Warner Bros. Agrees to Buy Machinima Online Gamer Network

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Warner Bros., Time Warner's film and TV studio, has agreed to buy the online gamer network Machinima, expanding its portfolio of digital properties with a leading programmer.

The acquisition will allow Machinima to accelerate its growth plans, the companies said Thursday in a statement. Financial terms weren't announced. Machinima will operate as a wholly owned subsidiary of Warner Bros. Digital Networks.

Warner Bros., the largest U.S. producer and distributor of TV shows, is buying the rest of Machinima after first investing in the company in 2014. The deal is part of the Burbank, Calif.-based studio's effort to reach audiences directly over the internet as they get more of their entertainment online.

Machinima, the 10th-largest online video company in the U.S., appeals to video-game enthusiasts, many of whom are also fans of movies and TV shows based on the DC Comics franchise owned by Warner Bros., said Craig Hunegs, Warner Bros.' president of business and strategy.

In June, the studio created Warner Bros. Digital Networks to develop new web video channels, expand the studio's current online services and seek strategic alliances as cord-cutting grows. The unit also plans to focus on expanding its other digital properties, like DramaFever, which was known for streaming Korean TV shows and movies, and Warner Archive Instant, a subscription service for classic titles.

AT&T deal
The moves will likely appeal to AT&T Inc., which said last month it is buying Time Warner for $85.4 billion. Part of AT&T's reason for acquiring the company, which also owns HBO and CNN, is to deliver more online video to subscribers' smartphones.

Machinima is led by Chad Gutstein, who took over in March 2014 after serving as operating officer of the Ovation TV network. Under the CEO, the company has expanded from a group of YouTube channels to a global production company distributing video on Amazon.com, PlayStation Vue and the CW Network.

In a statement, Mr. Gutstein said the deal will let his company take advantage of Warner Bros.' intellectual property, sales and distribution.

-- Bloomberg News