ViacomCBS eyes further acquisitions after merger

L-R: Shari Redstone, Bob Bakish, Joe Ianniello

Discovery and Sony Entertainment have been mooted as potential targets for ViacomCBS as it looks to bolster the newly merged company with further acquisitions, following the creation of the $30bn outfit yesterday.

The long-awaited merger will see brands including CBS, Showtime, Nickelodeon, MTV, BET and Comedy Central coming under one roof, along with CBS Television Studios, Paramount Pictures, Network 10 in Australia, and Channel 5 in the UK.

The company will house around 140,000 TV episodes and 3,600 films, with more than 750 series currently ordered or set for production. More than $13bn has been spent by the firms on content over the past year, with shows such as Billions airing on Showtime and Star Trek: Discovery offered by CBS All Access.

However, ViacomCBS remains far smaller than rivals such as Netflix, WarnerMedia owner AT&T and Disney, valued at $137bn, $254bn and $247bn respectively, and on an earnings call yesterday execs from both Viacom and CBS admitted further acquisitions would be explored.

ViacomCBS chief Bob Bakish, who will lead the merged entity, said: “Both of us continue to look at opportunities in the marketplace and have executed on some of those in the past. This is something we’re going to continue to do.

Billions

“Speaking from Viacom’s perspective, we have done deals that have been effective accelerants to our strategy. And that’s something that we are going to look to on a combined company basis.”

Christina Spade, CBS’s chief financial officer, added that the newly formed company would “explore strategic transactions that enhance our content portfolio, accelerate our direct-to-consumer growth and strengthen our international footprint.”

CBS has recently been linked with Lionsgate-owned pay provider Starz while Viacom picked up AVOD service PlutoTV in February. Yesterday, Reuters reported that Shari Redstone, chairman of National Amusements – owner of close to 80% of CBS and Viacom voting shares – had considered potential deals with factual giant Discovery and Sony, although no talks have yet taken place.

Bakish also said ViacomCBS would ramp up its direct-to-consumer streaming offerings around the world but said the company would continue to sell its programming to companies such as Netflix, a strategy many of its rivals such as Disney have erred away from.

“Boosted by the strength of our combined library and production capabilities, we’ll be able to feed escalating demand for third-party content, serving a diverse global customer base,” he said.

Joe Ianniello, president and interim CEO at CBS, added that third-party licensing would continue “internationally and domestically” but he conceded that “[in] the longer term, obviously, the aspiration is to have global subscribers and really connect to the consumer.”

Bakish also said the two companies, which were previously brought together in 1999 but broken up seven years later, would share content: CBS programming will become available on AVOD offering Pluto, while Viacom shows will be offered via CBS’s SVOD services, once existing licensing deals ran their course.

Star Trek: Discovery

“There is nothing at all preventing us from moving forward in terms of beginning to unlock that opportunity in the very near future,” he added. “Obviously, it’s something that we will build on over time. There is some low-hanging fruit there that we will seek to pick quite soon.”

Ianniello said CBS All Access would remain “competitively priced” and would offer around 1,000 hours of kids programming from Viacom. The CBS chief added that the company had been doing three-year deals “more and more”, rather than five-year arrangements, allowing it to “reset” relatively quickly.

Bakish added that All Access would join “a compelling portfolio of streaming products” that include subscription and ad-based offerings such as Showtime OTT, Pluto TV and niche services such as Noggin and forthcoming BET+.

“This mix creates a powerful D2C ecosystem, which will allow us to serve consumers at different price points while enabling portfolio cross-selling,” he said. “This includes using our free ad supported offerings as a powerful traffic funnel, a consumer entry point to upsell from as well as a place where we can catch and continue to create value from consumers taking a pause from subscription services.

“We also see significant cross-platform upside as the D2C portfolio benefits from the combined company’s content and marketing. And our expansive production capabilities and deep library assets have the potential to fuel a significant product that can be deployed all around the world, particularly as we’re able to take advantage of the international infrastructure that we already have in operation.”