Music-focused video network Vevo is seeking $0.5bn from new investors for expansion and diversification, according to press reports. Vevo, which is controlled by music and media groups UMG, Sony Music and ADMC, could be worth more than $1.7bn by Ampere estimates. If the funding round is successful, the investment would almost certainly make Vevo the highest valued multi-channel network (MCN) to-date - trumping Maker's $0.7bn (approximate value after earn-out following Disney acquisition in 2014) and AwesomenessTV's $0.65bn (implied by Verizon's investment in 2016). The last major music MCN investment of a comparable order of magnitude was Sony's acquisition of top 10 YouTube network The Orchard in 2012, valuing the network at a reported $0.2bn. Vevo, currently the leading YouTube network by monthly views, and whose constituent channels pull in roughly six times the viewing of The Orchard's properties, will be worth many times more.
Investments in Multi-Channel Networks (MCN) by traditional media and communications groups have continued into 2016, albeit at a slower pace than in previous years. Yet while purchase prices soar ever higher - Verizon headlined earlier in 2016 with its acquisition of a stake in AwesomenessTV, valuing the company at $650m - an update to Ampere's 2015 review of MCN acquisition trends reveals a downward trajectory in the value that purchasers are willing to place on MCN audiences.
Analysis of an expanded set of MCN investment and acquisition deals indicates that value per monthly view has declined by 25% over the past five years - from an average of 12 cents per monthly view in 2012, to 9 cents per monthly view in 2016. However, this decline does not necessarily reflect concern regarding the underlying fundamentals of MCNs, but rather the fact that the businesses themselves are maturing and their anticipated growth rates slowing. Company valuations are always a factor of risk and reward, and while the market positioning of MCNs is becoming increasingly solid, the opportunity for triple-digit year-on-year growth is now waning. For the MCN sector, this means that the valuations of their businesses are now - on average - likely to grow at a rate slower than that of the expansion of their audiences - unless they can illustrate substantially improved income growth on a per viewer basis.
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