Why Viacom Bought Awesomeness on the Cheap

Everything isn’t so awesome for youth-media company Awesomeness.

On July 27, Viacom revealed it is purchasing the digital-centric production house behind such projects as YouTube original series Foursome and Netflix film You Get Me for a price tag that sources peg at about $25?million plus debt. Factoring in all aspects of the sale — a complicated calculation because the company is jointly owned by Comcast (via DreamWorks Animation), Verizon and Hearst — insiders value the deal at between $50?million and $100 million, a significant discount from its 2016 valuation of $650 million.

Awesomeness’ sale, which will see the departure of CEO Jordan Levin, is the latest splash of ice water in the cooling of the formerly red-hot market for digital-media businesses. Maker Studios went through a significant round of layoffs last year after it sold to Disney, and the business has since been absorbed into the Disney Digital Network. On July 23, Latino-focused digital firm MiTu cut staff and said goodbye to several top executives, including co-founder Beatriz Acevedo, as part of a substantial reorganization.

Though sources suggest that Awesomeness’ bargain-basement price wasn’t the result of significant losses at the company, it does reflect how it has failed to live up to the expectations of its onetime owners. The valuation also reflects that a Viacom-owned Awesomeness would likely look different from the business it had grown to be over the past few years. For example, Awesomeness took a recent hit after Verizon opted to shutter its go90 app, putting an end to a rich content deal said to be worth about $50 million per year. Notes a source familiar with the business, “It was a real moment of truth.”

Further, Viacom’s deal for Awesomeness will not include Awesomeness-operated online brand DreamWorksTV, which is fully owned by Comcast’s NBCUniversal and will move under the purview of Digital Enterprises president Maggie Suniewick.

Founded in 2012 by television producers Brian Robbins and Joe Davola, Awesomeness was one of the early channels funded through YouTube’s original channel initiative. Using that funding as a launchpad, the goal was to build out a youth-oriented new-media business. A year later, it sold to DreamWorks Animation for what amounted to around $100 million including earn-outs.  

With the support of then-DWA CEO Jeffrey Katzenberg, the company expanded to produce YouTube channels for other brands including DWA and Seventeen magazine. In 2014, it acquired management firm Big Frame as it doubled down on the digital talent business. Amid the traditional industry’s growing interest in digital — which spurred the sale of Maker to Disney (for a final price tag of $675 million) and Fullscreen to Otter Media (at a reported $200 million to $300 million valuation) — Awesomeness sold minority stakes to Hearst and, later, Verizon.

But the landscape for digital businesses has shifted significantly in the last two years as Google and Facebook continue to dominate the online advertising business and the streaming video landscape gets eaten up by deep-pocketed tech companies like Netflix, Amazon and Apple.  

When Verizon bought into the business in April 2016 — the deal that gave Awesomeness its $650 million valuation — the telecom giant planned to launch a subscription video brand with Awesomeness. In preparation for the venture, Awesomeness signed a nearly $100 million lease for a 90,000-square-foot office building in West Hollywood and tapped ABC veteran Samie Kim Falvey as chief content officer for the new service, dubbed Made for Mobile. But the effort got derailed after DWA, Awesomeness’ majority owner, sold to competitor Comcast in August that year. At the time, sources told The Hollywood Reporter that Awesomeness largely had been an afterthought in that deal. The following year Robbins, who had served as CEO since Awesomeness’ inception, left the company — setting off a wave of departures including Awesomeness Films head Matt Kaplan, chief business officer Kelly Day, chief talent officer Paula Kaplan and, more recently, president Brett Bouttier.  

Today, Awesomeness serves primarily as a studio, producing films for theatrical and digital distribution, selling shows like Freakish to Hulu, and continuing to funnel original programming to its YouTube channel and other online platforms. That’s a business that NBCUniversal understands, but it has made less sense for Hearst and Verizon, which in addition to shutting down g090 has also revealed plans to move away from the content business entirely. With the shifting priorities of its owners, it made sense to sell the business and consolidate that ownership structure, which was made more complicated by the different strategies of public Comcast and Verizon and family-run Hearst. Per sources, there were multiple interested parties.

Viacom could prove a good fit for Awesomeness, in part because its newly created Digital Studios group is being run by former Awesomeness executive Day. The brand will now be integrated into her group, which also recently acquired conference organizers VidCon and influencer marketing platform WhoSay. For Day, Awesomeness gives her group access to a digital studio that can produce content not already tied to specific Viacom brands. Further, Awesomeness has cache with young audiences, reaching 158 million subscriber a month and generating over 300 million monthly views. In a July 27 statement, Day called the brand “a digital media powerhouse for today’s most sought-after and hard-to-reach youth audiences” — exactly the demo that the owner of Nickelodeon and MTV needs to recapture. 

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