If CBS (NYSE:CBS) can't reach you as a couch potato, it just may snag you as you're buying potatoes. The media giant is paying $71.5 million in cash to acquire SignStorey, a company that has set up video displays in 1,400 supermarkets.
It may sound hokey, but it works. Providing ad-supported content through grocery chains like Supervalu (NYSE:SVU), SignStorey's screens entertain as many as 72 million consumers a month.
The deal is a no-brainer for CBS, now able to promote its shows as it taps its existing sponsor base to reach consumers at the point of purchase. This is not all that different from its deal with AMR (NYSE:AMR), where it's in an ad revenue-sharing deal on American Airlines flights. The acquisition also makes sense given the company's growing billboard business (while other segments declined, CBS' outdoor segment grew this past quarter).
Sure, some clips -- like a CSI crime scene or a Survivor gross-out food challenge -- may not work in a supermarket setting, but there is plenty to gain and little to lose with the purchase. SignStorey will be renamed CBS Outernet.
Video display advertising is big business in other countries. China's Focus Media (NASDAQ:FMCN) is thriving thanks to its network of 124,000 flat-panel monitors, positioned in areas of heavy pedestrian traffic like stores and office buildings.
For CBS, it's about more than just landing a new ad revenue stream. With TV watchers spending more time on the Internet or playing video games, it's now able to promote its prime-time shows in one place that most people still visit on a weekly basis: the supermarket.
What's that? Consumers are ordering home-delivered groceries over the Internet, through services like Amazon's (NASDAQ:AMZN) new AmazonFresh? Hold that thought. Let CBS dream a little longer.
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Longtime Fool contributor Rick Munarriz now knows why CBS has an eye for its logo: It's always watching you. He does not own shares in any company mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy that's running low on eggs.
