The biggest acquisitions of multichannel networks (MCNs), such as Disney's $950 million buy-up of Maker Studios and Otter Media's $200-300 million purchase of Fullscreen, have most likely already taken place, according to one analyst firm. That leaves other companies hoping to buy MCNs with fewer options, and limited time to jump into the segment.
But acquisition and consolidation are still good avenues to explore, according to Ampere Research. That's because valuation of many MCNs is pretty decent. "Our analysis of MCN investments spanning the last three years reveals that the average MCN is worth 10 cents per monthly view," the firm said in a press release. "On this basis, an MCN with 1 billion monthly views would be worth $100m. There are 22 MCNs now worth at least this much."
Those 22 MCNs alone have a combined value of $6.5 billion. Looking further along that line, the top 100 MCNs have over 100 billion views per month combined, for a value of $10 billion.
YouTube's channel business is valued at more than $20 billion, the firm said.
The ROI (return on investment) around MCNs is attractive, too. Since 2012, when acquisition of MCNs by major media players began, companies have seen the value of their multichannel portfolios rise. For example, Disney and DreamWorks Animation investments in MCNs increased in value by more than 240 percent in 18 months, the research firm reported.
"Growth rates for MCNs are huge, and early buyers into the sector have seen their acquisitions triple in value within a few short years," said Richard Broughton, research director at Ampere. "Furthermore, buying an MCN delivers instant global reach, opening up new territories and helping to future-proof businesses in an increasingly unpredictable media sector."
So, when should companies jump the MCN game? And what's the best way to do it? It's hard to precisely time an acquisition move, but Ampere notes that the valuations of the few remaining independent MCNs are not diminishing. And while acquiring one or more MCNs--and then consolidating them--is a popular option, there's nothing to stop a company from creating its own MCN, too. Or, one could just go with an already-acquired, proven winner--as Hearst did in December, when it acquired 25 percent of AwesomenessTV from DreamWorks for $81 million. Note that DreamWorks paid just $33 million for the MCN in 2013.
- see the release
- and this Ampere valuation chart
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