Analysis: MCNs a Target for Acquisitions by Traditional Media Groups

LONDON: New research into multi-channel networks (MCNs) by Ampere Analysis reveals that more than 75 percent of the MCNs acquired in the last three years were bought by traditional media groups.

The firm's analysis of MCN investments spanning the last three years reveals that the average MCN is worth 10 cents per monthly view. On this basis, an MCN with 1 billion monthly views would be worth $100 million. There are 22 MCNs now worth at least this much. Ampere’s analysis shows that the combined value of these 22 MCNs is $6.5 billion.

Collectively, the top 100 MCNs receive 100 billion views per month, making them worth nearly $10 billion. The YouTube channel business is now valued at over $20 billion.

Acquisition activity of MCNs began in 2012, with early moves by the leading media groups, including Discovery Communications’ purchase of Revision3 for $30 million, Telegraaf Media Groep’s 70 percent stake in Zoomin.TV, and Time Warner’s $40 million deal for Maker Studios. Today, MCNs are owned by such groups as RTL, ProSiebenSat.1, Vivendi, Disney, DreamWorks and FremantleMedia. For these larger players, MCNs have thus far represented good value for money and return on investment. Both DreamWorks and Disney have seen the investments they made in MCNs increase in value by more than 240 percent in 18 months.

Richard Broughton, research director at Ampere Analysis, said: “Growth rates for MCNs are huge, and early buyers into the sector have seen their acquisitions triple in value within a few short years. Furthermore, buying an MCN delivers instant global reach, opening up new territories and helping to future-proof businesses in an increasingly unpredictable media sector.

“For those players without a stake in the MCN game, sand is rapidly running through the hourglass. Very few top MCNs remain that don’t now have an affiliation to a major media group. And with no apparent decline in valuations over time, those rare MCNs that are still independent are becoming increasingly expensive. Many media companies are playing a waiting game: the million dollar question now is when to stop waiting and start acting.”