Disney in Talks to Buy Maker Studios for $500M+

Maker Studios operates one of the largest networks of YouTube channels

Disney is in talks to buy Maker Studios for at least $500 million, according to two individuals with knowledge of the conversations. Maker Studios operates one of the largest networks of YouTube channels in the world, one including stars like PewDiePie (real name Felix Kjellberg) and Epic Rap Battles of History. Its channels generate more than 5 billion views a month.

The deal could still fall apart, but those in the online video community have assumed Maker would sell for some time. It has raised more than $70 million to-date, an amount that suggests it would either go public or sell to a more established media company. AwesomenessTV, another large network, sold to DreamWorks Animation last year while Machinima just took an investment from Warner Bros.

Neither Maker nor Disney responded to requests for comment. Re/Code first reported the news.

Also read: Machinima Raises $18 Million in Financing Deal Led by Warner Bros.

Maker Studios raised $36 million in late 2012 with investors valuing the company at $300 million, and at TheWrap‘s conference last September executive chairman Ynon Kreiz said Maker would be a billion-dollar company. Yet most of the biggest networks have faced growing pains over the past year, as revenue did not rise fast enough to match their growing costs. Machinima has been laying off employees, as have a few smaller networks.

Maker, founded by a series of aspiring entertainers like Danny Zappin and Lisa Donovan (who went by Lisa Nova on YouTube), was conceived as a United Artists of YouTube. It brought together a number of creatives who struggled to make in Hollywood, but leveraged their natural charm, YouTube and other social platforms to build massive fan bases. Zappin ran the company for the first few years, but was ousted in favor of Kreiz, the former CEO of reality TV power Endemol.

Also read: How Big Can Maker Studios Get Under New Chief Ynon Kreiz?

Kreiz brought a more professional tone to the company, one it needed as it tried to monetize its massive audience. He hired a number of seasoned executives beneath him, including former Yahoo content chief Erin McPherson, and acquired Blip, a video service with its own player.

Maker wants to use that player to distribute its videos off YouTube because it cannot thrive subsisting solely on the advertising revenue it generates on the site. Most of the large networks are frustrated by the revenue they see from YouTube, which takes a hefty cut of advertising revenue. YouTube has maintained that it encourages people to branch out beyond YouTube, knowing that most of these creators and networks will still rely on the site’s massive audience.

Yet saying you want to branch out beyond YouTube and having success doing so are two very different things. Many of the most popular creators on YouTube, from The Annoying Orange to The Fine Brothers,  have turned to television, where the money is real and immediate. It is clear that some companies, Maker included, are debating a sale because netting their investors some return is a safer bet than chasing that billion-dollar mark on their own.