AT&T, Chernin Group Buy Majority Stake in Leading YouTube Network The move likely values Fullscreen, which counts the fastest-growing subscriber base of any YouTube network, at $250 million.
By Geoff Weiss
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Old media titans like Walt Disney and DreamWorks have been hungrily eyeing the white-hot YouTube space for years. But among the site's top multi-channel networks (MCN) -- which typically manage thousands of YouTube channels in exchange for a cut of Google ad revenues and sponsorship deals -- there has been one notable holdout on the acquisition block.
Fullscreen, which currently counts the fastest-growing subscriber base of any YouTube network and whose top channels include The Fine Brothers, Shane Dawson, Grace Helbig and Our 2nd Life, announced today that it has sold a majority stake to a joint venture between AT&T and The Chernin Group called Otter Media.
This is the first investment by Otter Media, which was formed last April with $500 million in capital to invest in online video. The company previously made an unsuccessful bid for digital streaming service Hulu.
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Nevertheless, unlike Maker Studios -- Fullscreen's chief adversary, which was acquired by Disney for $950 million in March -- Fullscreen founder George Strompolos made the strategic decision not to sell his company outright.
Having frequently compared Fullscreen to MTV, Strompolos told Bloomberg that that network erred in selling to Viacom at its peak. "They didn't capture nearly the upside they ended up creating. This lets us continue to go for a home run."
Otter's undisclosed stake likely values Fullscreen at $250 million. The transaction is expected to close next month.
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Fullscreen, which was founded in 2011 by Strompolos, a former YouTube employee, currently counts a team of 200 worldwide and has already raised $30 million in funding. This latest investment will be allocated towards production, growing an advertising staff, expanding a live-events business and product licensing, Strompolos said. Fullscreen is also rumored to be developing a paid video streaming service.
"What felt like the future of media four years ago has quickly become the new reality," Strompolos wrote in a blog post announcing the deal. "Both Hollywood and Madison Avenue have recently taken notice and truly started to embrace this change."
AT&T, meanwhile, also clearly sees video as seminal to its future. In addition to Otter Media, the company inked a $49 billion mega-merger with DirecTV in May.
