ProSieben's Red Arrow Makes Collective Digital Studio Investment

"Epic Meal Time"
"Epic Meal Time"
 

Collective Digital Studio has raised its first round of outside investment from Germany's ProSiebenSat.1. 

The companies are not disclosing the size of the round, but CDS chairman Michael Green tells THR that the investment is "a significant eight figures" and represents a 20 percent stake in the Beverly Hills YouTube network. 

The investment comes from ProSieben's production and distribution arm Red Arrow Entertainment, which oversees 15 production companies in nine countries.    

Green calls the investment a "real meeting of the minds." 

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Said Red Arrow managing director Jan Frouman: "Our partnership with CDS is a major strategic step forward for Red Arrow. Not only will we be expanding our global digital presence in a real and meaningful way  but we will be doing it with a team who knows the space and shares our creative philosophy. We couldn’t be more pleased."

CDS, a subsidiary of Collective Management Group, manages a YouTube multichannel network of more than 600 channels, including food-centric Epic Meal Time, that generates nearly 1 billion views each month. The firm also works with YouTube talent to produce, distribute and market online video across several platforms. 

For example, CDS produced web series Video Game High School with Freddie Wong's Rocket Jump Studios. It also helped bring a series based on YouTube's The Annoying Orange to Nickelodeon and produced a Nickelodeon movie franchise based on Lucas Cruikshank's Fred Figglehorn character.   

The network is the latest in a string of YouTube businesses to find support from traditional media companies. Warner Bros. led an investment in Machinima in early March and Disney acquired Maker Studios on Monday for up to $950 million. 

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"When many of our peers were out raising money we were kind of resistant to it," says Green. "We were building a business and were fiscally disciplined. As it started to prove itself, we wanted to continue to ramp it and scale it, which requires capital. We had a real story to tell when we went out into the marketplace." 

ProSieben started a multichannel network called Studio71 in August 2013 that now generates more than 100 million video views a month. As part of its investment, Studio71 will now receive content from CDS and market it across its platforms. The two firms also will collaborate on programming, talent and technology initiatives. 

Moelis & Co. advised CDS in the deal and Cooley LP handled legal representation. ProSieben was represented by Milbank. 

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