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Sell More Ads to Invest in More Movies and TV Shows

The newly combined Viacom CBS is looking to sell more ads to invest in more movies and TV shows and to become a bigger player in the growth of the streaming video business. But in November, bigger rivals Disney launch their own services, and streaming pioneer Netflix spends more money on original shows and movies, so larger companies may still not be big enough to be competitive.

Viacom CEO Bob Bakish

Viacom CEO Bob Bakish has declared ViacomCBS to be "one of the few companies that has the breadth and depth of content and can shape the future of the industry." Separated in 2006, Viacom announced a long-awaited reunion last week. Viacom owns a Paramount Pictures movie studio and pays for TV channels such as Comedy Central, MTV and BET, while CBS has a stake in broadcast networks, TV stations, showtime and CW wireless networks.

ViacomCBS will be one of the few companies that has a rich and in-depth content and can shape the future of the industry. CBS is one of the first media companies to launch its own streaming service, CBS All Access. Available for $ 6 a month, the service includes a new "Star Trek" series, a revival of the "Twilight Zone", and an archive of past and current broadcast shows.

Comcast's NBCUniversal and AT & T's WarnerMedia are now Disney's own service to challenge Netflix, Amazon, Google and other entertainment companies. To expand the library, Disney acquired Fox's entertainment business for $ 71 billion in March, while DirecTV owner AT & T bought Time Warner for $ 81 billion last year.

CBS CEO Joe Ianniello, who will be responsible for the combined company's CBS business, said in an interview with analysts that content from Nickelodeon, BET, MTV and Comedy Central could be added to Showtime for CBS All Access and Paramount films. CBS's ad-supported CBSSports HQ and ET Live can be added to Pluto TV.

And the company wants to strengthen the international proposal. This merged company offers one-click access to premium American programming that moves seamlessly across borders and hundreds of thousands of hours of local production international programming.

Completed deal in the end of this year

When the deal is completed by the end of this year, ViacomCBS will have a library of more than 14,000 TV episodes and a combined 3,600 movie title, including franchises such as "Star Trek" and "Mission: Impossible". It was a major content consumer, with Netflix expected to spend more than $ 13 billion last year or nearly $ 15 billion in 2019. Both companies now order or produce more than 750 series. But the merged company will still be small. The market value of CBS is $ 18 billion and Viacom is about $ 11.7 billion. Disney is nearly $ 250 billion, and Netflix is ​​$ 113 billion.

CBS says it has 8 million subscribers combined with All Access and Showtime streaming services. It's a lot less than the 600,000 US subscribers that Netflix has, but it's on par with the number of HBO Now subscribers, the network's standalone streaming service. And Paramount Film Studios, despite its popularity like last year's "A Quiet Place" and the latest "Mission: Impossible" sequel, accounted for 5% of market share in the box office this year. It has not been in the top five since 2011.

Neil Begley, Moody's media analyst, said other acquisitions may need to be considered for ViacomCBS to maintain. But the majority of smaller companies, such as Discovery, AMC Television Network, MGM and Lionsgate Movie Studios, remain, reducing the number of possible goals, he said. He said there will be a big question as to whether the new company will focus on subscription services like CBS All Access and Showtime or free advertising support services like Pluto TV owned by Viacom.

Or both can continue. If you're going in both directions, you're blocking bets, but what's the best strategy you can punch. The entire stock transaction will give CBS shareholders the rest of the merger and Viacom shareholders of about 61pc. These companies said the merged company would generate $ 28 billion in revenue. Combining these companies is said to save $ 500 million annually.

CBS and Viacom have many relationships

After being split in 2006, both CBS and Viacom are controlled by state entertainment. Shari Redstone, daughter of the media giant Sumner Redstone, runs the holding company. This split was the way to separate Viacom's networks, such as MTV, Nickelodeon, and BET, from the slow growth of the CBS network at the time.

But over time, the fate of the two companies changed. CBS, the long-time head of Les Moonves, became more profitable and Viacom struggled as Paramount Studios' weakness and those who preferred streaming dropped the cable. Recombination is now meaningful because media companies are expanding their content offerings to more effectively compete with advertising costs.

However, Moonves opposed this idea because CBS is more powerful and profitable than Viacom. Faced with several charges of sexual misconduct in the past year, Moonves' acting changed its dynamics. Under the agreement, Shari Redstone agreed not to push for a reunion for at least two years, but the CBS itself has opened up the possibility.

Redstone will be chairman of the merger company board. Redstone explains, We will establish a world-class multi-platform media organization suitable for growing in a rapidly changing industry. Viacom's stock price rose 2.4pc and CBS 1.4pc, and Wall Street is expecting this deal especially recently. Disney's stock rose 1pc and Netflix was less than 1pc.

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