How shopping for Viacom might assist CBS struggle Netflix and Disney within the streaming wars — and harm it (CBS, VIAB)
- After 13 years aside, CBS is getting ready a bid to purchase its sister firm, Viacom, The Wall Avenue Journal reported on Tuesday.
- The deal, if it occurs, might bolster CBS’s streaming initiatives, Wall Avenue analysts and a media strategist advised Enterprise Insider.
- A mixed CBS-Viacom would not have the worldwide footing of Netflix or the model energy of Disney. However it might have extra benefits than both CBS or Viacom has by itself immediately.
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A wedding with Viacom might give might give CBS an edge in streaming video.
After 13 years aside, CBS is getting ready a bid to purchase its sister firm, Viacom, in what could be the third try to mix the 2 media conglomerates, The Wall Avenue Journal reported on Tuesday, citing individuals accustomed to the state of affairs.
There are company causes to merge the 2 corporations, that are each majority managed by the Redstone household by means of Nationwide Amusements, Inc.
However the deal, if it occurs, might additionally bolster CBS’ streaming initiatives, Wall Avenue analysts and a media strategist advised Enterprise Insider.
A mixed CBS-Viacom would not have the worldwide footing of Netflix or the model energy of Disney. However it might have extra benefits than both CBS or Viacom has by itself immediately. The businesses, collectively, might attain a wider viewers, construct a broader catalog, and have extra negotiating energy with the assistance of Viacom’s Pluto TV.
The place CBS suits into the streaming wars
CBS has largely been ignored within the streaming wars this previous yr as legacy media giants Disney, WarnerMedia, and NBCUniversal put together new streaming providers that would pose threats to incumbents Netflix and Amazon.
But, CBS — which continues to be the most-watched community on TV — additionally has two standalone streaming subscriptions, CBS All Entry and Showtime. The 2 platforms reached a complete of eight million subscribers on the finish of final yr, and CBS raised its purpose to 25 million subscribers domestically by 2022, up from a goal of 16 million. That might be somewhat smaller than Hulu immediately, throughout its on-demand and streaming-TV choices.
CBS additionally has free, ad-supporting streaming sports activities and information networks, together with CBS Sports activities HQ, CBSN, CBSN Native, and ET Stay. Its studios, together with CBS TV, produce some programming for different streaming providers as nicely, equivalent to “Useless to Me” on Netflix.
The benefits of a Viacom deal
A mixed CBS-Viacom might be a extra compelling streaming contender.
Viacom’s streaming and manufacturing belongings would open up CBS to a broader viewers. Whereas CBS is understood for having the oldest viewers in community TV, Viacom’s networks like Comedy Central and MTV, and its youngsters’s channel, Nickelodeon, cater to youthful crowds.
“It might give CBS the cradle to the grave now, actually,” Mary Ann Halford, a senior adviser on the technique consulting agency OC&C Technique Consultants, advised Enterprise Insider. “It offers CBS extra stability.”
CBS and Viacom would have a broader worldwide footprint collectively, and will use every others’ programming —fairly than purchase from outdoors studios — in locations just like the UK, the place Viacom is extra established, and Australia, the place CBS has an even bigger presence.
A mixed CBS-Viacom would even have a bigger catalog and manufacturing output, which its might use to fill its personal platforms and license extra programming to different providers. Viacom’s studios, like CBS’, additionally produce collection now for different streaming providers, like Paramount TV’s “13 Causes Why” on Netflix, “Jack Ryan”on Amazon Prime Video, and MTV Studios’ “The Actual World” reboot on Fb Watch.
“They might fill a gap that’s being created by Disney,” Ryvicker mentioned, referring to Disney’s all-in streaming technique, which has resulted in it pulling content material from Netflix.
Viacom comes with baggage
Viacom would include some baggage that would maintain CBS again within the streaming sphere.
Not all of CBS and Viacom’s manufacturers match neatly collectively. Viacom’s cable networks have struggled with the buyer shift away from conventional TV providers as nicely.
The kids’s networks have had a very robust time, as extra youngsters watch programming on place like Netflix and YouTube, as an alternative of cable TV. Nickelodeon misplaced practically 30% of its viewers in 2018, based on Nielsen knowledge revealed by IndieWire.
“We do not consider the idea of a totally distributed youngsters’ linear community will exist for for much longer,” analysts from Bernstein, a Wall Avenue agency, wrote in January, in a word that argued towards a CBS-Viacom merger.
An acquisition of Viacom would expose CBS to extra danger from Viacom’s cable channels. However the mixed firm would even have extra alternatives to repackage its programming, with its mixture of standalone subscriptions, ad-supported providers, and throughout Pluto TV.
“[Nickelodeon] must be repackaged ultimately,” Marci Ryvicker, an analyst at Wolfe Analysis, which upgraded its worth goal for CBS in Might on the situation of a take care of Viacom, advised Enterprise Insider. “Children has been one of many first kinds of programming that has been changed by streaming.”
Viacom has a couple of standalone streaming choices within the US, together with Comedy Central Now, Noggin — for pre-school aged youngsters — and an upcoming BET subscription service. It additionally has a free, ad-supported TV service, Pluto TV, which Viacom acquired in January for $340 million.
Leaning on Pluto TV
Pluto TV has been a bargaining chip for Viacom, and is also an asset for CBS. Viacom not too long ago struck a take care of cable operator Comcast to get the free, ad-supported TV service with greater than 100 channels — together with at the very least 14 networks with Viacom content material — on the Xfinity X1 platform.
“What it’s helped Viacom do is assist assure Viacom carriage with distributors who’re tough to barter with,” Ryvicker mentioned.
Pluto TV additionally had about 16 million month-to-month energetic customers on the finish of April, up 31% from December 2018, Viacom reported. That is an viewers CBS and Viacom might construct on. CBS might supply its subscription providers like CBS All Entry and Showtime as add-ons to the free Pluto TV service, for instance.
“It is a promotional platform for you then to upsell individuals to purchase a paid service, like CBS All Entry,” Halford, the advisor, mentioned. “These are issues that may change into very attention-grabbing, if CBS finally ends up transferring from a broadcast world to an IP TV on-demand world.”
SEE ALSO: How Disney’s advertising and marketing benefit over Netflix shall be its secret weapon within the streaming warfare
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