France's TF1 and Italy's Mediaset Invest in Multi-Channel Network Studio71

Robin Roemer
Rhett & Link

The MCN, controlled by Germany's ProSiebenSat.1, plans to launch in France and Italy.

Two of Europe's leading commercial television broadcasters, France's TF1 Group and Mediaset in Italy, will invest a combined $56 million (€53 million) to become minority shareholders in Studio71, the online multi-channel network (MCN) controlled by German broadcaster ProSiebenSat.1.

The deal, announced Thursday, values Studio71 at around $426 million (€400 million) and represents a major move by Europe's old media players into the online video space. Following the 2015 merger of L.A.-based Collective Digital Studio with ProSieben's Studio71, the company, by its own estimation, is the fourth-largest MCN in the world, generating more than six billion monthly views on YouTube alone. Its talent pool includes such online stars as Lilly Singh and Rhett & Link, YouTubers Roman Atwood and Dennis Roady and actor Dwayne “The Rock” Johnson.

“By taking a stake in Studio71, the TF1 group is positioning itself in the global digital ecosystem alongside two of Europe’s leading media groups, said Olivier Abecassis, vp innovation and digital at the TF1 Group. And by becoming the operator of Studio71 France, we are bolstering our presence in multi-platform premium online video, and our status as a key partner for emerging web creatives.”

Following the deal, ProSiebenSat.1 will retain around 70 percent of Studio71. TF1 Group will have 6.1 percent and Mediaset 5.5 percent. As part of the agreement, Studio71 will expand into France and Italy, setting up local operations by buying a strategic minority interest in TF1 Group's MCN Finder Studios and partnering with Mediaset on a new Italian-based MCN. The deal to buy into Finder Studios still has to be approved by regulatory authorities in Germany and Austria.

“The partnership with TF1 Group and Mediaset gives us access to key European markets where the online video market is just now picking up momentum and promising significant potential,” said Christof Wahl, ProSiebenSat.1 COO. “With the united marketing power of our media companies, we have an attractive ecosystem to promote our content creators and create more value for our advertising partners.”

Studio71 CEO Reza Izad said this expansion was only the beginning and that the company was eager to replicate the model around the world.

The strategic approach of these companies will follow the Studio71 model of combining TV context from the parent companies — ProSiebenSat.1 airs hit shows such as The Voice in Germany — with original online content from local YouTube and digital stars.

Analysts welcomed the deal, with U.K.-based Liberum saying it would "allow the three players to leverage a much larger content library at minor extra cost. The transaction is not only a strategic one that will allow the players to better monetize their MCN channels, but we also expect it to benefit the margins in the longer-term." Liberum gave a buy recommendation for ProSiebenSat.1 stock and hold recommendations for both TF1 and Mediaset.