Germany's ProSiebenSat.1 Creates Global MCN via Collective Digital Studio Deal

Epic Meal Time Hosts - P 2011

Epic Meal Time Hosts - P 2011

The company merges its Studio71 with CDS and pays $83 million for a 75 percent stake in the combined Collective Studio71.

German TV giant ProSiebenSat.1 is looking to become a global online video player. The company, which already operates multichannel network (MCN) Studio71, has struck a deal with Collective Digital Studio to combine it with its own Studio71 and form the new Collective Studio71.

ProSiebenSat.1 is investing $83 million in the deal that values the entity at $240 million and will hold a 75 percent stake, the companies said on Wednesday. The founders of Collective will own 25 percent. Collective Studio71 will have locations in L.A., New York, Berlin, Toronto and London.

Last year, ProSiebenSat.1 acquired a 20 percent stake in the Beverly Hills YouTube network.

On a combined basis, the companies currently generate 2 billion video views per month, making the combined firm one of the largest MCNs worldwide, they said. Studio71 will oversee the combined company's European and U.K. operations, while Collective will be responsible for the Americas and other English-speaking territories.

The new company will be jointly managed by chair Christof Wahl, Sebastian Weil and Ronald Horstman from ProSiebenSat.1 and Collective founders Michael Green and Reza Izad.

Collective said it was the first company to take YouTube stars’ online content to TV with F?ED on Nickelodeon. It is also known for food-centric YouTube channel Epic Meal Time and for producing hit web series Video Game High School. Among its other popular YouTube channels and stars are Rhett & Link’s Good Mythical Morning, Lilly Singh (aka IISuperwomanII), Corridor Digital, Explosm Entertainment’s Cyanide and Happiness, Meredith Foster, Matthew Santoro and pranksters Roman Atwood and VitalyzdTv. The latter ran onto the pitch during the 2014 soccer World Cup final in Brazil between Germany and Argentina and tried to kiss a German defender.

Studio71 was launched in Aug. 2013. Its properties include Let’s Play Together, Last Man Standing and The Mansion. It also has built web presences for TV hits, such as The Voice Kids and The Voice of Germany.

"ProSiebenSat.1 created and built up its own MCN with Studio71, and it has established itself as the largest network in the German-speaking world," said Christian Wegner, member of the executive board of ProSieben. "By founding Collective Studio71 we will now instantly be a global player in this attractive growth market."

Wahl, managing director at ProSiebenSat.1, said: "Studio71 and CDS are joined by the same digital DNA: a strong focus on developing innovative Web-only productions and branded entertainment formats, and intensive cultivation for our creators. The added value for our partners has top priority here."

Said Green: "Through our existing ProSiebenSat.1 partnership, we have been able to greatly increase monetization for our creators in Germany. The combination of our two MCNs, backed by a strong financial foundation, will enable us to leverage opportunities throughout Europe, the Americas and other territories to establish the first truly global MCN. There will also be a strong focus on bringing in broadcast partners for all these territories worldwide."

Earlier in the week, ProSieben made headlines with news of deal talks with German publishing giant Axel Springer.

Twitter: @georgszalai