allthingsd.com - 2 years ago

Discovery Channel Gets a Web Video Arm, Courtesy of Revision 3

rev3screen.pngWeb video is supposed to disrupt cable TV. And maybe it will, one day. In the meantime, the cable guys are doing just fine.

Here's a proof point: The Discovery Channel has purchased Revision3, a Web video startup that makes and distributes its own shows, like "Tekzilla" and "Epic Meal Time."

Discovery isn't disclosing a purchase price, but multiple sources familiar with the transaction tell me the cable guys will pay around $30 million for the startup. The company ended up raising about $10 million during its six-year lifespan, with the last chunk coming from a group of investors that included Mark Cuban.

All of Revision3′s 50 employees are supposed stay on, and there's a chance they could end up pulling down sizeable earnouts. But they probably won't, because that's the nature of earnouts.

TechCrunch reported the deal talks earlier this week.

This deal isn't an acqhire, as Discovery intends to keep Revision3 operating out of its San Francisco headquarters. The idea is that Revision3 will continue to make its own Web shows, which generate some 100 million streams a month, and that Discovery will eventually figure out ways to sync up some of its own stuff into the mix.

"We want them to continue doing what they're doing, and to continue developing native digital talent," says Discovery's digital boss JB Perrette. To date Discovery hasn't done a lot with Web video, and has traditionally kept most of its cable programming off the Internet. That's changed a bit recently, via library deals with Amazon and Netflix, and may ramp up a bit more in the future.

The deal comes as big Web players are trying to convince advertisers that their video stuff is just as good as TV - see Google's big show in New York last night.

But Discovery thinks there's still a distinction between TV and the Web - which is why it wanted to buy Revision3 in the first place, "We produce content on a $500,000 to $750,000 an hour scale," Perrette says. "Producing something at a 10th of that cost means it has to be very different."

Meanwhile Revision3 CEO Jim Louderback, who used to write blog posts with titles like "Cable TV Is Screwd" now says there's life in the cable business, after all. "One's not going to destroy the other, he says. "I don't think any new media destroys the other, i think it just creates its own path."

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