TalkTalk has acquired Tesco’s loss-making video service, Blinkbox, and Tesco Broadband for an estimated £5 million.
The service was described as a “distraction” to the wider business by Tesco’s new boss, Dave Lewis, who said that Blinkbox, which made a loss of £20 million in its last financial year, would be shut down if a buyer could not be found.
Blinkbox, which has around one million users each month, has deals with over 50 of the world’s leading content producers including HBO, Disney, Warner Bros., Universal Studios and 21st Century Fox.
However, it has faced tough competition from the likes of Netflix, which has shown phenomenal growth. With almost 54 million subscribers across the globe, international streaming has seen a tenfold increase since 2011.
Tesco had made attempts to increase the use of Blinkbox by bundling it with its own-brand Hudl tablet last year, but the service underperformed.
The integration of Blinkbox with TalkTalk’s existing TV business will begin immediately, with the Blinkbox branding set to be abandoned.
Blinkbox’s CEO and co-founder, Adrian Letts, will join TalkTalk as managing director for TV and report to Tristia Harrison, managing director of TalkTalk’s consumer business.
As part of the same transaction TalkTalk has also acquired Tesco’s broadband and landline services (approximately 75,000 broadband and 20,000 landline households), which the company hopes will enable it to “further leverage the superior scale and economics of [its] national network.”
Commenting on the acquisition, TalkTalk’s chief executive, Dido Harding, said: “We are excited about the opportunity that Blinkbox’s platform and technology expertise bring, and which will significantly accelerate the development of our TV platform.
“The purchase of Tesco’s broadband base is another example of TalkTalk leveraging its national network to grow faster. We are excited about the future of quad-play – fixed phone and broadband, TV and mobile – and this acquisition will help to further drive home our value for money advantage.”
