GLENDALE, Calif. – DreamWorks Animation SKG Inc. is buying AwesomenessTV, a YouTube teen network, for about $33 million in cash as it looks to tap into the popularity of online content.
DreamWorks said Wednesday that AwesomenessTV founder and CEO Brian Robbins will continue to direct growth at that company while also developing a DreamWorks branded digital family channel.
The deal includes the possibility of additional cash payments of up to $117 million if certain earnings targets are reached in 2014 and 2015.
The deal is expected to close this month.
AwesomenessTV features talk shows, scripted and reality programs and sketch comedy. The company has released a movie with AMC Theaters and expects to have a television show on Nickelodeon.
Its network of more than 57,000 YouTube channels has 14.4 million subscribers. The more than 1 million videos on the network have been seen 809 million times.
“We want to let Brian do what Brian’s been doing,” DreamWorks CEO Jeffery Katzenberg said Wednesday night at a YouTube presentation to advertisers in New York. “We also have talked about what we think are going to be some additional great collaborations with Brian on YouTube and ways in which the DreamWorks brand can serve as a valuable, defining brand for him.”
Benjamin Mogil, an analyst with investment bank Stifel, Nicolaus & Co., said in a research note that the purchase was “strategically prudent” and likely ends the possibility that DreamWorks will buy a pay TV channel as an outlet for the animated content from its franchises such as “Kung Fu Panda” and “Madagascar.” He said the acquisition will likely hurt DreamWorks’ earnings per share in the short term.
Rachel Egan, a spokeswoman for ad-buying network TubeMogul, said the purchase “seems like a broad recognition by DreamWorks that their younger audience — like the rest of us — are increasingly streaming content online, on mobile devices and in social media.”
The announcement came a day after DreamWorks announced quarterly earnings that beat analysts’ expectations on both revenue and profit, although both showed a decline.
Shares of DreamWorks, which is based in Glendale, Calif., were up $1.44, or 7.5 per cent, to $20.72 in late trading Wednesday.