CBS and Viacom merger: 'It's not a surprise, but it is a big deal'

After years of talks, CBS and Viacom have officially merged Tuesday creating a combined media company worth $28bn.

The two groups split in 2006. After a series of stalled out negotiations, the recombined companies – now called ViacomCBS – are back together under the umbrella of their controlling group National Amusements.

Gartner analyst Eric Schmitt said that while the deal obviously doesn’t come as a surprise, it does mean there’s another “credible scaled player” in the TV marketplace. 

“I think this is likely to slow the erosion in pricing in national TV,” said Schmitt, as there’s now one seller in the market. “This is likely to preserve traditional TV revenue and keep that pricing higher longer.”

Now together, ViacomCBS is hoping scale will buoy its position in traditional TV by both providing more leverage when negotiating carriage fees and maintaining ad price levels while it figures out its next play – likely in streaming. 

Brian Wieser, global president of business intelligence at GroupM, said ViacomCBS’s bigger position in traditional TV doesn’t necessarily give it better negotiating power.

“Practically they can threaten to pull much more from an MVPD than just a broadcast network if they don’t get what they want, but then an MVPD can hurt them harder by refusing to pay either.

“It also helps set a narrative for the industry which can help inform perceptions, which in turn can influence negotiations on the margins and may influence regulators and others as well.”

Show me entity :: 28891

ViacomCBS’s most notable streaming assets include Showtime OTT, CBS All Access (which combined to earn eight million by the end of 2018) and Pluto, which announced it had 15 million users in April.

In another non-surprise, ViacomCBS will evaluate its content licensing model with the possibility of offering a bundled streaming service. 

Bob Bakish, who was promoted from Viacom boss to chief executive officer of the combined group, said in an analyst call that he expects to both “fill out” ViacomCBS’s streaming offering and license out “even more” of its content to third party distributors.

The networks ViacomCBS merge to compete with have so far taken a much more focused approach. NBC Universal and WarnerMedia have made big splashes pulling The Office and Friends off of Netflix, respectively, losing out on a big chunk of licensing dollars to create a sense of exclusivity.

Meanwhile, Disney recently announced it will bundle together Disney+, ESPN+ and ad-supported Hulu for an extremely competitve price of $12.99.

AT&T (owns WarnerMedia) has a market share of over $250bn, Disney’s share sits at nearly $245bn and Comcast (owns NBCU) earns a share of $193bn, which all dwarf ViacomCBS’s sub-$30m number.

Brian Wieser, global president of business intelligence at GroupM, suggested that ViacomCBS will eventually prioritize one approach, most likely it’s direct-to-consumer business.

“You have to compete differently,” said Wieser. “You can choose to compete with scale, or you can choose to compete with quality content.”

ViacomCBS said it’s combined spend on original content totals over $13bn annually. 

Alan Wolk, co-founder and lead analyst at TVRev, said ViacomCBS’s existing position in streaming could be a differentiator as NBCU, Disney and WarnerMedia all work to get their flagship DTC products off the ground.

“CBS All Access, Pluto and Showtime apps have been up and running for several years and have most, if not all, of the tech kinks ironed out,” said Wolk.

“This is vastly unremarked on — you can have the best programming in the world, but if the app crashes daily, no one will watch it. The fact that Netflix was very focused on tech and on their app always working correctly is a large part of why they have been so successful.  Having those pre-existing apps gives the new entity a leg up over most of their competitors.”

Wolk added that the newly combined group’s array of library content from Nickelodeon, MTV, CW, VH1 and Comedy Central aimed at 18-34 year-old audiences can better help ViacomCBS establish a brand image for it’s OTT apps. 

Source: SEO Pattern to follow in 2019

Please follow and like us:
error

Leave a Comment

Your email address will not be published. Required fields are marked *