Revision3 may sell to Discovery Channel for $40M

After paving the way for Internet-based TV networks, Revision3 might finally be catching some attention from well-established cable television companies.

The startup is rumored to be in discussions with The Discovery Channel about a possible acquisition, reports TechCrunch. Revision3 has spent the past few weeks working on the deal, which values the startup between $30 million to $40 million. The report also indicates that a sale could be finalized by the end of the week.

Revision3 declined comment to VentureBeat regarding the potential sale.

The web-based TV network produces a variety of original shows about technology, comedy, pop culture, video games, music, and more. Some of its most popular shows include EpicMealTime, Diggnation, Tekzilla, Destructoid, and Totally Rad Show. The network is available across a plethora of digital platforms (e.g. Roku, Boxee, Zune, Tivo, Yahoo’s Connected TV Platform, Google TV, iOS, Android, and an HTML5-optimized video player). Those shows are mainly produced in Revision3′s studio, with videos that get distributed to several different platforms (YouTube, Facebook, AOL, Yahoo, iTunes, etc.) that generate revenue from a mix of advertising and in-show sponsorships.

The company’s programming brings in about 100 million monthly video views — with yearly audience numbers comparable to traditional cable TV networks, as VentureBeat reported back in January. And while Revision3 didn’t reveal its financial records for 2011, it did state that ad revenue was up by 53 percent compared to the previous year.

If an acquisition does happen, Revision3 would become the first Internet-based network owned by The Discovery Channel, which also owns TLC, Animal Planet, Oprah Winfrey Network (OWN), The Military Channel, and Science Channel.

Honestly, I think the $40 million price range for Revision3 is a steal, considering what a traditional television-based media company would gain. Revision3 has successfully built a model that distributes its programing across all of the important streaming video platforms/devices. It’s also figured out how to make money through all of these channels. Not only could the The Discovery Channel utilize this model for its own programming, but it would also be gaining a stable of fresh TV personalities who are familiar with less traditional production practices.

I doubt we’d see a cable channel version of Revision3, but certainly some of the network’s shows could cross over into some of Discovery’s preexisting channels. For instance, instead of playing an eight-hour block of “How it’s Made” on the Science Channel, we could get a dose of tech news and reviews.