in 2013 — and VRV, which sells OTT channels a la carte and in a bundle.

In addition, Otter Media runs Rooster Teeth, a digital-content studio and video network geared around original sci-fi and anime-style franchises, as an independent subsidiary. Previously, Rooster Teeth was a division of Fullscreen (which bought it in 2014 following Otter’s investment). Otter also has ownership stakes in studio startup Gunpowder & Sky and Hello Sunshine, a media company founded by Reese Witherspoon.

According to AT&T, Otter Media’s properties currently reach more than 93 million unique monthly consumers and is “on pace” to deliver over 75 billion video views this year. The company’s subscription VOD services have more than 2 million paying customers.

This January, Otter Media bought out the shares in Fullscreen and Crunchyroll that it didn’t already own, as a prelude to AT&T’s full ownership of Otter. AT&T reportedly wanted to move to buy out Chernin Group’s stake in Otter sooner, but the Department of Justice’s antitrust lawsuit seeking to block the Time Warner deal delayed the transaction.

Popular on Variety

More Digital

  • Netflix - Apple TV

    Netflix Stock Drops After CEO Acknowledges 'Tough Competition' Coming From Disney, Apple

    Netflix shares fell as much as 7% Friday to a nine-month low, coming after CEO Reed Hastings commented that the November launches of Disney Plus and Apple TV Plus will introduce a “whole new world” of competition. Hastings, speaking at the Royal Television Society conference Friday in Cambridge, England, said, “While we’ve been competing with [...]

  • Facebook

    Facebook Suspends Tens of Thousands of Apps During Privacy Investigation

    Facebook has suspended tens of thousands of apps ever since it began investigating potential privacy abuses, the company said Friday. The apps in question had been built by around 400 developers, and a suspension doesn’t necessarily indicate actual privacy violations. Facebook began combing through millions of apps that made use of its platform after the [...]

  • tivo logo

    Tivo Plans to Launch Android TV Dongle, Tivo+ Curation App

    DVR maker Tivo is getting ready to release a new device that may not record television at all: The company plans to launch a $50 Roku-like TV dongle early next year, its new CEO Dave Shull revealed in a conversation with CNN this week. The new device will be powered by Google’s Android TV platform, [...]

  • Still from "Andhadhun"

    Microsoft Streaming Deal Lifts Shares in India’s Eros

    Shares of leading Bollywood film distributor Eros International soared by 38% on Thursday following news of the company’s link up with Microsoft to develop a new generation of video streaming platform. The multinational company said that its Eros Now video operation would work with Microsoft Azure to develop its technology in three ways. They seek [...]

  • Comcast X1 DAZN

    Comcast Adds DAZN Sports-Streaming Service to Xfinity Flex, Sets Launch on X1

    DAZN, the digital sports service headed by ex-ESPN boss John Skipper, is now available to Comcast broadband customers on Xfinity Flex and will be available on Xfinity X1 this fall. It’s the first distribution deal for DAZN with a major U.S. provider since it debuted the combat-sports-oriented service in the States a year ago. In [...]

  • YouTube logo

    YouTube Raises Bar for Channel Verification, Stripping Some Creators of Verified Status

    YouTube is making it harder for channels to receive a verification badge indicating their authenticity — and the program’s new requirements mean that some channels won’t be eligible for verification. Like other internet platforms, YouTube indicates to viewers that specific channels are officially run by the creator, artist, celebrity or company they represent with an [...]

More From Our Brands

Access exclusive content