Verizon Communications Inc., determined to hold off rivals and maintain its position as the largest wireless provider in the United States, has placed a big bet on millennial-focused content production.
The New York communications giant agreed to purchase a 24.5 percent stake in online media company AwesomenessTV for around $160 million, valuing the business at roughly $650 million. Awesomeness is headed by Chief Executive Brian Robbins.
The deal provides DreamWorks Animation SKG Inc., which has a controlling 51 percent stake in AwesomenessTV, with a large cash infusion and will provide a pipeline of original content for Verizon’s go90 streaming-video app, which could help retain and attract millennial wireless subscribers.
Verizon also signed a multiyear agreement with AwesomenessTV to create short-form scripted and unscripted video content − the kind that is popular on online platforms such as YouTube, Facebook, and Snapchat − which will be distributed within go90. AwesomenessTV’s 90,000 independent video creators have amassed more than 16 billion video views since the platform launched in 2012.
Original AwesomenessTV content could help Verizon distinguish its wireless service from competitors, said David Miller, managing director in equity research firm Topeka Capital Markets’ Brentwood office.
“Verizon is a distributor, just like Comcast, Cablevision, Time Warner Cable or DirecTV.” he said. “Distribution is a commodity. What’s not a commodity is content − every TV show is different. You have to have a hook to have people keep their subscriptions.”
Verizon said it is aiming to make go90, which launched in October, a video-streaming service positioned between Netflix and YouTube. The app includes content from the National Basketball Association, Vice Media, and AwesomenessTV. Last week, the company hired Chip Canter, former senior vice president of digital product at NBCUniversal, to push that effort further along.
“AwesomenessTV has demonstrated an ability to zero in on programming that gen Z and millennials want to watch,” said Marni Walden, Verizon executive vice president of product innovation, in a statement. “The content AwesomenessTV has produced for go90 has exceeded all our expectations with shows such as ‘Guidance’ and ‘Top Five Live.’ That’s why we want to be in the AwesomenessTV business.”
DreamWorks Animation purchased its majority stake in AwesomenessTV 2013 for $33 million. Hearst Corp. retains a 24.5 percent stake in the business.
DreamWorks Animation’s share price rose 41 cents, or 1.7 percent, after the deal was announced Wednesday to close at $25.21 share.
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