Disney’s Maker Studios to Cut Jobs

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June 3 (Bloomberg) -- RBC Capital Markets Analyst David Bank and Bloomberg’s Jon Erlichman discuss possible job cuts at Maker Studios, which was recently acquired by Walt Disney. They speaks on Bloomberg Television’s “In The Loop.” (Source: Bloomberg)

Like disney?

With me to discuss this is david bank, media analyst and jon erlichman.

People who are in this area, in this industry, say that this maker acquisition by disney was a big deal and maybe a game changer or a wake-up call that you need to be in the space.

Some were questioning whether this is a land grab by disney or do they know what to do with this?

I think disney has a good idea what they want to do with this business.

There is a big difference between paying $500 million and $1 billion.

The price tag for maker gets closer to $1 billion if it makes all the performance targets that have been set in place by disney and certain management.

When they acquired maker, disney said let's have this as a stand-alone business inside our empire and it will not report to anyone business unit.

It will report to the cfo.

You would expect that as they go to the business and look at some of the things, maybe there was some cost-cutting opportunity.

It would be a different story if they were cutting half or3/4 of the workforce.

Which would make no sense.

Exactly come over the next few months we will get more clues on how disney really plans to use the maker business to benefit its own business.

. how should they use that business?

When we had the chance to speak with industry players about these acquisitions, there have been a number of them at disney.

You have had time warner invests in macninima and dreamworks making an acquisition.

The have not figured out the monetization model.

Google is keeping all the money in these things now.

My sense from the management is that the unique skill set that mcn's bring is they have a personnel and culture that is good at developing short form internet content.

That is a skill set on the short form for internet side that those guys have not specialized in directly.

I think they are trying to figure out the business model.

What they wanted was a capability, as early as possible.

It's a pretty big check to write for disney per kind of an incubator but at the end of the day, this is a really big company and they can afford to write big checks.

It sounds more like they are venture capitalists.

They are grabbing the talent.

They are investing more in the talent.

Exactly right.

They are grabbing the talent and personnel as you say versus the platform.

That's right.

I think it's a toehold in the space to figure out how to operate in that space and it's going to be more important later but clearly, none of these guys are doing these deals for their earnings power today or anytime soon.

Do they make money?

Do we know?

They are bringing in a huge amount of advertising revenue.

Some of them would say it's easier for them to generate a profit than others but clearly, they have been spending a lot of money to build these businesses.

Because of the fact that youtube has a split with content creators that they split the advertising dollars.

That is one reason why other players are trying to move in and cater to some of these youtube stars.

There has been a lot of talk about yahoo!

Creating its own video network and trying to get the stars to come over to their side.

They say you can keep more of the money.

That will be another thing to watch for.

As you see more of this content being generated, isn't that going to bring advertising rates down so it makes it harder to monetize?

Like on every platform, there is going to be premium content and less premium content.

You have to speak to a 14-year-old to be an expert on this.

I think you will see premium cpm's for breakout content but overall, it was seen to be a somewhat commoditized space with an endless amount of inventory.

That is the difference between network television and these mcn's. there is only 24 hours in a day.

Thank you both so much.

Jeremy siegel will join us at

This text has been automatically generated. It may not be 100% accurate.

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