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France's TF1 and Italy's Mediaset Join Collective Digital Platform Studio71

ROME - Studio71, the multichannel network controlled by German broadcaster ProSiebenSat.1, has forged partnerships with French TV network TF1 Group and Italy's Mediaset, which have become minority shareholders in the company, forming a European alliance in the advertising-video-on-demand sector.

TF1 has taken a 6.1% stake in Studio71, while Mediaset has taken an initial 5.5% chunk for a combined investment of 53 million euros ($56 million). ProSiebenSat retains about 70% of Studio71 shares, according to a statement.

The deal values Studio71 at roughly 400 million euros ($425 million).

The entry of these two top European generalist broadcasters will see Studio71 expand by setting up local operations in France and Italy. As part of the agreement Studio71 will acquire a strategic minority interest in premium multichannel network Finder Studios, which is controlled by TF1 Group. Under the Mediaset partnership, Mediaset's Publitalia80 unit will become the exclusive sales agent for Studio71 advertising in Italy.

Each new Studio71 platform will feature content from TF1 and Mediaset's top-rated TV shows as well as content from Studio71's top creators.

The stated business model for the expansion will seek to replicate the success of Studio71 in Germany, which is based on the winning mix of ProSiebenSat.1 Group's TV hits like Germany's version of "The Voice," combined with top online content from leading local creators, such Gronkh, who is Germany's No. 1 gamer.

Studio71, which is based in Los Angeles with offices in New York, Berlin, Toronto and London, has some 1,200 channels and generates around 6 billion monthly views on YouTube alone, according to the company.

The network will now use proceeds from the deal "to fund additional premium content and IP as well as further territory expansion," the statement said.

"The partnership with TF1 Group and Mediaset gives us access to key European markets where the online video market is just now picking up momentum and promising significant potential," noted Christof Wahl, member of the executive board, digital, and COO of ProSiebenSat.1 Group.

"By taking a stake in Studio71, the TF1 group is positioning itself in the global digital ecosystem alongside two of Europe's leading media groups," said Olivier Abecassis, VP of innovation and digital at TF1 Group. "And by becoming the operator of Studio71 France, we are bolstering our presence in multiplatform premium online video, and our status as a key partner for emerging web creatives," he added.

In November, Studio71 signed a licensing deal with Chinese digital content aggregator ByteDance, under which Studio71's content will be subtitled in Chinese and carried on ByteDance's Top Buzz platform.

This pan-European alliance of prominent generalist broadcasters in the AVOD sphere has particular significance for Mediaset, coming after the recent collapse of a partnership deal between Mediaset and French media conglomerate Vivendi. That partnership had been touted as the start of a potential pan-European SVOD giant. TF1 is owned by conglomerate Bouygues SA, a rival of Vivendi.

For Mediaset, the AVOD alliance with Studio71 marks a departure from the classic business model of offering scripted content for a monthly fee, as practiced by its loss-making Mediaset Premium pay-TV operation, and is the first move made by the broadcaster's newly launched digital unit.

"We join a digital global partner like Studio71 - with a deep broadcaster DNA - in order to build a leading player in the Italian market for the editorial management and monetization of digital talents, to maximize the distribution of Mediaset TV contents on Internet, and to boost synergies between TV and web," said Pierpaolo Cervi, Mediaset's chief digital officer.

Prominent European broadcasters have a competitive edge in the advertising VOD arena in terms of creating entertainment content, generating value from new talents, and also collecting advertising, a Mediaset statement noted.

Studio71 was formed by the merger of Collective Digital Studio (founded by Reza Izad, Michael Green, Dan Weinstein and Gary Binkow), and ProSieben's Studio71 (founded by Sebastian Weil and Ronald Horstman). It is currently the world's fourth-largest multichannel network, according to the company.

The company has deals with Facebook, Comcast's Watchable, Verizon's Go90, Liberty Global, YouTube Red, ZDF, Canal Plus, and, among others. It also has a deal in place with Paramount's Worldwide Television Licensing & Distribution and Acquisitions division for films from the studio's digital influencers.

Studio71's roster of creators includes Lilly Singh (a.k.a ||Superwoman||), Rhett & Link, Rachel Levin, Shay Mitchell, Matthew Santoro, Epic Meal Time, Roman Atwood, Family Fun Pack, and Dwayne "The Rock" Johnson.