Genius Brands acquires Vancouver animation house Wow! for US$53m

Hollywood company says it will transfer its own studios from China to Canada

Animator Chris Souza, when he was employed at Rainmaker in 2016, working on a TV project | Photo: Chung Chow, BIV

One of Vancouver’s oldest animation studios is going Hollywood as part of yet another reboot to its ownership.

Beverly Hills-based Genius Brands International Inc. (NASDAQ: GNUS) announced Wednesday it’s acquiring children’s production company Wow! Unlimited Media (TSX-V: WOW) in a deal worth US$53 million.

Wow! was created in 2016 through a merger between Vancouver-based Rainmaker Entertainment — known for its work on the CG animated ReBoot children’s series — and New York-based Fred Siebert’s Frederator Networks and Ezrin Hirsh Entertainment Inc.

Founded in Vancouver in 1991 as Mainframe Entertainment, the animation studio rebranded as Rainmaker in 2007 and then rebranded again as Mainframe Studios following the 2016 merger.

Mainframe, which has studios in both Vancouver and Toronto, does animation work for Netflix.com Inc. (Nasdaq:NFLX), Amazon Prime Video and Sony Entertainment Inc., among others.

Genius Brands said the Canadian production facilities will allow it to tap federal and provincial tax credits, which in turn will see it transfer its current animation production from China to Canada.

Toronto-based Wow! CEO Michael Hirsh will join Genius Brands’ board as a result of the deal and continue to oversee the Canadian operations.

The West Coast animation house found itself on its current path after its self-financed feature film debut, Ratchet & Clank, failed to connect with critics and audiences back in 2016.

The computer-animated movie grossed US$13 million at the box office based on a budget estimated to be US$20 million, according to BoxOfficeMojo.com.

That pushed Rainmaker to take a $10 million impairment charge on its first-quarter income in 2016.

A few months later, Rainmaker acquired Frederator and Ezrin Hirsh Entertainment in a deal worth an estimated $17 million. That deal was funded in part through an $11 million private placement.

Wow was then created as the parent company overseeing Rainmaker’s animated production efforts and Frederator’s YouTube distribution, the latter of which has about 1 billion monthly views on YouTube.

“This is a powerful partnership that brings immediate and significant value for shareholders.  We bring production capacity, new IP, and a robust and profitable YouTube Network,” Hirsh said in a statement.

“Genius Brands, with Kartoon Channel!, has a fully distributed footprint where our content can thrive and also help Kartoon Channel! itself expand.  Genius Brands’ world-class consumer product licensing team, led by Kerry Phelan, will enable us to monetize all of these great characters and brands. This transaction represents the culmination of our extensive strategic review process.

Wow will be delisted from the TSXV as a result of this acquisition.

torton@biv.com

@reporton