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After Disney-Maker, YouTube MCN Collective Digital Studio Lands ProSieben Investment

More big-media money is flowing to a digital-entertainment venture: German broadcasting giant ProSiebenSat.1 is buying a 20% stake in Collective Digital Studio, the YouTube multichannel network company whose titles include Video Game High School and Annoying Orange.

CDS is a subsidiary of L.A.-based The Collective, a management and production company owned by its founders and GF Capital Private Equity Fund. The size of ProSieben's investment is not being disclosed. Michael Green, chairman of CDS and CEO of The Collective, said ProSieben is investing "eight figures" into the firm.

News comes after Disney this week announced the acquisition of Maker Studios, one of the largest MCNs delivering 5.5 billion views per month, for at least $500 million as the Mouse House hopes to reach younger audiences on digital platforms. That deal, unprecedented in its size, stands to drive more investment and acquisition activity in the sector.

CDS, formed in 2011, operates more than 600 YouTube channels, which it says deliver almost 1 billion views per month. In addition to web series Video Game High School (pictured, above), the company has produced TV shows based on YouTube properties for The Annoying Orange, Epic Meal Time and Fred. CDS has 80 employees.

SEE ALSO: Why Disney Is Taking the Huge Risk of Buying Maker Studios

The entity acquiring the CDS stake is ProSiebenSat.1's Red Arrow Entertainment production and distribution group, which oversees 15 international production companies in nine countries. Red Arrow, in partnership with CDS, plans to develop online talent and new content verticals, and will handle global programming distribution for content from the venture.

Green said CDS will use the funding to expand the company, particularly in sales, as well as develop technology to scale the business and continue to grow its talent base. ProSieben is "a strategic partner that will enable us to monetize the global reach of our content as well as tap into the Red Arrow distribution system to create additional opportunities for our creative talent," he said.

In August 2013, ProSieben formed its own German-language multichannel network, Studio71, which now generates more than 100 million video views per month. With the CDS deal, Studio71 will receive video content from CDS and marketing will be handled in-house by SevenOne Media.

"Digital functions globally," Christian Wegner, executive board member of ProSiebenSat.1, said in a statement. "Having established a leading multichannel network in the German-speaking region, we are taking the consequent next step with CDS to create a global player in what is a high-growth sector of the entertainment industry."

CDS was advised by Moelis & Co. and represented by law firm Cooley LLP. ProSiebenSat.1 was represented by Milbank, Tweed, Hadley & McCloy LLP.

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