Analysis: Why Viacom Needs to Merge With CBS — Could Discovery Be Part of a Deal as Well?

Feb 5, 2019  •  Post A Comment

A new analysis piece examining the situation at Viacom applauds the company’s turnaround under CEO Bob Bakish, but adds: “Now, it needs a merger with CBS to get to the next level.”

The Bloomberg piece by Tara Lachapelle says: “Against the odds, Bob Bakish pulled Viacom Inc. out of its darkest days, put a halt to the obituaries being drafted for the company, and gave it new life. But this may be about as far as Viacom can go on its own.”

The article notes that Viacom’s first-quarter results, posted this morning, “showed mixed progress in its turnaround efforts and the difficulty of being a small fry in the media world. Profit, aided by improvements at the Paramount Pictures film studio, surpassed analysts’ expectations. Still, revenue fell short, as cord-cutting continued to weaken advertising sales, a trend that’s unlikely to reverse.”

The piece adds: “Viacom’s numerous niche networks have an obvious disadvantage in a marketplace shifting toward skinnier TV bundles that generate much narrower profit margins than traditional cable packages. … Recombining with CBS would help both companies save significant sums in overhead costs and perhaps lead to the necessary pruning of Viacom’s overly large portfolio of TV networks.”

The article also cites speculation that a CBS-Viacom combination could include a third element, such as a tie-up with Discovery Inc.

We encourage readers to click on the link above to Bloomberg to read the full analysis.

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