Over the last week, news has surfaced that telco AT&T and Time Warner are approaching an $84 billion acquisition deal, with a potential $1.73 million penalty for Time Warner should they pull out of the deal discussions. The news came on the heels of a rumored plan by Time Warner-owned studio Warner Bros. to acquire the remaining stake in Machinima — a digital video business into which the company invested a total of $46 million across 2014 and 2015. Machinima’s total investment grabbed to date falls just shy of $100 million from Redpoint, MK Capital and Google, among others.
So where does the Machinima acquisition by Warner Brothers shake out?
“Even though the AT&T / Time Warner deal will move at glacial pace, any M&A activity puts everything on ice,” Peter Csathy, Chairman of biz dev and advisory firm Creatv Media. “If Machinima and Warner Brothers don’t already have a deal signed, this coule be another hiccup in Machinima’s quest to find a buyer.”
With an M&A deal of this scale, that could spend months in federal vetting, sources close to the WB-Machinima deal claim that it will likely be unaffected given how bedded the two studios already are.
Media veteran and former Yahoo interim CEO Ross Levinsohn agrees. “It’s doubtful this acquisition between AT&T and Time Warner will have any impact on the deal between Warner Brothers and Machinima. A $100 million deal is inconsequential at this stage, and both AT&T and Time Warner need to keep running their businesses while the bigger deal goes through what looks to be a lengthy year-long regulartory review.”
Given Machinima is back in discussions with Warner Bros. six months after the Hollywood studio passed on it, it would appear Machinima’s tour to find a buyer was unsuccessful. And as the legacy MCN’s have either significantly shifted their business models or already found an exit, Machinima’s position in a cooling market may be as Csathy put it — “on ice.”