• David

ViacomCBS: Now It's Really Getting Interesting

“Third times a charm” said Bob Bakish in an interview with CNBC on August 14, 2019. The on again off again marriage between Viacom and CBS had been wildly speculated and arguably in the works since 2016. Now with the deal agreed, we are getting a glimpse into the rationale, strategy and opportunity ahead for the company. Needless to say, this marriage will change the face of the US media landscape in ways we can only begin to fathom.

The new ViacomCBS will be a “leading global multi-platform premium entertainment company” which, when deconstructed, hints at some of the focus moving forward. “Leading” is already established as per Nielsen which gives ViacomCBS 22% of all impressions for the 2018-19 season compared to 18% for Comcast NBCU, 14% for Disney and 14% for FOX. Their aspirations go well beyond the US market however.

“Global”, seems to be an area that is heating up in the wake of NBCU and Sky. It is no surprise that with Bob’s global experience and success, this will be an area of focus and potential differentiation for the new entity. “Premium entertainment” is clearly in the eye of the beholder and it’s worth noting that “premium” to the Viacom consumer is radically different than “premium” to the CBS consumer. This is partly what makes this marriage so interesting. It will be fascinating to see the juxtaposition of these two entities delivering premium content at scale. "Cradle to grave" is a diversification strategy that has long existed in marketing - and while it is a bit of hyperbole, it does come to mind when you think of the breadth of audiences delivered by the new entity.

"Multi-platform" is a given, with the future of entertainment driven by streaming in the living room and 5G in your pocket. The ViacomCBS direct-to-consumer strategy will undoubtedly be a critical area of focus in the near term.

The combination of CBS All Access and Showtimes direct to consumer OTT offering has 8MM subs today with a super aggressive goal of 25MM in the next 18 months. PlutoTV has 18MM monthly actives (which has grown nicely since being picked up by Viacom). Utilizing these assets to deliver a comprehensive direct-to-consumer proposition is super interesting. Leveraging the full library of television, movie, sports and live event assets across these platforms has the potential to give Disney+, HBO Max, NBCU, and even Netflix a good run for their money. I worry about the “paradox of choice” facing consumers in the coming months – but do believe that competition is a good thing, and ultimately the market dictates the winners and losers.

Finally, there has been much speculation on what else will need to be added to the ViacomCBS portfolio to make them an even more powerful player in the media ecosystem. While massive, their combined market cap is still dwarfed by Disney, AT&T and Comcast. Not that this is a radical prediction, but my money is on Discovery Communications. With a $15BB market cap and some really nice premium adult Brands (HGTV, Food, etc.) it would be seemingly accretive to the assets already in house.

Stay tuned, buckle up, and watch this space. Now, it’s really getting interesting.

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