Dive Brief:
- Discovery Communications and The Enthusiast Network (TEN) are forming a joint venture with an eye to provide auto advertisers a multimedia platform for reaching auto fans, according to a report in The Wall Street Journal. Discovery will hold the majority stake in the partnership and no cash will change hands in the deal.
- Discovery will contribute Velocity, its cable network with an auto focus, and its automotive video library while TEN is contributing its entire social media, video and live event automotive holdings. TEN owns publications including Motor Trend, Automotive and Hot Rod, streaming video service Motor Trend on Demand and YouTube's Motor Trend channel, which has more than 5 million subscribers.
- Spending in the U.S. automotive advertising sector hit almost $10 billion last year, up 9% over 2015, per Kantar Media data cited in Fox Business.
Dive Insight:
This announcement is the latest in a string of new partnerships surrounding automotive marketing. Last month, Vistar Media announced an out-of-home measurement tool with Toyota that helped put ROI metrics behind a traditional advertising channel for auto makers. In July, Dealers United — a digital solutions company for auto dealers — rolled out a test for its Facebook Inventory Ads, a format that helps simplify dealerships running Facebook ads that automatically update inventory and price changes in real time.
The new partnership is Discovery's first U.S. direct-to-consumer video play and evidence the cable programmer sees value in spinning off its car-centric brand into a new venture. Terms of the agreement, which is still subject to regulatory approval, allow Discovery to buy TEN at a later date or TEN to sell its stake, the Journal said.
Discovery also bought Scripps Networks Interactive this week for almost $12 billion, according to U.S. News & World Report. And while the new joint venture is likely aimed to snag some of the auto industry's $10 billion ad spend, it's also planning to attract a mainly male audience more efficiently than just via sports content, CEO of the new partnership Paul Guyardo told the Journal.