Friday, 06 December, 2019

CBS, Viacom reunite with plans for bigger role in streaming TV wars

CBS Viacom reach deal to reunite Sumner Redstone's media empire CBS, Viacom reunite with plans for bigger role in streaming TV wars
Adrian Cunningham | 14 August, 2019, 04:42

After some false starts, CBS and Viacom announced Tuesday they will combine to form the latest media empire in a wave of mergers driven by the need for companies to reformulate themselves for the streaming era.

The merger creates a company with roughly $30-billion market value, which is still small compared to rivals including Netflix Inc (NFLX.O), at $136 billion, ABC network owner Walt Disney Co (DIS.N), at about $245 billion, and NBC owner Comcast Corp (CMCSA.O) at $193 billion.

And Disney in November plans to launch a new "Disney+" service at a starting price of $6.99 monthly that offer its films and television shows as well as the library it acquired through the Fox deal.

The transaction is subject to regulatory approval, but is expected to close by the end of this calendar year. The combined company, ViacomCBS, will have an edge in the competitive streaming landscape, says one analyst. That's far less than the 60 million USA subscribers that Netflix has, though it's comparable with the estimated number of subscribers to HBO Now, that network's stand-alone streaming service. "The combined company will be a scale player globally, with leadership positions in markets across the U.S., Europe, Latin America and Asia", said the two companies in a statement, adding that the combined company will have the largest television business in the United States, with the highest share of broadcast and cable viewing across all key audience demographics, and strength in every key category, including news, sports, general entertainment, pop culture, comedy, music and kids. This merger of CBS and Viacom could mean Kurtzman and his production team could have sizable influence if and when Star Trek gets back on the big screen - such as the growing possibility of a Quentin Tarantino Star Trek movie. The new company wants to speed up the growth of its streaming services, including CBS All Access, Showtime, and Pluto TV, the free ad-supported service that Viacom owns, and drive more advertising to its services.

Begley said the combined entity might have to consider other acquisitions to keep up with competitors.

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Both CBS Corp. and Viacom have always been controlled by Sumner Redstone, 96, and more recently his daughter, Shari, 65, through their family's privately owned company, National Amusements, which operates movie theaters in the USA, United Kingdom and Latin America. Shari Redstone, daughter of media mogul Sumner Redstone, runs the holding company. ViacomCBS owns a vast number of media properties, including CBS, Showtime, Nickelodeon, MTV, and the CW. Her efforts had been blocked by former CBS CEO Leslie Moonves and the CBS board.

A recombination makes sense now because media companies are bulking up their content offerings to better compete for ad dollars. At the time, Les Moonves was head of CBS.

Shari Redstone is vice-chair of CBS and Viacom, as well as the president of National Amusements. But Moonves was ousted past year, which reportedly opened the way for serious pro-merger discussion to continue.

Redstone will be chairwoman of the combined company's board. Disney's stock was up 1%, while Netflix gained less than 1%.