Walmart said it reached a deal to buy television maker Vizio for $2.3 billion, a major bet by the retail behemoth that it can make advertising revenue a significant part of its future.
The deal gives Walmart access to more opportunities to sell advertising through the TVs that Vizio manufactures, as well as create entertainment for shoppers, the retailer said Tuesday.
News of a potential deal between Walmart and Vizio was first reported by The Wall Street Journal last week, sending Vizio’s stock higher. In Tuesday morning trading, Vizio shares rose 15% to $10.98. Walmart agreed to pay $11.50 a share in cash for Vizio’s outstanding stock.
Buying Vizio provides Walmart with a TV operating system, granting more space to sell ads and viewership data as it works to grow its advertising business. The move aligns with Walmart’s efforts to expand profit streams beyond selling goods in stores and online. Walmart already has a large private-label electronics business through its Onn brand, which offers phone chargers, speakers and televisions. The Onn TVs run on operating systems from Roku.
The deal is a response to both the changing nature of Walmart’s revenue model and the television business, said Seth Dallaire, chief revenue officer for Walmart U.S., who will manage Vizio after the acquisition. Streaming and internet-connected TVs have made the TV business about software, not hardware, he said. Walmart has access to shoppers and data that makes advertising through connected TVs even more appealing to potential advertisers, he said.
“As more people come to us through digital channels, it allows us to leverage this advertising capability we have,” said John David Rainey, Walmart’s chief financial officer. “The acquisition of Vizio is very complimentary to that. It’s an accelerant to what we are already doing.”
After the deal is complete, Walmart will continue to sell several TV brands as it does now, said Dallaire.
Walmart expects the deal to close as early as the middle of its current fiscal year, which would be this summer, after regulatory clearance, said a spokeswoman for the company.
The Walmart deal shows how important consumer data and ad space have become for retailers as they work to grow their digital advertising businesses to compete with Amazon.com. In addition to being an e-commerce behemoth, Amazon is among the biggest ad players in the U.S. behind Google parent Alphabet and Facebook owner Meta Platforms. Amazon has also been building its own smart TV business.
Walmart on Tuesday said its global ad business reached $3.4 billion in the year ended in January, up 28% from the year prior.
Competition to attract advertisers is fierce among retailers, with Best Buy, Kroger, Instacart and others vying for the business. Advertisers continue to shift dollars into the retail media space, which is expected to hit $59.6 billion in U.S. ad revenue this year, up almost 30% from 2023, according to Insider Intelligence.
Write to Sarah Nassauer at [email protected]
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