Report: Netflix aims to acquire Los Angeles billboard company for $300M

Dive Brief:

Netflix is offering $300 million to acquire Regency Outdoor Advertising, an outdoor billboard company that owns billboards in prominent spots across Los Angeles, according to a CNBC report citing anonymous sources familiar with the matter. Netflix is not the sole bidder for the company, the report said.
Netflix has advertised some of its original shows, including "The Crown" and "Stranger Things," on Regency billboards before. Regency owns billboards on the Sunset Strip part of Sunset Boulevard, an area well-known for promoting TV shows and movie releases. Other locations include Los Angeles International Airport, along with major freeways and space near the Los Angeles Angels baseball stadium.
Last year, Netflix acquired comic book publisher Millarworld, the company's first known acquisition. The potential purchase of Regency would be Netflix's largest acquisition to date, CNBC said.

Dive Insight:

As the competition between a growing number of online streaming services intensifies, Netflix is intent on remaining on top. Acquiring Regency would help the digital service heighten its visibility in heavy traffic areas and in one of the most influential cities for the entertainment industry, Los Angeles. Compared to other traditional, non-digital ad formats, billboards remain a strong option for marketers because they can't be skipped or ignored in the way that TV and print ads can be, per CNBC.

In its Q4 2017 earnings call, Netflix announced plans to increase its marketing spending by 54% from $1.3 billion to $2 billion this year. However, the increased marketing spend could increase Netflix's expenses per subscriber by about 25%, according to data from MoffettNathanson referenced by CNBC.

Netflix's potential push into traditional outdoor advertising comes as the number of paid TV subscribers continues to decline. The company's continued popularity could be costing TV advertisers between $3 billion and $6 billion in revenue, according to estimates from nScreenMedia. In Q3 2017, Netflix had 56.4 million subscribers, who each miss about 35 commercials per day — adding up to roughly 2 billion in ad impressions — due to streaming on the ad-free platform, per nScreenMedia.