For Viacom, which owns MTV, Comedy Central and VH1, the acquisition could help in future negotiations with pay-TV distributors. Viacom plans to let carriers such as Comcast and Charter offer the service for their broadband-only customers, according to a person familiar with the matter who asked not to be named because the strategy is confidential.

Pluto TV is a free, ad-supported service that has given over-the-top viewers a video option that doesn't require a cable subscription or monthly payments to Netflix . The transaction is expected to close in the first quarter, the companies said in a statement on Tuesday.

Viacom has agreed to acquire streaming service Pluto TV for $340 million in cash, the latest piece of its strategy to build a streaming business as consumers cut the cord.

Viacom shares have fallen more than 50 percent over the past five years as many of its signature channels have failed to churn out hit shows that resonate with younger audiences. To stay relevant in an on-demand world, Viacom is offering content in a variety of forms, including free services and several subscription offerings. The company is widely expected to begin merger discussions with CBS later this year to gain scale as online competitors steal subscribers away from cable TV.

"As the video marketplace continues to segment, we see an opportunity to support the ecosystem in creating products at a broad range of price points, including free," Viacom CEO Bob Bakish said in the statement.

Bakish is a candidate to run the eventual Viacom-CBS combination.

Founded in 2013, Pluto TV has raised money from companies including Samsung, Scripps Networks and Germany's ProSieben. The service has about 12 million monthly active users and is entirely ad-supported, featuring a live linear feed of more than 100 channels and on-demand movies and TV shows.

Viacom plans to add content to Pluto TV from its digital studios without changing the platform's focus on free programming. Viacom will use the service to market subscription products such as Noggin and Comedy Central Now. Tom Ryan, Pluto TV's CEO and co-founder, will continue to run the business and operate it as an independent unit of Viacom.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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