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Viacom Gets What It Wanted

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Mar. 11 2019, Published 11:16 a.m. ET

Viacom wastes no time closing Pluto deal

Viacom (VIAB) (VIA) has completed the acquisition of Pluto TV. Viacom announced its plan to acquire Pluto in January and said it would pay $340 million in cash for the asset. With cord-cutting upending the traditional pay-TV world, Viacom has chosen a multipronged strategy to survive. In addition to continuing to operate its own television channels, Viacom has also been seeking out contracts to produce shows for digital video services. It produces shows for Netflix (NFLX) and Snapchat, the Snap-owned (SNAP) social app that reaches 186 million people every day around the world.

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Viacom banking on Pluto to supercharge advertising business

Viacom also distributes its shows through Dish Network’s (DISH) Internet-based television service Sling TV and AT&T’s (T) DIRECTV Now. To further broaden the reach of its content and expand its revenue opportunities, Viacom has expanded its strategy to include running its own digital video services. This is where Pluto fits. Pluto operates a digital video platform supported by advertisements. It boasts 12 million customers, mostly young people aged 18–34 years. Viacom is mostly betting on Pluto to help grow its advertising business. Viacom’s advertising revenue fell 6.0% year-over-year to $1.2 billion in the first quarter of fiscal 2019, the period ended in December. About $28 billion was spent on digital video advertisements in the United States in 2018, according to eMarketer estimates.

Pluto will operate as a standalone subsidiary of Viacom complete with its own chief executive.

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