On Tuesday, cable provider Altice USA, Inc. announced that it has acquired millennial news network, Cheddar, Inc. for $200 million, according to a Wall Street Journal report. Of course, the deal is subject to regulatory approval prior to its closing.
Jon Steinberg, the founder and CEO of Cheddar, and former BuzzFeed executive, will become president of Altice News, a division that will include Cheddar, as well as Altice’s News 12 channel and i24 News, an Israeli-based 24-hour international news network.
A Relationship That Dates Back To 2016
Cheddar broadcasts live news 19 hours a day from the floor of the New York Stock Exchange (NYSE), NASDAQ, the Flatiron Building in New York City, and the White House lawn and briefing room in Washington, D.C., covering products, technologies, and services. It distributes its content through its two networks—Cheddar Business and Cheddar News.
Since its launching in 2016, it has raised over $54 million in venture funding, with Altice News as one of its early investors, alongside AT&T, Comcast Ventures (owned by CNBC parent company, Comcast), Raine Ventures, Liberty Global, Goldman Sachs, Lightspeed Ventures, and Amazon.
Altice USA came about when the Dutch telecommunication company, Altice, bought Cablevision in 2015 for $17.7 billion. Now servicing the tri-state area in the United States and parts of the Midwest and South, Altice became extremely attractive to Steinberg for purposes of acquisition.
“They’re the third largest cable company in the U.S., and focused on live news,” Steinberg emphasized.
“Cheddar gives us full suite of news, business and general news to advertise across multiple different markets,” Altice USA CEO, Dexter Goei told CNBC.
Since its inception, Steinberg has been able to negotiate deals on a variety of platforms without incurring affiliate network fees, allowing the company to build its distribution while finding its way into the homes of over 40 million consumers, as well as free, ad-supported services.
Why You Should Care
#1 –The Struggle Is Real
This deal comes along as other digital media companies are struggling to maintain growth with platforms like Google and Facebook, which suck up the majority of online ad revenue.
Recently, news outlets BuzzFeed and Vice Media announced layoffs, along with Verizon Media Group, laying off approximately 7% of its staff, which includes companies such as HuffPost, Yahoo, and TechCrunch.
#2–Cutting the Cord Is Inevitable; Increasing Digital Distribution Is The Future
By aggressively pushing programming onto a variety of pay-TV platforms and free streaming services, Cheddar has been able to win over those customers through deals with Dish’s Sling TV, AT&T’s DirecTV Now, Hulu With Live TV, and YouTube TV.
Catering to the digital space is key for media companies to survive today. We are getting even closer to the realization that cutting the cord is inevitable, forcing digital media companies to look for new and innovative ways to integrate existing cable customers into modernized programming.
Steinberg believes that with the acquisition of Cheddar, Altice News can become “a leader in local, business, national, and international news everywhere as we look to build a live news offering for customers in the traditional pay TV ecosystem.”
“What I really care about is Jon being able to do better with our existing businesses and create original content,” Goei said. “This is about maximizing underinvested and underutilized assets at Altice USA.”
#3—Altice USA Is Now Catering to an Entirely New, Younger Market—Millennials
Cheddar’s influence in the millennial market, especially when it comes to streaming across social media platforms like Facebook, Twitter, and Instagram—combined with smart-TV apps, allows for a much larger ratio of targeted audiences than what is currently available to other networks.
Millennials already have short attention spans, as social media platforms like Instagram and Twitter have already proven. As a millennial, we like short and sweet. We don’t have time to be reading essays and sitting in front of a TV hoping to hear a story that interests us. No, we want to “view our own adventure,” where we are able to have tailored news stories and programming at our beck and call.
#4—Growing Ad-Revenue Potential
Lastly, Cheddar now has the opportunity to enhance its own advertising capabilities. Traditionally, the network hasn’t attributed the bulk of its revenue from selling ads; rather, it licenses its content to other platforms for a fee, taking a share in the advertising costs.
With this acquisition, Cheddar will have access to Altice USA’s a4 platform, “a4 Media,” an advanced TV business that formally launched in April of last year, enabling cross-screen targeting across 90 million U.S. households and over 1 billion devices.
“We can go to clients and say we can do these custom creative sponsorships, and a massive scaled buy,” Steinberg added. “[…] we can run the spots right away and take cut-downs, whether it’s display or video units, and run it through a4.”
But for Steinberg, his focus is on bringing “more scale, linear television spots, and programmatic inventory” to the space.
“I want to be the leading live news player in international, national, business and local, for both traditional and paid TV customers, and for people that don’t have a traditional cable bundle.”
