Snap Strikes $100 Million Deal With Time Warner

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Snap, the owner of Snapchat, just struck a $100 million deal with Time Warner, the company that owns HBO and Warner Bros, which will see the entertainment company provide the platform with up to 10 original shows annually for the next two years.

Time Warner will produce original programming and advertising, as the newly public social media group tries to get a greater share of the ad dollars earned from marketing to younger audiences.

“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,” said Nick Bell, vice president of content for Snap, in a statement.

Gary Ginsberg, Time Warner executive vice-president, said Snap had driven the “evolution of media”.

“We’re confident this partnership will help drive larger audiences to our shows and to the new direct-to-consumer platforms we continue to roll out,” he said.

It is not clear how much of the $100 million deal will be spent on developing the new programs and how will be spent on advertising on the platform. Snap sells video ads that sit within collections of photos known as “stories”, original programming to appear on its Discover section, and sponsored filters and lenses which are visual overlays on people’s snaps. Time Warner will advertise HBO, Turner and Warner Bros. on Snap in the next two years.

Snap typically broadcasts one show a day in its app under a “Shows” header. They all are five to 10 minutes and made in participation with networks like NBC, ABC, BBC, A&E, Discovery, Vice, and others. The shows have collectively drawn “audiences of over 8 million,” Snap CEO Evan Spiegel said during the company’s latest earnings call.

By the end of 2017, Snap aims to have two to three shows air in its app every day.

Snap is one of many internet companies competing to be the future of TV. Facebook is investing in original content to encourage people to watch long-form video on the social network. YouTube launched a subscription service in 2016 as well as YouTube TV, a platform on which consumers can watch live broadcasting, earlier this year.

Shares of Snap are up 1.94% on Monday, to $17.88, after falling back to their IPO price of $17 late last week. It opened at $17.85, with a session high of $18.34 and a session low of $17.03. The stock currently has a market capitalization of $21.75 billion. Meanwhile, Time Warner shares settled at $99.90, up 0.7%.

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