strictly confidential - wikileaks digital... · resources away from traditional channels (tv,...

STRICTLY CONFIDENTIALMARCH 2013

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EQUITY CAPITAL MARKETS

Disclaimer

This executive summary (this “Summary”) contains certain information pertaining to Collective Digital Studio (collectively with its subsidiaries, “CDS” or the “Company”). The Company has engaged Moelis & Company LLC (“Moelis”) as its exclusive financial advisor and placement agent in connection with a proposed transaction. This Summary is being provided solely to assist the recipient in determining whether it wishes to proceed with conducting its own due diligence investigation of the Company and a potential transaction. Neither the Company nor Moelis intend for this Summary to form the sole basis of any transaction decision. The recipient should conduct its own investigation and analysis of the Company in connection with any transaction.

The information in this Summary was provided by the Company or is from public or other sources. Moelis has not assumed any responsibility for independently verifying such information and expressly disclaims any liability to any purchaser in connection with such information or any transaction with the Company. Neither the Company nor Moelis make any representation or warranty, express or implied, or accept any responsibility or liability for the accuracy or completeness of this Summary or any other written or oral information that the Company, Moelis or any other person makes available to any recipient. Neither the Company nor Moelis makes any representation or warranty as to the achievement or reasonableness of any projections, management estimates, prospects or returns. This Summary speaks only as of the date of the information herein and neither the Company nor Moelis has any obligation to update or correct any information herein.

Any transaction with the Company involves a high degree of risk. Any party to a transaction should inquire into, independently investigate and consider such risks in its due diligence investigation before entering into any transaction.

This Summary is not, and should not be construed as, an offer to sell or a solicitation of an offer to buy any securities of, or to make any investments in, the Company in any jurisdiction. Any transaction will not be registered under the U.S. Securities Act or any state securities laws. Applicable law may restrict the delivery of this Summary to persons in certain jurisdictions. The recipient should inform themselves about, and observe, any such restrictions. By accepting this Summary, the recipient represents that it is a person to whom Moelis may deliver this Summary without a violation of the laws of any relevant jurisdiction.

Upon request, the recipient must return promptly all material provided by or on behalf of the Company (including this Summary) without retaining any copies. The Company undertakes no obligation to provide the recipient with access to additional information and reserves the right, without advance notice, to negotiate with one or more prospective purchasers, to change the procedures for any transaction, to terminate negotiations at any time prior to the signing of a binding agreement for a transaction and to enter into such agreements with any other party.

Please direct all communications and inquiries relating to this Summary or a possible transaction as follows:

1999 Avenue of the Stars, 19th FloorLos Angeles, CA 90067

Tel: (310) 443-2300Fax: (310) 443-8700

399 Park Avenue, 5th FloorNew York, NY 10022

Tel: (212) 883-3800Fax: (212) 880-4260

Carlos JimenezSenior Vice President

Tel: (310) [email protected]

Nick GentileAssociate


Michael WangAnalyst


Navid MahmoodzadeganManaging DirectorTel: (310) 443-2311

[email protected]

Paul InouyeManaging DirectorTel: (650) 223-8989

[email protected]

INVESTMENT BANKING

Ed ChiangManaging DirectorTel: (212) 883-3554

[email protected]

Gavin KoltSenior Vice President


James KearneyAssociate


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Collective Digital Studio

Collective Digital Studio (“CDS” or the “Company”) is a leading producer and distributor of premium online video content to the millennial generation. The Company operates a network of over 100 YouTube channels receiving more than 200 million monthly video views, as well as the CDS Network, an aggregation of websites delivering premium video content to over 23 million unique monthly visitors. Capitalizing on its founders’ heritage in talent management, CDS has forged deep relationships with leading millennial generation digital influencers, such as FreddieW, the Annoying Orange, Epic Meal Time, and Fred, and is able to successfully partner with these creators to develop highly sought-after proprietary content. The Company is a leader in creative execution, producing and distributing top quality online video content on par with cable network-distributed programming.

COMPANY OVERVIEW

Proven creative execution capabilities and reputation for premium online content that is on par with the quality of content distributed on various cable networks Recent successes include Video Game High School (VGHS), a unique web series with over 51

million video streams

Premium Content Distribution

Long-standing core relationships with some of the most marquee digital influencers Track record of successful talent management through the heritage business of the founders Demonstrated ability to partner with talent and build brands / IP around them

Strong Relationships with Marquee Talent

Compelling Industry Dynamics

Highly favorable industry tailwinds as major media brands and advertisers begin shifting resources away from traditional channels (TV, print, radio) and into online / mobile Internet ad spending is poised for explosive growth, led by online video, as spending aligns

with current viewership trends and resources gravitate towards the massive audiences online

Large Aggregated Audience

Leading multi-channel network on YouTube, driving over 200 million monthly video views and reaching over 9 million monthly unique video viewers Additional audience reach through CDS Network, driving over 60 million incremental video

views per month and reaching over 7 million additional unique video viewers per month

Aggregated network reaches 1 in 6 millennials each month

Leading Technology Platform

Powerful technological capabilities, bolstered by recent Metacafe acquisition, providing efficiency and scalability to the business model Expertise in website curation and a proprietary video player enables CDS to create an online

environment that maximizes audience engagement

Attractive Growth Opportunities

Untapped opportunities to increase content ownership and enhance advertising partnerships Potential for more investment in talent channels and brands Opportunity to further build out sales force and increase reach with brand partners Targeted acquisitions of video-centric websites

KEY INVESTMENT HIGHLIGHTS

CDS leverages its highly engaged audience and talent base to monetize its content with major brands seeking to develop their online presence. The Company sells sponsorships through display and pre-roll advertisements, and is a leader in creating custom integrations within content for corporate sponsors. CDS currently faces many untapped opportunities to increase content ownership and enhance advertising partnerships, and is focused on accelerating these efforts moving forward. The Company expects to generate revenue of approximately $25 million in 2013.

—Also has a traditional Internet audience, reaching over 23 million monthly unique users

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SELECTED KEY TALENT / CONTENT

CORRIDOR DIGITAL

Subs: 1.5mmViews: 146mm

Sam Gorski & Niko Pueringer exploded onto the scene with “Frozen Crossing,” and have built an impressive body of work featuring mind-blowing visual effects, motion graphics, music and gaming memes.

HANNAH HART


Comedian Hannah Hart is a true original. Best known for her hit series, the hilarious “My Drunk Kitchen,” Hannah’s talents extend to sketch comedy, music and vlogs.

ANNOYING ORANGE

Subs: 3.8mmViews: 2,234mm

Annoying Orange has grown to icon status. The series’ broad comedy and juicy puns have struck a chord with kids & teens, as well as adults all over the world.


FRED

Created by Lucas Cruikshank, this internet video series centers around 6-year-old Fred Figglehorn, who has a dysfunctional home life and “anger-management” issues. To date, several films and albums surrounding the character have been produced.

MEGAN & LIZ


These Nashville-based twins pen inspirational pop anthems and have a loyal millennial fan base around their music videos and beauty / fashion formats on YouTube. Additionally, they’ve landed on Billboard’s Top 50 Social list.

RHETT & LINK


Rhett & Link, famously known as the “Commercial Kings,” have created their own online video empire with a diverse and quirky collection of music videos and original web series.

Collective Digital Studio (Cont’d)

EPIC MEAL TIME


Harley Morenstein and his cast of zany characters have created the Internet’s top cooking show with insane recipes, accounting for the majority of food content views on YouTube.

FREDDIEW


The world’s most powerful YouTube stars, according to Business Insider. Freddie Wong & Brandon Laatsch are pioneers with their action-packed, tongue-in-cheek videos aimed at pop culture fanatics.

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