Viacom Inc said on Tuesday it will buy Pluto TV, a free video streaming TV service, for $340 million in cash to expand its advertising business.
The owner of MTV Networks sees the purchase of the six-year-old company as another way to build a so-called direct-to-consumer business, Viacom said, while avoiding the capital intensive task of competing directly against subscription video services owned or to be built by Netflix, Walt Disney Co and AT&T Inc’s WarnerMedia.
Pluto TV is a standalone app that has distribution deals across most streaming TV services, like Roku, Amazon Fire TV, Android TV, Apple TV, Chromecast and Sony PlayStation consoles, as well as on Samsung and Vizio smart TVs.
Following the acquisition, Pluto Co-Founder and CEO Tom Ryan will continue to serve as CEO of Pluto TV, which will operate as an independent subsidiary of Viacom upon closing of the transaction, according to a statement.
Pluto TV has a large network of content partners that includes major TV networks and film studios, but its core app users are much smaller than Viacom's. Following hte deal, Pluto TV's content offering will also be complemented with additional Viacom programming.
The acquisition expands Viacom's digital streaming footprint to Pluto's 12 million+ monthly active users, 7.5 million of which are on connected TVs.
Pluto could also serve as a marketing tool for Viacom's current direct-to-consumer subscription services, including Noggin and Comedy Central Now.
It will also help scale Viacom's digital television ads business by providing it with more sales inventory.
The transaction is expected to close in the first quarter of 2019, subject to regulatory approval.