Disney Formalizes Digital M&A Group; Sub $20 Million Deals; Looking Outside Main Areas

Walt Disney (NYSE: DIS) has formalized some of the M&A functions to accelerate its position in the digital media space, and has formed a group headed by Kevin Mayer, the EVP of Corp Dev at Disney. Techcrunch reported on it first here and we have confirmed some more details. The group includes VPs Leigh Zarelli and Matt Pillar, working with Mayer.
Some interesting variables: More after the jump…
— The deals will be outside the usual ambit of Disney: family (Disney’s mainstay) and sports (ESPN). So expanding into other sectors is on cards, though it will be in the consumer media and services sector.
— A Club Penguin kind of deal was an aberration in terms of scale, and would probably remain one-off. What the group is looking at is less-than-$20-million-upfront deals, and some cash and earnouts as the main formula to stick to.
— What I know from one of my sources is that one such deal has been closed, and is around $19 million cash and a bigger earnout, though we don’t know which company has been bought.
— The number of deals it has to do has not been decided, nor any time frame for it.
— This is, of course, separate from Steamboat Ventures, the VC arm of Disney, whose main focus is on tech VC deals and functions independently of Disney’s larger corporate goal. In fact, Steamboat is out in the market raising another fund to invest in startups.
Staci adds: A Disney spokesman confirmed that the company is looking “opportunistically” at start-up acquisitions and is not limited to consumer internet acquisitions specifically. The acquisitions have to fit Disney’s financial parameters on returns and fit strategically. One source cautioned against describing it as a new group, saying it is more a case of new execs and the escalation of an acquisition strategy already at work. The Disney games unit, for instance, has acquired game dev companies. As Rafat mentioned, Club Penguin was an aberration in terms of this strategy but I also don’t think this emphasis would keep Disney from another large acquisition if makes financial and strategic sense.