Walmart buys TV maker Vizio for $2.3 billion to expand advertising

Walmart is buying budget TV maker Vizio for $2.3 billion as the retail giant seeks new frontiers for its advertising business, the companies said Tuesday.

The nation’s largest retailer said the deal will give its advertising division Walmart Connect new ways to reach customers through in-home media and additional opportunities to boost profits. The acquisition “gives us the opportunity to reach and serve customers in new ways and connect more dots for those who advertise with us,” Walmart CEO Doug McMillon said on a call with analysts.

John David Rainey, Walmart’s chief financial officer, called advertising one of the key growth areas for Walmart this year. “Global advertising and memberships” will generate 20 percent of Walmart’s operating revenue in the current fiscal year, Rainey said.

Vizio has more than 18 million active accounts on its SmartCast – its TV operating system – and its platform offers free, streamable content that is supported by ads.

“This is the part of the business that Walmart hopes to grow,” said Neil Saunders, managing director of analytics firm GlobalData. “This multichannel approach gives Walmart much more power and reach in the advertising world and puts it on a more level playing field with, for example, Amazon.”

Walmart reported strong financial results Tuesday, with sales up 6 percent to $648.1 billion for the fiscal year. The company’s operating income rose 32.2 percent to $27.1 billion.

Retailers are looking to increase profit margins as consumers move back into discretionary categories. Electronics sales have been particularly persistent as most consumers upgraded their home entertainment in 2020 and 2021 during the pandemic.

According to the Bureau of Labor Statistics’ Consumer Price Index, TV prices fell 9.7 percent in January from last year. According to Circana, the average cost of a TV was $385 last year, down 11.7 percent from 2022. Rainey said he expects the “relative weakness to continue” for technology sales.

Walmart already generates more sales for Vizio than any other retailer, Saunders says, but retailers are going beyond just selling goods.

“On a broader level, the deal underlines that retail is becoming a much more diversified business than it used to be,” Saunders said in a statement. “There are linear connections between retail and other industries, such as advertising and fulfillment, that retailers want to capitalize on.”

Under the all-cash deal, Walmart would pay $11.50 per share to acquire Vizio, reflecting a 54 percent premium to the TV maker’s stock price before the Wall Street Journal broke news of a possible acquisition last week.

Shares of Vizio rose more than 16 percent on Tuesday, while shares of Walmart rose more than 3 percent.

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