Viacom in talks to acquire youth-media firm

  • Business
  • Thursday, 26 Jul 2018

Less money: Viacom's revenue miss was due to a lack of hit releases from the company's Paramount film studio.

LOS ANGELES: Viacom Inc is in talks to acquire youth-media company Awesome-nessTV from Comcast Corp, Verizon Communications Inc and Hearst Corp, according to two people familiar with the matter.

The parties haven’t reached a final deal, but the talks are in advanced stages and could conclude in just a couple weeks, said the people, who asked not to be identified because talks are ongoing.

Viacom will pay less than half of the US$650mil valuation AwesomenessTV received back in 2016, a sign of the sagging market for online media companies.

Viacom has begun scooping up digital properties after years of being criticised for fighting the migration of media to the Internet, including a lawsuit against Google.

The idea is to better connect with the young viewers that have left Viacom channels MTV and Nickelodeon in favour of YouTube and Instagram.

It acquired the online video convention VidCon and marketing firm Whosay, and has commissioned dozens of web series.

Viacom’s digital studio is led by Kelly Day, who once worked at AwesomenessTV, while Brian Robbins, AwesomenessTV’s co-founder and former chief executive officer, works at Viacom’s studio Paramount Pictures.

Once one of the fastest-growing companies in online media, AwesomenessTV has struggled to turn its popularity among young viewers into a sustainable business, and the owners have soured on a money-losing venture.

Comcast has a 51% stake in AwesomenessTV, while Verizon and Hearst Corp own the rest. The owners decided the company would be better off with just one part in control, said the people.

Comcast acquired a stake in Awesome-nessTV through its acquisition of DreamWorks Animation, the animation studio behind Shrek and Kung Fu Panda, while Verizon acquired its stake under outgoing chief executive officer Lowell McAdam.

AwesomenessTV was valued at US$650mil when Verizon acquired its minority stake in 2016, and it fit alongside the Huffington Post and AOL in the phone company’s growing suite of online properties. Verizon’s incoming CEO, Hans Vestberg, has begun to reduce Verizon’s interests in media.

The valuation of most digital-media companies has plummeted over the past few years as Facebook and Google swallowed much of the online-advertising market.

Dozens of companies that built businesses by distributing video and news on those sites have suffered. The news site Little Things closed, while Walt Disney Co’s Maker Studios and news site Mic fired staff.

Robbins, a former actor, filmmaker and producer, founded Awesomeness after watching his children forsake TV for YouTube and other online media.

The company amassed a network of tens of thousands of YouTube channels, for which it sold advertisements and advised on business matters.

AwesomenessTV also produced an eponymous TV show for Nickelodeon; movies featuring popular online personalities Cameron Dallas and Lia Marie Johnson; and web series for brands like “Royal Crush,” made in conjunction with the Royal Caribbean cruise line.

The growing audience online for web video attracted further investment, and increased the company’s valuation.

DreamWorks Animation acquired AwesomenessTV in a deal worth as much as US$117mil, and AwesomenessTV was valued at US$235mil when Hearst acquired a minority stake.

Verizon, which bought its minority stake in 2016, also handed AwesomenessTV a significant sales boost when it acquired programming for Go90, a short-form video service that was Verizon’s challenge to YouTube.

Yet Verizon shut down Go90 earlier this year, and has been looking to extricate itself from AwesomenessTV as well.

Long-time media executive Jordan Levin took the reins at AwesomenessTV last year, succeeding Robbins.

Robbins and chief operating officer Brett Bouttier have since left the company, which signed a lease for a 90,000 sq ft space in 2016. — Bloomberg

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