By Lillian Rizzo, Joe Flint and Patience Haggin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 22, 2020).
Fox Corp. and Comcast Corp. are each in discussions to acquire
advertising-supported video services, as entertainment giants
increasingly look to offer free or low-cost alternatives for
consumers who don't want to pay for streaming subscriptions.
Fox has expressed interest in acquiring Tubi, an ad-supported
streaming service that carries reruns of television shows and
movies, according to people familiar with the matter. The companies
are discussing a deal that could be valued at north of $500
million, the people said.
Separately, Comcast's NBCUniversal is in advanced talks to
acquire Vudu from retail giant Walmart Inc., according to people
familiar with the discussions. Vudu allows consumers to buy or rent
movies or shows and in 2016 launched a free, ad-supported service
that includes thousands of movies and TV shows.
Almost all major entertainment companies, from Walt Disney Co.
to AT&T Inc.'s WarnerMedia, have launched or are preparing
ad-free subscription streaming services to compete with Netflix
Inc. and Amazon.com Inc.
But several companies also see the need to offer free,
ad-supported tiers to reach other consumers. A Wall Street
Journal-Harris Poll survey last fall found that Americans are
willing to spend an average of $44 monthly on streaming video to
subscribe to an average of 3.6 services.
ViacomCBS Inc. outlined its streaming plans this week, saying
its premium option will be Showtime, while a second option will be
an expanded version of its CBS All Access subscription service.
Other consumers will be able to access the ad-supported service
Pluto TV, which predecessor company Viacom Inc. acquired last year
for $340 million.
In December, the Journal reported that Comcast was in exclusive
negotiations to acquire Xumo LLC, another ad-supported streaming
platform.
Sony Corp. last year formed a joint venture with media company
Chicken Soup for the Soul Entertainment Inc. to launch a beefed up
version of its ad-supported platform, Crackle. Chicken Soup for the
Soul took a majority stake in the streaming platform, now called
Crackle Plus, while Sony remained an investor.
The boom in ad-supported video "was the missing piece in the
streaming wars," said Bill Rouhana, chief executive of Chicken Soup
for the Soul Entertainment. "It's no surprise that M&A activity
is increasing dramatically in the sector."
Amazon's IMDb last year launched an ad-supported streaming
service to complement the company's Prime subscription service.
Tubi would give Fox -- which owns the Fox broadcast network, Fox
News and Fox sports networks, among other assets -- a platform with
significant reach and a large customer base. Tubi said that in
December it notched 25 million monthly active users. Fox could use
the service as another home for content from its broadcast network
as well as a promotional platform.
Fox Corp. and Wall Street Journal parent News Corp share common
ownership.
Based in San Francisco, Tubi streams content from Warner Bros.
Entertainment Inc., Paramount Pictures and Lions Gate Entertainment
Corp. Its most popular titles include "Scooby-Doo," "New Jack City"
and "Daddy Day Care." The service is available on streaming devices
such as the Amazon Fire Stick, Apple TV and Roku, as well as Sony
and Samsung televisions. Tubi is available in the U.S., Canada and
Australia.
Vudu was acquired by Walmart in 2010 for more than $100
million.
The financial terms Walmart and NBCUniversal are discussing
couldn't be learned. The discussions may not result in a deal, the
people familiar with the talks said.
The talks come a few months before NBCUniversal launches a new
streaming service, Peacock, which will include an ad-supported
version for $4.99 a month and an ad-free tier for $9.99, as well as
a more limited, free version with ads. The service will debut in
April to Comcast and Cox Communications Inc. customers and to all
consumers in July.
Vudu's ad-supported service would serve as a complement to
Peacock, the people familiar with the talks said. The free service
has recent titles such as "La La Land" and a large library of older
ones like "Swingers," "The Karate Kid" and "Ace Ventura: Pet
Detective."
Vudu's online movie-rental service would support NBCUniversal's
movie-ticketing and rental business, Fandango Media LLC, which is
said to have more than 30 million online and mobile monthly
visitors.
Vudu's movie-rental business is said to be about seven times the
size of Fandango's by revenue, according to another person close to
the situation. Walmart says Vudu is installed on more than 100
million devices across the U.S.
In 2018 Walmart considered expanding its video-streaming
ambitions by launching a subscription-supported service separate
from Vudu, to compete with Netflix, but the company chose not to
enter such a crowded, competitive market, said a person familiar
with the situation.
If Comcast moves ahead with an acquisition of Xumo, it would be
aligned more with the cable giant's Xfinity pay-TV platform, known
as X1, as well as the company's streaming device, Flex, said a
person familiar with the matter. The X1 cable box serves as a
one-stop shop for Comcast pay-TV subscribers, since it includes
both cable programming and access to numerous streaming
applications such as Netflix.
Flex is targeted at cord cutters who remain broadband
subscribers. Last year, Comcast began offering Flex to its
broadband-only subscribers at no cost.
AT&T's HBO Max, which is launching a $14.99-a-month
subscription offering in May, will offer a lower cost, ad-supported
version at a later time.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com, Joe Flint at
joe.flint@wsj.com and Patience Haggin at
patience.haggin@wsj.com
(END) Dow Jones Newswires
February 22, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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