FRANKFURT (Reuters) - European broadcasters TF1, ProSiebenSat.1 and Mediaset said they would join forces in the rapidly growing market for video content broadcast on Internet platforms such as YouTube.
Italy’s Mediaset and France’s TF1 will take a stake in ProSieben’s Studio71 via a capital increase that values the unit at 400 million euros ($425 million), the companies said on Thursday.
Studio71 was founded in 2013 and creates shows and content for Internet platforms such as Alphabet’s Youtube. Its shows, which include Fred, The High Fructose Adventures of Annoying Orange and Last Man Standing, generate more than 6 billion monthly views.
With consumers increasingly using smartphones and tablet computers to watch videos and listen to music, broadcasters are expanding their online media offerings to win viewers.
At the same time they offer cross-platform formats to maximize advertising income. Promoting online shows in its televisions shows and vice versa is a cornerstone of ProSieben’s strategy.
“Not only will such a deal allow Studio71 to expand geographically alongside its current presence in Germany, USA, Canada, Great Britain and Austria but it will also allow the three players to leverage a much larger content base,” said Liberum analyst Ian Whittaker in a client note.
RTL Group’s broadbandtv has 5.7 billion monthly views, the Bertelsmann-owned broadcaster told an investor conference in New York this week.
Broadcasters are also feeling the heat from pure content- streaming services such as Netflix - whose $6 billion content-acquisition budget for this year rivals that of most broadcasters - and Amazon Prime.
“The partnership with TF1 Group and Mediaset gives us access to key European markets where the online video market is just now really picking up momentum and promising significant potential,” ProSieben digital head Christoph Wahl said in a statement.
As part of the investment, Mediaset and TF1 will hold 5.5 percent and 6.1 percent, respectively, in Studio71, the German broadcaster said. It will keep a stake of about 70 percent.
Under the deal, ProSieben will take a minority stake in Finder Studios, which was co-founded by TF1, it said, adding it had set up a joint venture with Mediaset to roll out the Studio71 business model in Italy.
ProSiebenSat.1 shares were down 0.9 percent by 1200 GMT (7 a.m. ET), underperforming the STOXX Europe 600 Media index which was down 0.5 percent. Mediaset was down 3.5 percent, while TF1 was up 0.1 percent.
“In the longer-term we would expect this service to benefit the margins as the content only needs to be produced once and then can be leveraged by the three players,” said Liberum’s Whittaker, rating ProSiebenSat.1 “Buy” and TF1 and Mediaset “Hold”.
Reporting by Harro ten Wolde and Christoph Steitz; editing by Susan Thomas