Viacom agrees to buy Pluto TV for $340 million

Viacom shares have fallen more than 50 percent over the past five years as many of its signature channels have failed to churn out hit shows that resonate with younger audiences. To stay relevant in an on-demand world, Viacom is offering content in a variety of forms, including free services and several subscription offerings. The company is widely expected to begin merger discussions with CBS later this year to gain scale as online competitors steal subscribers away from cable TV.

“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,” Viacom CEO Bob Bakish said in the statement.

Bakish is a candidate to run the eventual Viacom-CBS combination.

Founded in 2013, Pluto TV has raised money from companies including Samsung, Scripps Networks and Germany’s ProSieben. The service has about 12 million monthly active users and is entirely ad-supported, featuring a live linear feed of more than 100 channels and on-demand movies and TV shows.

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.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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