Will Newly-Merged ViacomCBS Boldly Go After Other Media Assets?

When Sumner Redstone split CBS from Viacom in 2006, he was busting up a major conglomerate in the hope that the assets would be better appreciated separately for their different qualities — CBS for its steady reliability and Viacom for its riskier, hit-driven growth potential. It didn't quite work out that way, and now daughter Shari Redstone is struggling to turn a couple of relatively small companies into a single entity.

One banker suggests that Discovery might make the most sense, and the John Malone-controlled company was floated as a takeover target for the combined CBS-Viacom just a few months ago. "Even a merged CBS-Viacom is still arguably quite sub-scale compared to the other streaming players," notes Douglas Mitchelson of Credit Suisse.

"A combined CBS-Viacom will need to combine with additional content companies," says Alan Gould of Loop Capital. Beyond market-cap constraints, ViacomCBS also has lower financials than its peers. Adding revenue that CBS and Viacom each logged in their latest fiscal years amounts to $27.4 billion, with operating income of $5.3 billion. In comparison, Disney had $59.4 billion in annual revenue and $15.7 billion in operating income.

Still, the merger may be "too little and too late," says Hal Vogel, CEO of Vogel Capital Management and a former entertainment industry analyst. "It will take at least 18 months to get the combo managed smoothly, and meanwhile it will still be a relatively small company."

They don’t need to. They have a large cabal of television networks, they have the most storied movie studio in Hollywood, a huge library of movies & shows (not to mention the iconic IPs) and a string of streaming services (free & premium). Why would they get greedy like Disney?

Disney and Netflix are not very stable themselves right now.

Really nice breakdown !

Yes

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