Time Warner Inc. (TWX, Financial) and Snap Inc. (SNAP, Financial) announced on June 19 they had entered a two-year deal for the creation of content and advertising, marking one of the largest development deals Snap has landed to date.
Time Warner’s various Turner cable channels and Warner Bros. studios will produce up to 10 original shows per year for the popular image-sharing app Snapchat. The deal opens up future avenues for HBO content as well.
Valued at $10 million, the deal is part of Snap’s efforts to bring premium mobile TV-like shows to its users. With shows from Comcast Corp. (CMCSA, Financial) and CBS Corp. (CBS, Financial) already airing on Snapchat, the Time Warner deal is expected to fuel a significant increase in the number of shows featured on the social networking app. The three- to five-minute shows will be produced exclusively for Snapchat and will feature motion graphics, split screens, quick cuts and more. Snap hopes to air three shows a day by the end of the year.
Nick Bell, Snap’s vice president for content, expressed his excitement for the deal.
"Time Warner and their brands have long been pioneers of what incredible, premium content looks like, and we're thrilled that innovators across their expansive network will begin producing shows for Snapchat,” Bell said. “This partnership is another exciting step as we continue to branch out into new genres, including scripted dramas, comedies, daily news shows, documentaries and beyond."
In addition to content, Time Warner will invest in advertising from HBO, Turner and Warner Bros. on Snapchat. Snap will benefit from 50% of the advertising revenues generated from the shows. Time Warner will keep the other half.
The companies view the deal as a vote of confidence in Snap’s ability to grow advertising revenue by appealing to younger consumers. Snap posted disappointing revenue figures in its first quarter as a public company, causing shares to slide following the May 10 earnings report.
Snap shares rose 1.5% to $17.81 following the deal’s announcement. Time Warner hopped 0.7% to $99.85.
Disclosure: I do not own any stocks mentioned in the article.
