Viacom Acquires Free Streaming Platform Pluto TV for $340 Million

As its competitors rush to launch Netflix-style subscription streaming services, Viacom is making a bet on free programming. 

The company is paying $340 million in cash to acquire free streaming service Pluto TV, which it plans to use as a distribution outlet for digital programming from brands like Awesomeness and as a marketing tool for its portfolio of media brands. The deal is expected to close during the first quarter of the year. 

"As the video marketplace continues to segment, we see an opportunity to support the ecosystem in creating products at a broad range of price points, including free," CEO Bob Bakish said Tuesday in a statement announcing the purchase. "To that end, we see significant white space in the ad-supported streaming market and are excited to work with the talented Pluto TV team, and a broad range of Viacom partners, to accelerate its growth in the U.S. and all over the world." 

Founded in 2013, Pluto TV was created with the premise that, despite the on-demand nature of streaming services like Netflix or YouTube, consumers were still looking for a lean-back experience. It licensed shortform digital programming primarily from YouTube and curated the videos into channels based on a specific genre or brand. Over time, it began to license films and television shows from the major Hollywood studios and organized them into customized channels like Pluto TV Movies or TV Drama. Today, Pluto offers more than 100 channels featuring programming from more than 130 partners. The company, which is said to have a $200 million run rate, claims an audience of 12 million monthly active users, two-thirds of whom watch via connected TVs. 

"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 co-founder and CEO 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."

Viacom, which has been steadily building up a digital business through the acquisitions of influencer marketing platform WhoSay and digital producer Awesomeness, sees an opportunity to utilize Pluto to reach consumers directly and use it as an entry point for subscription businesses Noggin and Comedy Central Now. Further, it will connect Viacom with a predominantly young, tech-driven viewership that largely isn't paying for cable, where it primarily distributes networks like MTV and BET. 

The deal comes during a pivotal moment for legacy media companies. Disney, WarnerMedia and NBCUniversal are all currently working on streaming services that will help them not only take on Netflix but also allow them to create a direct relationship with consumers as cable subscriptions decline. Acquiring Pluto will give Viacom the opportunity to experiment with streaming video without going all-in on a subscription business. The company says that the deal will not disrupt its existing pay TV relationships.