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BERLIN, GERMANY - FEBRUARY 15: Dreamworks CEO Jeffrey Katzenberg attends the 'The Croods' Premiere during the 63rd Berlinale International Film Festival at Berlinale Palast on February 15, 2013 in Berlin, Germany. (Photo by Pascal Le Segretain/Getty Images)
The network, called AwesomenessTV, has more than 14 million subscribers, 800 million video views and more than 55,000 channels. DreamWorks Animation said it plans to create its own channel on the network.
“Awesomeness TV is one of the fastest growing content channels on the Internet today and our acquisition of this groundbreaking venture will bring incredible momentum to our digital strategy,” said CEO Jeffrey Katzenberg in a statement.
Glendale, Calif.-based DreamWorks is following other media companies that are posting content onto YouTube to attract more customers. Buying AwesomenessTV allows DreamWorks to instantly acquire the network’s subscribers, said Ben Mogil, a managing director at investment banking firm Stifel.
"They are making a thoughtful bet that viewership is going to go more online," Mogil said.
Mogil said one of the advantages of having a YouTube channel is more flexibility in programming. The company wouldn't post full-length films, but short clips that could draw viewers to watch DreamWorks' movies, he said.
The company had also considered purchasing a cable channel, but now the acquisition of AwesomenessTV has replaced that, Mogil said.
DreamWorks said the deal will close next month. The company will pay $33 million up front and if certain earnings targets are met, the total payout for AwesomenessTV could go up to $117 million.
AwesomenessTV’s CEO and founder Brian Robbins will remain with the company and will be in charge of developing DreamWorks’ channel.
“The acquisition of AwesomenessTV by DreamWorks Animation speaks to Jeffrey’s vision for the future of entertainment, the immense appetite for new kinds of storytelling and the power and reach of YouTube,” Robbins said in a statement. “The incredible opportunity to take all the resources of this amazing global brand with beloved character franchises and create a dedicated family channel has extraordinary potential.”
After it is owned by DreamWorks, AwesomenessTV said it will operate as a stand-alone company. The West Los Angeles-based company said it has about 40 employees and no jobs will be impacted by the acquisition.
AwesomenessTV is known for shows such as IMO, a talk show that’s sort of like The View for teenagers and Mindless Takeover, a behind the scenes program about boy band Mindless Behavior.
DreamWorks Animation's stock was trading at $20.50 on Wednesday morning, up about 6 percent.