Peter Kafka

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Another Big YouTube Bet: Time Warner Leads $40 Million Maker Studios Round

Here comes more money for YouTube videos. But these dollars don’t come from YouTube: Time Warner is leading a big round of financing for Maker Studios, a start-up that specializes in creating and distributing clips for the video giant.

The media conglomerate, via its Time Warner Investments arm, is leading a $40 million round that sources say should close within the next three weeks.

I don’t know the other players in the round, and they may not be set yet. I also don’t have a pre-money valuation for the Los Angeles-based company, but it should be at least $150 million, which would put the total value for the company in the $200 million range by the time the deal is done. Maker had previously raised $4 million from Greycroft Partners and GRP Partners. (Update: I’m told the company has raised a total of $15 million to date, which makes much more sense.)

Last week, Variety reported that Time Warner was considering an investment in Maker. Both Maker and Time Warner declined to comment.

When the deal closes, it will be the second big slug of money that has gone into YouTube-centric companies this year. In May, Google and other investors put $35 million into Machinima, which makes and distributes YouTube clips for videogame fans.

And there may be more YouTube money to come: Industry sources say that Fullscreen, another big YouTube hub, has been talking to Bertelsmann’s RTL Group about a large investment, though it’s unclear whether the two companies will move forward.

The Maker deal comes a year after Google tried to kick-start original content production for YouTube by funding a slew of “channels.” Maker got three of those deals.

But while lots of video makers were happy to take Google’s money to finance their productions, many of them have privately complained that Google hasn’t done a great job of promoting their clips to viewers and selling them to advertisers. Sources say that at least some of Maker’s new round will go toward building out the company’s direct sales force.

Maker can also use money to finance its large production arm, regardless of whether it renews its deals with Google in the coming months. And it can use some of it to help recruit new talent; it has had a falling-out with Ray William Johnson, a YouTube star who has stopped producing his “=3” show for the studio.

Here’s an episode of “Epic Rap Battles of History,” one of Maker’s best-performing series. Careful! It’s not safe for every workplace:


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— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google