ProSiebenSat.1 Media AG, a German television company with 29 stations reaching roughly 62 million households, agreed to buy a 20 percent stake in Collective Digital Studio LLC, a Los Angeles multichannel network company (MCN).

While the size of ProSieben’s investment has not been disclosed, proceeds from the deal are expected to help grow Collective Digital's technology and talent base.

The deal comes just days after Walt Disney Co. (NYSE: DIS) purchased MCN producer Maker Studios Inc. for $500 million as part of an attempt to reach younger generations of viewers who watch videos online and on mobile devices.

Collective Digital is known for operating more than 600 channels on YouTube, which Google Inc. (Nasdaq: GOOG) bought for $1.65 billion 2006. Its titles, which include Video Game High School and Annoying Orange, boast roughly 1 billion views per month, according to the company. In addition to various web series, Collective Digital has produced television shows based on its offbeat YouTube properties.

ProSieben is acquiring Collective Digital through its subsidiary Red Arrow Entertainment, which oversees 15 international production companies across nine countries. The deal also allows ProSieben to grow its own MCN, Studio71, with a new library of content. Studio71 which was launched in August 2013.

Bankers Navid Mahmoodzadegan and Carlos Jimenez of investment adviser Moelis & Co. advised Collective Digital on the sale process, while law firm Cooley LLP handled legal matters. Milbank Tweed Hadley & McCloy LLP provided legal counsel to ProSiebenSat.1.

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.