The company will pay $500 upfront for Maker Studios, plus up to an additional $450 million in bonuses if Maker Studios can achieve performance-based milestones.
"Short-form online video is growing at an astonishing pace and with Maker Studios, Disney will now be at the center of this dynamic industry," said Disney CEO Bob Iger in a statement.
Maker Studios currently manages around 55,000 channels, which collectively receive 5.5 billion video views per month. The company currently distributes to a total 380 million YouTube channels subscribers.
Disney said the deal, expected to close in its third quarter ending June, will have a mildly negative impact on its earnings through to fiscal 2017.
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TheStreet Ratings team rates DISNEY (WALT) CO as a Buy with a ratings score of A+. The team has this to say about their recommendation:
"We rate DISNEY (WALT) CO (DIS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DIS's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 8.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 33.76% and other important driving factors, this stock has surged by 41.92% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DIS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- DISNEY (WALT) CO has improved earnings per share by 33.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DISNEY (WALT) CO increased its bottom line by earning $3.38 versus $3.12 in the prior year. This year, the market expects an improvement in earnings ($4.02 versus $3.38).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Media industry average. The net income increased by 33.1% when compared to the same quarter one year prior, rising from $1,382.00 million to $1,840.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, DISNEY (WALT) CO's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: DIS Ratings Report