Exclusive: Fullscreen to buy online video producer Rooster Teeth

Reuters News
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Posted: Nov 10, 2014 2:48 PM

By Lisa Richwine

LOS ANGELES (Reuters) - Media company Fullscreen has agreed to acquire Rooster Teeth, an 11-year-old online production studio based in Austin, Texas, that created the long-running video series "Red vs. Blue," executives of the companies told Reuters.

Fullscreen, one of the biggest networks on YouTube, is majority-owned by Otter Media, a joint venture between AT&T <T.N> and Peter Chernin's The Chernin Group.

With Rooster Teeth, Fullscreen adds a leading producer of online comedy and gaming-related content that is popular with 18-to-34-year-old males. The main Rooster Teeth channel on YouTube has nearly 8 million subscribers.

"They are really pioneers in the online video space," Fullscreen Chief Executive George Strompolos said in an interview. "They have mastered the art of producing high-quality content but also managing to engage the community on a very personal level."

Financial terms were not disclosed.

The purchase is the latest in a flurry of acquisitions by media companies aiming to capitalize on the fast-growing audiences of teens and young adults who watch video online.

Fullscreen and other multichannel networks help video creators with production, advertising sales and other services to increase their viewership and revenue. Fullscreen's networks have more than 450 million subscribers, the company said.

Rooster Teeth CEO Matt Hullum and Burnie Burns, the company's creative director, will remain in their current roles. The company will keep its headquarters in Austin and expand to Los Angeles.

Rooster Teeth was founded in 2003, before the explosion of online video viewing enabled by YouTube, which is now owned by Google <GOOGL.O>. The company has produced "Red vs. Blue" for more than 11 years, making the animated series using images created within video games.

Its collection of animated and live action videos include a reality gamer series called "The Gauntlet" and "Immersion," a show that tests video game concepts in the real world. The series appear on YouTube channels and the Rooster Teeth website. Some of its programming is distributed on streaming services Netflix <NFLX.O>, Hulu and Crunchyroll.

Rooster Teeth also sells DVDs, T-shirts and other merchandise, and hosts an Internet culture and gaming conference in Austin called RTX that in 2014 drew 30,000 attendees.

This year, Rooster Teeth raised nearly $2.5 million on crowd-funding site Indiegogo to make live action feature film "Lazer Team," which is currently in production.

Fullscreen will support Rooster Teeth's existing hit series and make a multimillion-dollar investment in new content, Strompolos said. It also plans to expand the company's merchandise and live events.

The additional funding will allow Rooster Teeth to widen its programming slate and reach bigger audiences, Burns said in an interview. "Now we can have multiple productions of multiple franchises at one time," he said.

Investment bank McCafferty & Company advised Rooster Teeth on the deal.

(Reporting by Lisa Richwine; Editing by Ronald Grover and Alan Raybould)