Disney to buy Maker Studios, operator of YouTube video channels, for at least $500 million

LOS ANGELES, Calif. – Disney said Monday that it is buying YouTube channel operator Maker Studios for at least $500 million as the family entertainment giant aims to stay in front of younger audiences who are increasingly watching short videos online.

The Walt Disney Co. could pay up to $450 million more in bonuses if Maker meets performance targets, the company said.

The purchase will give Disney ownership of 55,000 channels — including Epic Rap Battles of History and makeup expert Amy Pham’s The Fashion Statement. Combined, Maker has 380 million subscribers and generates 5.5 billion views per month.

Buying Maker Studios will help Disney reach young audiences, said Kevin Mayer, Disney’s executive vice-president of corporate strategy, in an interview.

“They have the biggest audience on YouTube. It’s very hard to replicate,” Mayer said.

Mayer also said that Disney could find talent for its TV shows and movies in the YouTube stars on Maker Studio’s channels.

The purchase will dampen Disney’s earnings per share “mildly” through the 2017 fiscal year, Mayer said.

Disney shares rose 11 cents to $79.60 in after-hours trading Monday after falling 86 cents, or 1.1 per cent, to close at $79.49 in regular trading.