Across two funding rounds, Warner Bros has invested more than $40 million in the digital network Machinima. Now, the prominent entertainment company is looking to make an outright purchase. As first reported by The Information, the two companies are negotiating a deal that would see Warner Bros acquire Machinima.
As part of its investment in Machinima, Warner Bros received an option to purchase the network for two times its annual revenue. Machinima is on pace to make about $75 million in 2016, which would have placed a $150 million price tag on that deal. Instead, Warner Bros has let that option expire, and it is now attempting to negotiate a less lucrative acquisition instead. A source cited by The Information notes that the final price of the deal could fall below $100 million.
While Machinima was once one of the most prominent multi-channel networks in the digital space, its value fell after a multi-year period marked by layoffs, executive departures, unsteady viewership, and the exodus of several top creative partners. Under new CEO Chad Gutstein, Machinima has refreshed its brand, but it has still not reclaimed its status as a top digital media platform, and the falling price tag for its acquisition is further evidence of that.
Whether Warner Bros completes its Machinima acquisition or not, the two companies will likely remain close collaborators. They have worked together on many projects, including several which combine Machinima’s digital media expertise with Warner Bros properties like DC Entertainment.
Neither Warner Bros nor Machinima has yet commented on the acquisition rumors.