ProSiebenSat.1 takes over CDS

German media group ProSiebenSat.1 is paying US$83m for a majority stake in US-based multi-channel network Collective Digital Studio (CDS), which it will merge with its own in-house MCN Studio71.

ProSieben acquired a 20% stake in CDS last year but has now increased this to a 75% share.

Set up by talent agency execs Michael Green, Reza Izad, Gary Binkow and Dan Weinstein, CDS manages some 900 YouTube channels, which together claim over 1.7 billion views per month, through properties such as Fred, Epic Meal Time, Video Game High School and Rhett & Link’s Good Mythical Morning.

ProSieben will merge CDS with its own Berlin-based MCN business, Studio71, which is behind digital properties including Let’s Play Together, Last Man Standing and The Mansion – its first move into the US last summer.

The combined company will be called Collective Studio71 (CS71) and will be jointly managed by ProSiebenSat.1 Digital MD Christof Wahl, Studio71 MD Sebastian Weil and founder Ronald Horstman, along with CDS’s Green and Izad.

The CDS founders will retain 25% of the business, which will have locations in LA, New York, Berlin, Toronto and London, with the transaction valuing the company at US$240m.

The Studio71 side of the business will oversee European and UK operations, while CDS will be responsible for the Americas and other English-speaking territories. The merged entity currently generates 2 billion video views per month, ProSieben said, making it one of the largest MCNs worldwide.

“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.”

ProSieben increased investment in CDS is the latest in a wave of M&A activity in the MCN sector, largely driven by established media companies, with Disney’s US$1bn deal for Maker Studios last year the highest profile.

A new report from research firm Ampere Analysis this week found that over 75% of MCNs acquired in the last three years were bought by traditional media groups. The firm said the average MCN is worth 10 cents per monthly view, meaning an MCN with 1 billion would be worth US$100m. It identified 22 such companies, with a combined value of US$5.5bn, and said the YouTube channels business now has an overall value of some US$20bn.

ProSieben has itself this week been the subject of merger speculation, with the company reportedly in talks over a US$16bn roll-up with compatriot Axel Springer.

ProSieben rival RTL Group recently set up a new central division to oversee its MCN and digital video interests including StyleHaul, BroadbandTV and Divimove, in which its FremantleMedia subsidiary earlier this year took a controlling stake.