Channel M has the video. PlayNetwork Inc. has the audio. Will these two in-store media companies work well together?

That’s the question raised by the acquisition of Sherman Oaks-based Channel M by PlayNetwork of Redmond, Wash. Channel M puts video screens in stores and sells ad time on them. PlayNetwork provides background music for retail establishments.

The strategy of merging the companies was to expand business by putting video screens in stores where they already provide audio, said Lon Troxel, chief executive of PlayNetwork.

“Being together provides a natural way to have a conversation to offer music and video,” Troxel said.

Channel M has its screens in about 10,000 stores, while PlayNetwork pipes music into 55,000. Adding video screens to even a portion of PlayNetwork’s audio customer base will result in healthy growth.

“We are growing our subscriber base over 20 percent annually, and this acquisition allows us to continue to gain market share,” Troxel explained.

Channel M is one of the nation’s largest in-store video production and distribution companies, with clients such as Blockbuster, GameStop and Kampgrounds of America.

The company was acquired Nov. 2 by PlayNetwork, which provides in-store music and voice messages for such clients as Starbucks, Nordstrom,

Victoria’s Secret, Gap and Macaroni Grill. Financial terms of the acquisition were not disclosed.

In addition to getting advertiser messages on in-store screens, Channel M produces programming for its customers and sells it to them. For example, the screens in Blockbuster stores feature news show-type programming with movie star interviews, Hollywood gossip, trailers for current films – and advertising. The movie studios pay Channel M to show the trailers, advertisers pay for exposure, and Channel M shares the revenue with Blockbuster.

Meanwhile, PlayNetwork provides background music and marketing messages to stores that pay a subscription fee. There is no advertising in a PlayNetwork soundtrack, except voice-overs to promote the store itself.

Now what happens?

The idea is to make the audio complement the video. For example, the audio in a store could direct customers to video screens to see items on sale and get more information about them.

Channel M’s staff of 31 employees, who produce the videos and sell the ads, will remain in Sherman Oaks, and the payroll is expected to grow as the video business expands. Channel M executives David Teichner and Eric Hebel will join PlayNetwork as executive vice president of Channel M advertising and senior vice president of creative media services, respectively. Both will remain at the Sherman Oaks office.

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