Signs point to "yes." As I recently wrote in a lengthy analysis of 2015's top digital media deals and trends to date this year, those leading MCNs "are ripe for M&A down the road -- a road that likely just got shorter [last week] because one of their independent brethren (Collective Digital Studio) has just been taken off the table ...." Other industry insiders agree, including execs from major media companies with whom I have spoken. And, several followers/influencers within the industry underscore this point even more emphatically. Sahil Patel of Digiday -- who covers the space very closely -- writes, "If you're a major media company and you're interested in buying a YouTube network, you better hurry up." And, even more emphatically, research firm Ampere Analysis concludes: "For those players without a stake in the MCN game, sand is rapidly running through the hourglass ... Many media companies are playing a waiting game: the million dollar question now is when to stop waiting and start acting." Ampere pegs the top 100 MCNs as having a collective value of an eye-popping near-$10 billion (yes, BILLION!) -- and further concludes that 22 MCNs each justify an acquisition price of "at least $100 million" based on previous M&A comps in the space.
I don't know about that (since Ampere's "treat-all-MCNs-the-same" analysis is rather one-dimensional and apparently doesn't consider other relevant valuation factors, including strategic "fit," specific consumer vertical focus, each MCN's focus on and -- amount of -- licensable original programming, and quality of distribution partners, among others). But, I certainly do believe that MCN M&A will actively continue in the next several months (NOTE: remember, most majors call themselves MPNs now, as in "multi-platform network"). I call this Phase 2 of expected MCN M&A activity -- which ProSieben/Collective Digital Studio (CDS) sparked last week.
HERE ARE MY PREDICTIONS OF WHO COULD BE NEXT (and for those keeping score, in addition to correctly identifying CDS, I had earlier correctly anticipated M&A for Crunchyroll, Fullscreen and StyleHaul):
(1) TASTEMADE -- the leading food and travel MCN (which counts Scripps, Liberty Media, and Comcast as strategic investors, is known and respected for its original programming and brand, and has secured big wins on the distribution side with Apple and Facebook, among others); here is my exclusive interview of CEO Larry Fitzgibbon from last August;
(2) MACHINIMA -- one of the major MCNs that started it all several years back, is gamer/young male-focus, and still has massive scale (and counts Warner Bros. as a strategic investor);
(3) WHISTLE SPORTS -- the leading sports-focused MCN (which counts BSKYB and Liberty Global as strategic investors, has compelling deals with several major sports leagues -- including the NFL -- and features content that "travels well" internationally); here is my exclusive Q&A with CEO John West (note: Whistle is a client of Manatt Digital Media);
(4) MITU NETWORK -- the leading Latino-focused MCN (which counts AMC Networks as a strategic investor);
(5) DANCEON -- the leading dance/music-focused MCN (which features significant original programming that is ripe for upstream licensing to traditional platforms, and which also counts AMC Networks as a strategic investor); here is my exclusive profile about this MCN (note: Manatt Venture Fund is an investor and DanceOn is a client of Manatt Digital Media);
(6) FREDERATOR -- an animation-focused MCN that is somewhat "under the radar" (similar to Collective Digital Studio prior to its acquisition), and which is lead by media industry pioneer Fred Seibert who helped launch MTV and VH-1 and also served as President of animation legend Hanna-Barbera; in other words, his relationships and partnerships with the creative world are legend; and
(7) OMNIA MEDIA -- another digital-first media company that also is very much "under the radar" and is rumored to be in active discussions on the M&A front right now.
And, these are just some of the leading U.S.-based MCNs. Remember, it's a big world out there -- with several other major MCNs, including German-based Mediakraft. Many hungry major international media companies exist (cases in point: ProSieben/CDS and RTL Group/StyleHaul).
BONUS PICKS -- JUKIN' MEDIA -- not really an MCN, but also generally in the short-form digital-first space (and with a unique value proposition and multi-faceted business mode -- and also with a strategic media investor -- Bertelsmann Digital Media Investments). Here is my profile of this very "hot" company about which many are talking. It wouldn't surprise me if Jukin' were swallowed up first. I also like WOVEN, which is a bit like a "less angry" Vice -- and is another company that I previously profiled.
What's the common denominator here? Virtually all of them count major media companies as strategic investors. And, as we just saw with ProSieben (which previously already held a 20% stake in CDS), strategic investment frequently leads to outright M&A. Strategics frequently like to "try" before they "buy." And, in the prescient words of Yoda (a character now owned by Disney and which, in turn, transformed the MCN M&A world and playbook with its near $1 billion purchase of Maker Studios early last year), "buy, they will!"
