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Defy Media Contemplating a Sale

Online video firm Defy Media, a maker of comedic web videos mostly aimed at young men, is in discussions that could lead to either a capital raising or a sale, said a person close to the company.

Any deal could give Defy, or any acquirer, much-needed extra scale with content and audiences, which is crucial for drawing advertising dollars. Even though online video audiences have grown significantly in recent years, high production costs remain a hurdle for independent firms looking to expand. Last year several comedic online video sites such as Funny or Die, CollegeHumor and The Onion discussed a combination with Viacom, although the talks didn’t lead anywhere.

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The company could also be attractive because unlike many other digital media companies that burn through capital, Defy’s financial performance is seen as relatively healthy, according to two people familiar with its financials. The majority of Defy’s revenue comes from advertising, though the company has experimented with other models, including merchandising and subscriptions. Recently Defy launched a subscription service Screen Junkies Plus that has drawn tens of thousands of subscribers paying $4.99 a month, according to a person familiar with the figures. Last year it released a Smosh movie in theaters as well as subscription video platforms like Netflix.

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The rise of mobile video, through services like Snapchat Discover and new apps like Verizon’s Go90 have created a greater demand for original, short-form videos and the companies that can create them quickly.