Launched in 2011, Fullscreen's network of more than 15,000
YouTube channels counted 20.4 million U.S. unique viewers in March,
according to comScore. Its founder and CEO George Strompolos had
co-created YouTube's partner program, which lets people who upload
videos to the service run ads against them in order to make
money.
Relativity had submitted an eleventh-hour bid to snatch Maker
Studios from The
Walt Disney Company, but the YouTube network's board rejected
the offer and signed off on the Disney deal.
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In an
interview with Bloomberg TV that posted Monday, Relativity
Media CEO Ryan Kavanaugh acknowledged that his company is looking
at other acquisition options post-Maker but didn't specify any in
particular. "We are in active negotiations with multiple other
places," he said.
Mr. Kavanaugh said in the interview that he liked Maker "and
other business models like it" because of their large bases of
audiences and content creators. However he questioned whether Maker
and other networks that rely on ad dollars for revenue works
financially. Relativity Media primarily makes its money through the
sale of movies and TV shows.
Online video networks such as Maker and Fullscreen have built
their business primarily on YouTube. They sign deals with thousands
of YouTube creators to sell ads against their videos and help
manage their channels. But in addition to splitting the money they
receive from advertisers with those creators, they also have to
give up typically 45% of that revenue to YouTube. That doesn't
leave a whole lot left for these companies to sustain and grow
their businesses.
A number of the higher profile YouTube networks have cozied up
to bigger, more traditional Hollywood companies for financial
support. Last year AwesomenessTV
sold to DreamWorks Animation. And in March Machinima raised an
$18 million
funding round led by Warner Bros., reportedly with an
option for the studio to buy the YouTube network. That same
month Disney announced the Maker acquisition. And in early April
AwesomenessTV
picked up fellow YouTube network Big Frame. Fullscreen appears
to be next.
It's unclear how much Relativity is looking to pay for
Fullscreen, but sources said they expect any deal to include a
heavy share of Relativity stock. Relativity
reportedly offered Maker $525 million in cash and stock with
the potential for another $500 million and a $75 million bonus pool
for certain executives and creators.
Industry executives believe Fullscreen will carry a smaller
price tag than Maker. That company's deal with Disney is worth $500
million upfront with the potential to eventually total $950 if
certain requirements are met.
Last June Fullscreen
raised roughly $30 million from The Chernin Group, Comcast
Ventures and WPP. It raised another $7.79 million in January,
per a regulatory filing released by the Securities and Exchange
Commission.
