Telecom giant Verizon Communications (NYSE:VZ) has announced that it will acquire a 24.5% stake in AwesomenessTV, which is a joint venture between DreamWorks Animation and Hearst. DreamWorks will remain the majority owner with 51% ownership, with Verizon and Hearst splitting the remainder at 24.5% each. The deal values AwesomenessTV at $650 million, implying that Verizon is paying approximately $160 million.
Verizon intends to create a short-form mobile video service that includes scripted and non-scripted series. The premium content will only be available on Verizon's platforms within the U.S. as part of its go90 offering, but AwesomenessTV will have the ability to distribute the content outside of the U.S.
Does it matter?
The deal is the latest in a long string of moves by Verizon to expand deeper into content. The most notable acquisition as part of that broader strategy was certainly the $4.4 billion acquisition of AOL last year.
Big Red is emphasizing video services and hoping exclusive content can set it apart, differentiating from its smaller rivals that may lack the resources to make big content-related acquisitions. That might help it defend its pricing power, which is under attack on the wireless front as rivals undercut on price.
Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool recommends DreamWorks Animation and Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.