Viacom has agreed to acquire streaming service Pluto TV for $340 million in cash, the latest piece of its strategy to build a streaming business.
The company calls it another way to build its direct-to-consumer business.
Viacom says buying the 6-year old company is a way of avoiding the capital intensive task of competing directly against subscription video services owned or to be built by Netflix, Walt Disney and AT&T’s WarnerMedia.
Founded in 2013 Pluto TV is a free, ad-supported service that has given over-the-top viewers a video option that doesn’t require a cable subscription or monthly payments to Netflix. The transaction is expected to close in the first quarter, the companies said in a statement on Tuesday.
“Since our launch less than five years ago, and particularly over the past year, Pluto TV has enjoyed explosive growth and become the category leader in free streaming television,” said Pluto TV CEO and Co-Founder Tom Ryan. “Viacom’s portfolio of global, iconic brands and IP, advanced advertising leadership and international reach will enable Pluto TV to grow even faster and become a major force in streaming TV worldwide. Viacom is the perfect partner to help us accomplish our mission of entertaining the planet.”
For Viacom, which owns MTV, Comedy Central and VH1, the acquisition could help in future negotiations with pay-TV distributors. Viacom plans to let carriers such as Comcast and Charter offer the service for their broadband-only customers, according to a person familiar with the matter who asked not to be named because the strategy is confidential.
Viacom plans to add content to Pluto TV from its digital studios without changing the platform’s focus on free programming. Viacom will use the service to market subscription products such as Noggin and Comedy Central Now. Tom Ryan, Pluto TV’s CEO and co-founder, will continue to run the business and operate it as an independent unit of Viacom.
While Viacom has no plans to make current shows on pay TV services available for free on the service, it sees Pluto TV as a way to make money off its archives.
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