Robert Bakish, chief govt officer of Viacom World Media Networks, speaks in some unspecified time in the future of a Bloomberg Tv interview at the Cell World Congress in Barcelona, Spain, on Tuesday, March three, 2015. The occasion, which generates several hundred million euros in income for the metropolis of Barcelona as soon as a year, also components the enviornment for per week turns its attention support to Europe for essentially the most up to date in technology, despite a lagging ecosystem.
Pau Barrena | Bloomberg | Getty Images
CBS and Viacom get hold of agreed to merge, ending a three-year-broken-down drama filled with starts and prevents that reunite the 2 companies controlled by Shari Redstone’s Nationwide Amusements conserving company. Now that you just get hold of had five minutes to digest the deal, it is time to name to mind what Redstone and Bob Bakish, the blended company’s newly named CEO, are attempting to make next.
This could well fair sound glib. Nonetheless in this case, Redstone explicitly wants to get bigger sooner, in accordance to folks conversant in the matter. A pair of of what brought on the CBS-Viacom deal to tug along all year used to be figuring out which board members would stick to the blended company and getting these folks centered on the new company’s route.
CBS has a market capitalization of about $18 billion. At an agreed upon replace ratio of .59625, Viacom is valued at about $12 billion. A blended company could well get hold of an enterprise rate of about $50 billion. That quiet locations CBS-Viacom at a gigantic steadiness sheet disadvantage in the case of borrowing for hiss spending on customary programming and sports rights relative to competitors AT&T/Warner Media (enterprise rate = $453 billion), Disney (enterprise rate = $315 billion), and Comcast/NBC Universal (enterprise rate = $305 billion).
And the legacy media companies get hold of all bulked up to compete with technology giants Amazon (enterprise rate = $924 billion), Apple ($922 billion), Alphabet/Google ($707 billion), Fb ($495 billion) and Netflix ($143 billion). Final analysis: CBS/Viacom remains to be worthy smaller than its competitors which shall be also going to be bidding on the single motion footage and presentations and, most considerably for CBS, the Nationwide Soccer League’s broadcast rights, that are impart for renewal in 2022.
So what are Redstone’s only alternate strategies so as to add extra heft and programming?
As CNBC wrote in January, here’s strategic good judgment to pairing CBS/Viacom with Discovery. Redstone loves sports rights, and Discovery is a main player in European sports, proudly owning bizarre rights to video games in many European markets including pan-European tv sports network EuroSport. Discovery also struck a deal with the Educated Golf Association for international rights and a golf streaming provider closing year for $2 billion.
Furthermore, Discovery outbid Viacom for Scripps Networks Interactive in 2017 — a $12 billion acquisition for the owner of HGTV, Trudge back and forth Channel and Food Network. Bakish’s interest in Scripps at the time could well fair counsel he’d be attracted to a mix as soon as extra.
One likely hangup to a deal shall be who would traipse a blended company. Discovery CEO David Zaslav is only 59 and is neatly revered in the media replace. Nonetheless Bakish would practically no doubt are attempting to lift his job as CEO after officially incomes the role this present day. Discovery has a market valuation of about $15 billion and an enterprise rate of $39 billion.
Starz makes some sense for CBS, which already owns rival top rate video provider Showtime. There’s no doubt overlap between the 2 subscription services that could well presumably end result in synergies (i.e. rate decreasing, job cuts in overlapping positions). CBS has been successful accumulating subscribers for its tell-to-user streaming services Showtime Anytime and CBS All Get entry to, reaching Eight million subscribers two years sooner than its hold within forecast and forecasting 25 paying prospects by 2022. Starz is forecasting between 15 million and 25 million subscribers for its streaming provider by 2024.
Nonetheless whereas CBS Chief Executive Officer Joe Ianniello had interest in Starz, Bakish could well fair no longer be in a traipse to head in that route, in accordance to folks conversant in the matter. Shopping Starz or even all of Lions Gate is never always in truth going to drastically cross the needle for CBS. Lions Gate’s entire enterprise rate is candy $5.7 billion. Despite the indisputable truth that Lions Gate merges with MGM, a deal that is been speculated for years, that blended company would quiet be worthy smaller than Discovery.
In a kind of words, if Bakish and Redstone are attempting to get plenty bigger immediate, Starz, Lions Gate and MGM could well presumably no longer make it. That could well also fair push them extra down the checklist of priorities.
Activist investor Dan Loeb has attach pressure on Sony this year to atomize up the $70 billion company into an electronics unit and an leisure unit. Whereas Sony has thus a long way resisted his requires a split, Redstone has some interest in pursuing a doable deal for Sony Photos, in accordance to folks conversant in the matter.
The shy away here is twofold. One, it is no longer certain Sony shall be attracted to shedding adjust of Sony Photos. Whereas it is likely CBS could well presumably structure a deal the put Sony would in truth get a few of Redstone’s vote casting shares as a sweetener, such a structure could well fair be complicated. And two, if Sony used to be willing to section with Sony Photos, which owns film franchises equivalent to Spiderman and Males in Black and TV series including Seinfeld, Breaking Rotten, Jeopardy! and Wheel of Fortune, there would practically no doubt be a few suitors — including bigger fish love Comcast.
Univision is never always in truth as certain of a fit for CBS/Viacom. Nonetheless it is for sale. In direct that is one thing. The privately held Spanish language broadcaster has been debating going public or selling for years. Madison Dearborn Companions, Providence Fairness Companions and Thomas H. Lee Companions led a buyout with Haim Saban of the company support in 2007 for $13.7 billion. Early indications from bankers counsel Univision could well fair get hold of to promote for much less if it finds a buyer now.
Shari Redstone attended Allen & Co.’s Sun Valley convention in July — along with Saban. Whether the 2 mentioned a deal is unclear.
Unquestionably, Redstone could well presumably also add extra heft by selling — following the footsteps of Time Warner and Twenty first Century Fox. Redstone is never always in truth wedded to passing CBS-Viacom to her youth, unlike her father, Sumner, in accordance to folks conversant in her contemplating.
On the change hand, selling CBS-Viacom whereas her ninety six-year-broken-down father remains to be alive could well fair be anathema. And Sumner Redstone has declared he’s going to are living eternally. So presumably that one’s moot.
Disclosure: CNBC and NBC are owned by Comcast’s NBCUniversal unit.