DreamWorks Animation, which has been looking to expand its business beyond animated movies, is looking at Vevo, the online music video service.
Industry sources say DreamWorks CEO Jeffrey Katzenberg wants a piece of Vevo, which is owned primarily by Universal Music Group, Sony Music and Abu Dhabi Media. I’m told Katzenberg submitted a bid to Vevo’s owners this week, though I don’t know if he was looking to buy a controlling stake in the company or if he was proposing a minority investment.
Last year, Google, whose YouTube site generates the majority of Vevo’s views, bought a small stake in the company, in a deal that valued it at around $650 million. Vevo says it generated 55 billion views last year, on YouTube, its own site and other platforms, including Microsoft’s Xbox.
I’ve asked DreamWorks and Vevo executives for comment.
Other investors, including Guggenheim Partners, have pursued Vevo in the past. And sources say two other potential buyers — John Malone’s Liberty Media Corp. and The Chernin Group, run by former News Corp. executive Peter Chernin — are also in early discussions with Vevo’s owners.
Vevo is a difficult asset for investors to grapple with, though. Music videos are some of YouTube’s most valuable properties, and the company generated $250 million in sales last year, according to a person familiar with the service. But when Web viewers watch a Vevo clip on YouTube, the video’s owners, along with YouTube and music publishers, pocket more than 90 percent of that revenue, leaving Vevo with very slim margins.
Katzenberg has been pushing DreamWorks to expand beyond its core business of making animated films. Last year, he purchased YouTube channel AwesomenessTV, in a deal that could eventually cost more than $100 million, and last month Awesomeness paid $15 million to buy Big Frame, another YouTube-centric company.
Sources say Katzenberg has recruited former Hulu exec Andy Forssell, who ran the video site as interim CEO for much of last year, to help with his Vevo bid. Last year, Universal Music CEO Lucian Grainge joined DreamWorks Animation’s board of directors.