The newly combined ViacomCBS will invest in more movies and TV shows and try to sell more advertising as it seeks to become a bigger player in the growing business of streaming video.
Yet the bigger company still might not be big enough to be competitive, as larger rival Disney launches its own service in November and streaming pioneer Netflix spends even more on original shows and movies.
That isn’t stopping Viacom CEO Bob Bakish, who will lead the combined company, to declare that ViacomCBS will be “one of only a few companies with the breadth and depth of content and reach to shape the future of our industry.”
CBS and Viacom, which separated in 2006, announced their long-anticipated reunion Tuesday.
Viacom owns the Paramount Pictures movie studio and pay TV channels such as Comedy Central, MTV and BET, while CBS has a broadcast network, television stations, Showtime and a stake in The CW over-the-air network.
CBS was one of the first media companies to launch its own streaming service, CBS All Access. The $6-a-month service now has a new “Star Trek” series, a revival of “The Twilight Zone” and archives of old and current broadcast shows.
Disney, Comcast’s NBCUniversal and AT&T’s WarnerMedia are jumping in with their own services as well to challenge Netflix, Amazon, Google and other tech companies encroaching into entertainment. To expand its library, Disney bought Fox’s entertainment businesses for $71 billion in March, while DirecTV owner AT&T bought Time Warner last year for $81 billion.
Acting CBS CEO Joe Ianniello, who will head the CBS business in the combined company, said in a call with analysts that the company might add content from Nickelodeon, BET, MTV and Comedy Central to CBS All Access and Paramount movies to Showtime. CBS’ ad-supported CBSSports HQ and ET Live could be added to Pluto TV.
“The combined company will have the best of both worlds, premium U.S. programming that seamlessly travels across borders and hundreds of thousands of hours of locally produced international programming, all available with the click of a button,” he said.
Once the deal is completed, expected by the end of the year, ViacomCBS will have a combined library with more than 140,000 TV episodes and 3,600 film titles, including franchises such as “Star Trek” and “Mission: Impossible.”
But the combined company still will be small. CBS has a market value of $18 billion and Viacom about $11.7 billion. Disney’s is nearly $245 billion and Netflix is at $136 billion.
CBS says All Access and its Showtime streaming services have 8 million subscribers combined. That’s far less than the 60 million U.S. subscribers that Netflix has, though it’s comparable with the estimated number of subscribers to HBO Now, that network’s stand-alone streaming service.
CBS and Viacom have had an on-again, off-again relationship.
After splitting in 2006, CBS and Viacom both remained controlled by National Amusements. Shari Redstone, daughter of media mogul Sumner Redstone, runs the holding company.
But over time, the two companies’ fates were reversed. CBS, under longtime chief Les Moonves, became more profitable and Viacom struggled, hurt by weakness in its Paramount studio and people dropping cable in favor of streaming.
A recombination makes sense now because media companies are bulking up their content offerings to better compete for ad dollars. But Moonves was against the idea, as CBS was stronger and more profitable than Viacom.
Moonves’ ouster last year in the face of multiple sexual misconduct allegations changed the dynamic. Under an agreement, Shari Redstone agreed not to push for a reunion for at least two years, but that left open the possibility of CBS itself pushing for it.
Redstone will be chairman of the combined company’s board.