Swimming With the Giants: Venture Capital's Top Media Targets

While money invested by major media companies in start-ups is small, the deals can have a notable impact on both sides 3/18/2013 12:01:00 AM Eastern

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While the money being invested by major media companies in start-ups is
small, the deals can have a notable impact on both sides. Here’s how these
investments can impact both start-ups and big media.

ROKU: The rapidly expanding,
over-the-top (OTT) video provider
raised $45 million last year from
a group of investors that included
both News Corp. and BSkyB,
which is 39.1% owned by News
Corp. The deal will allow News
Corp. to experiment with OTT and
give its apps prime placement on
the Roku platform, while strengthening
the video provider’s access
to content. “One of our goals is to
be media-friendly, and we have an insight into the media world that we would
never have without them,” says Anthony Wood, Roku founder and CEO.

MAKER STUDIOS: With original Internet video providers becoming a particular
hot play, Time Warner Investments became the lead buyer in a Series C
round of funding last December. With Maker’s more than 150 million YouTube
subscribers and some 2 billion video views each month, the investment will
give Time Warner valuable expertise on creating online video with the startup’s
very different low-cost economics and promotional systems. At the same
time, Courtney Holt, Maker COO (and an MTV and music-label veteran) notes
the deal will help with their international expansion and open up opportunities
for their talent and programming concepts to work with Time Warner’s units.

ELEMENTAL: As media giants look for technologies to more efficiently deliver
more video to more devices, Disney’s Steamboat Ventures became the lead
investor in the Series B round in 2010 for this video processing technology provider.
“It was a vote of confidence that we really needed,” says Sam Blackman,
Elemental CEO and cofounder. “Media companies are very conservative about
working with new companies. Knowing that Steamboat had invested in us
gave ABC News and ESPN a reason to try us out,” which led to deployments
first at ABC News and then a variety of other major companies, including
Comcast, the BBC and Weather Channel.

WIDEORBIT: The most widely used software for traffic and billing systems
at U.S. TV stations has had a number of strategic investments from media
companies over the years, including Hearst Ventures, which still has a stake in
the company. Such ties helped build WideOrbit’s business and provided muchneeded
capital. “The traditional VCs have no interest in investing in a company
whose target was traditional media, because they all believe that traditional
media would disappear,” says Eric Mathewson, the company’s founder and
CEO, who has been an active private equity investor since 1994.

GET GLUE: As the social TV space
began to heat up, Time Warner
Investments put $12 million in the
company in January 2012. That
helped cement ties with many of
Time Warner’s operating units and
is part of a bigger push to speed the
pace of innovation. “Time Warner
understands the need to move faster
to remain competitive and is very
interested in seeing how start-ups
can innovative so quickly,” says Alex
Iskold, Get Glue founder and CEO.

BROADCAST TECH PROVIDERS: As broadcasters push to expand their
multiplatform distribution capabilities, a wave of mergers has roiled the
equipment vendor landscape. Jonathan Hodson-Walker, managing partner at
the investment bank Silverwood Partners, estimates that companies making
up 50%-60% of the global $16 billion broadcast equipment business have
been acquired in the last two years or are up for sale. One key driver has
been the push by traditional vendors to acquire other companies so they can
expand their product lines and better supply the new technologies needed
by their broadcast partners.


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