Genius Brands International to acquire Canada’s Wow Unlimited Media for $53m

California-based Genius Brands International is set to acquire Canada’s Wow Unlimited Media for around US$53m in cash and stock.

Michael Hirsh

The deal will see Wow! subsidiaries including the Frederator Network move under the Genius Brands umbrella. The transaction also includes Wow!’s production operations, including its two main studios, Frederator Studios and Mainframe Studios, and the projects produced through those entities.

Andy Heyward, chairman and CEO of Genius Brands, said: “The acquisition of Wow substantially accelerates the financial growth of Genius Brands, delivering on our promise to shareholders to execute meaningful and accretive acquisitions, as we seek to rapidly consolidate the marketplace and become the foremost producer, broadcaster and consumer product licensor of high-quality children’s entertainment in the world.”

Genius Brands, which trades on the NASDAQ, said the acquisition of Wow’s Canadian production facilities will create a “number of profitable synergies for the company via access to various federal and provincial tax credits, which will allow Genius Brands to transfer its current animation production at great savings from China.”

Wow, which has offices in Toronto, Vancouver, New York and LA, currently trades publicly on the TSX Venture Exchange, a Canadian stock exchange. With the acquisition, Genius Brands said Wow will be de-listed from the TSX.

Wow’s Frederator Studios, based in New York, provides animation services on projects such as Adventure Time, FairlyOdd Parents, Powerpuff Girls, Dexter’s Laboratory and Castlevania, while Vancouver-based Mainframe Studios handles animation services on projects such as Madagascar: A Little Wild and Barbie Dreamhouse.

The deal will allow Genius Brands to expand into teen- and young adult-focused animation, grow its AVoD business (through the addition of the Channel Frederator Network) and oversee a full-service animation sub-contract studio with a large roster of clients, the company said.

The acquisition comes around six months after Wow announced it was undertaking a strategic review to look at future opportunities, including merging with another company or finding a buyer. The company is led by veteran animation executive Michael Hirsh as chairman and CEO.

Hirsh, who also co-founded Canadian animation firm Nelvana 50 years ago, said: “I’m excited to work with Andy and the Genius Brands team. This is a powerful partnership that brings immediate and significant value for shareholders. We bring production capacity, new IP and a robust and profitable YouTube Network with over a billion views per month.”

Hirsh will join the board of directors of Genius Brands while continuing his responsibilities for Mainframe, Frederator Studios, Networks and Platforms.

He added: “Genius Brands, with Kartoon Channel, has a fully distributed footprint where our content can thrive and also help Kartoon Channel itself expand. Genius Brands’ world-class consumer product licensing team, led by Kerry Phelan, will enable us to monetise all of these great characters and brands.

“This transaction represents the culmination of our extensive strategic review process. We feel that this is a very attractive opportunity for our shareholders, with significant potential upside in the months and years ahead.”

Wow’s Canadian content operations “will continue as a distinct Canadian controlled business,” said Genius Brands.