Time Warner will invest $100 million in producing TV-like shows and advertising on Snap Inc.'s Shapchat over the next two years, in a push by the the media giant to reach young audiences on the social network, according to a person familiar with the matter.
The deal will see Time Warner make shows for Snapchat in a range of genres, including scripted dramas, comedies and documentaries, according to a statement from both companies. Time Warner's properties like HBO, Turner and Warner Bros. will also invest in advertising on Snapchat.
The partnership will help boost the number of shows on Snapchat, which are three- to five-minutes long, to three a day from one. Eventually, New York-based Time Warner will make as many as 10 shows a year, according to the person, who asked not to be identified discussing private information. Warner Bros. will likely market its upcoming movies on Snapchat as part of the deal and revenue from ads sold during the Time Warner shows will be split evenly with Snap, the person said.
For Time Warner, the agreement with Snap will drive larger audiences to its shows and to new direct-to-consumer online services it introduces, Gary Ginsberg, a Time Warner spokesman, said in the statement.
The shows will be produced specifically for Snapchat's vertical format -- or how people would watch on their phones.
Snap, the app that people use to send disappearing photos, already has several deals with networks and studios to showcase their content in the form of mobile magazines and shows. For Snap, the content is intended to get users to spend more time on the app, while media companies are looking for access to a young audience, which is harder to find these days on TV.
Snap shares closed at their IPO price of $17 on Thursday amid concerns about the company's growth rate. The stock rose on Monday.
The deal comes as Time Warner awaits approval to be acquired by AT&T, whose CEO, Randall Stephenson, has said the future of video will be on mobile devices.
-- Bloomberg News