(Bloomberg) -- Hollywood mogul Jeffrey Katzenberg has secured about $800 million in financing for his video startup NewTV, which the company will use to fund high-end TV series that have YouTube-length episodes, according to people with knowledge of the matter.
A constellation of large media companies, including 21st Century Fox Inc. and Warner Bros., is supplying NewTV with about $200 million, said the people, who asked not to be identified because the discussions are private. NewTV has secured the rest of its financing from institutional investors, according to the people, and it plans to announce the fundraising in the coming weeks.
NewTV will use the money to finance shows that are roughly the duration of a typical YouTube clip, but at a cost more on a par with a Netflix Inc. series. Each NewTV series will cost about $5 million to $6 million per hour, the people said, but individual episodes won’t run much longer than 15 minutes.
“Jeffrey wants to take what Apple and Netflix and HBO are doing, and translate it into 10-minute-or-less shows,” said Rich Greenfield, an analyst at BTIG LLC. “I’m not saying it will work or won’t work. The reality is -- until we actually see it -- it’s hard to know.”
Katzenberg, who declined to comment for this story, has reached out to some of the biggest directors and producers in the entertainment business, the people said. NewTV has yet to announce any shows.
The 67-year-old first rose to prominence in the 1980s when he revived Walt Disney Co.’s movie studio with hits like “The Little Mermaid,” “Aladdin” and “The Lion King.” In 1994, he resigned from Disney amid a rancorous power struggle and founded DreamWorks SKG with director Steven Spielberg and record executive David Geffen.
Katzenberg oversaw the company’s animation division, which produced “Shrek” and “Kung Fu Panda.” DreamWorks Animation was spun off into a separate company in 2004 and was sold to Comcast Corp. for $3.8 billion in 2016.
Last year, Katzenberg announced that he had raised money for WndrCo, a new venture that is modeled after Barry Diller’s InterActiveCorp. WndrCo will invest in media and technology companies, including the British music service Mixcloud.
NewTV is the largest of WndrCo’s investments to date. Katzenberg recruited Meg Whitman, the former chief executive officer of Hewlett Packard Enterprise Co., to lead the business. Though Whitman has no experience running an entertainment company, she served on the board of DreamWorks Animation from 2005 to 2008, worked at Disney earlier in her career, and brings a wealth of relationships with Silicon Valley.
It’s still unclear exactly what form NewTV will take. The company isn’t raising enough money to take on Netflix or YouTube with its own subscription service. The Silicon Valley giants, the two largest online video services in the world, spend billions of dollars a year on content and technology.
Katzenberg may find a long line of companies willing to buy -- or bankroll -- the shows that NewTV makes. Netflix, Snap Inc., Facebook Inc., YouTube and AT&T Inc. all host short-form videos already, and several of Katzenberg’s allies in traditional media, like Disney, are investing in new online services.
But most of those videos were made cheaply, Greenfield said. Katzenberg’s challenge is persuading backers to shell out money for higher-quality content.
“He believes that when you see it you’ll believe it,” Greenfield said.
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