Viacom and CBS reunion likely marks first step into new frontier
When mogul Sumner Redstone impulsively split Viacom and CBS into two companies 13 years ago, the rationale was that it would unlock value in each — creating “Via-Grow,” a robust cable-based entity, and “Via-Slow,” with CBS as the steady tortoise to its corporate sibling’s hare.
It never made much sense. But now as Redstone’s daughter, Shari, recombines the two — seeking what amounts to “Via-Scale” — to weather the streaming wars to come, this trip back to the altar appears to be a little too late to achieve the desired ends.
The original positioning of Viacom as a cradle-to-grave advertising-supported giant — from Nickelodeon, MTV and Comedy Central for kids, teens and young adults through CBS and Showtime for their parents and grandparents — had considerable logic to it. The joint company also possessed clear synergies: Showtime, which ended up going with CBS in the divorce, had a need for movies that Paramount, which stayed with Viacom, could provide. (The two have labored to fill those voids in the intervening years at great cost.)
Now, however, the state of play in the entertainment industry has changed. As ridiculous as it sounds to say about a company that boasts $28 billion in combined revenue, the merged Viacom-CBS still looks to be on the runty side compared with the likes of Disney (especially since it swallowed much of Fox) and Comcast, as well as Netflix, Amazon and Apple.
Reuniting the CBS and Viacom assets does provide certain advantages, and CBS has already taken steps into the digital present by launching CBS All Access, using signature properties, most notably “Star Trek,” as a foundation.
Even so, the bulked-up ViacomCBS Inc. appears to be in need of another deal to put itself on a footing to genuinely compete, without being overrun by the handful of titans currently holding sway.
Paramount, for one, has been a laggard in theatrical box-office share — at 5% year to date, per Boxofficemojo.com. And the combination of cable channels — which in the past was all about establishing leverage with content distributors — comes as the cable bundle is under significant stress, with cord-cutting and the shift toward a more a la carte, subscription-based world.
In that environment, the value of many of Viacom’s second-tier channels, such as TV Land and CMT, is more suspect. While CBS and Paramount possess a vast library of movies and TV shows, they’ll be seeking to exploit them at a time when deep-pocketed tech companies and the few existing Hollywood giants have more formidable arsenals and resources.
Put another way, Nickelodeon and “Star Trek” might be nice, but they have a long way to go in terms of matching the Disney and “Star Wars” brands, and perhaps even WarnerMedia’s animated characters and DC Comics.
When the idea of reuniting Viacom and CBS began percolating, it also carried with it the prospect of placing control under then-CBS chief Leslie Moonves, at the time one of the highest-profile executives in the industry. Moonves’ exit from CBS last September didn’t leave the cupboard bare in terms of management, but nobody within the combined entity possesses a profile that can rival the one he once enjoyed with Wall Street, advertisers and Hollywood.
There’s no way of knowing where Viacom would be today had its corporate path not forked when it did, but the long road to meeting up again doesn’t look like a fairy-tale ending; rather, the reunion simply looks like the first step — to reference one of those aforementioned assets — into an uncertain media frontier.